I like simple, straightforward frameworks that are easy to understand, digest and implement. I wanted to take the opportunity to write about one of my favorites, and I give the credit to my partner Ashok Ananthakrishnan for driving this one home for the Iron Pillar partnership over the past few years. Now, for many of you, this may be obvious but then again, I learned from my friend and former colleague, Guy Kawasaki, how to take the potentially mundane and communicate in a way that is both entertaining and interesting. That is my goal here…But if the topic is indeed blasé, then please click a “like” and move on to your Tik Tok feed:)
The framework that I am referring to is “Attitude and Aptitude” – a duality that should be deployed in almost everything we do and is especially critical for startups. Let me splain:)
When hiring individuals or evaluating companies, the Iron Pillar partnership tries to ask a simple question “does the individual (potential employee or entrepreneur) have the attitude and aptitude” to perform well in their respective roles (EQ vs. IQ; Emotional vs. Rational; Soft vs. Hard skills are proxies as well). If analyzed properly, that seemingly simple question can lead to really interesting insights and heavy internal debate. Let’s drill a bit deeper.
Attitude is primarily qualitative and has to do with the individual’s overall enthusiasm, energy, passion, cultural fit and tenacity in the role. Aptitude, on the other hand, is primarily quantitative in terms of the acumen, skills and results needed (and ideally delivered) in the person’s respective role. Both aspects have to be present in the right ratio for success. I was recently speaking with my daughter about potential career choices and her comment to me was “well, I want to do something I am really good at AND passionate about”. That is indeed aptitude and attitude. As a typical father, while I agreed with her, I also told her to make sure she could earn a decent living doing it!
But here is the catch. For startups, that juxtaposition of attitude and aptitude morphs over the lifetime of the startup. Specifically, as startups transition from 0 to 1, 1 to 10, 10 to 100, and 100 to 1000’s, both attitude and aptitude have to evolve accordingly, imho. As a raw startup, for example, a personal is often required to deal with uncertainty, pivots, wear multiple hats and be able to thrive in a chaotic environment. Not only emotionally does the person have to be stable and take that risk in stride, but in the face of that uncertainty and risk, be able to deliver results and continue to thrive. As that company transitions to a 10-100 stage, the early chaotic environment is no longer sustainable, and processes, systems and clear roles and responsibilities have to become the “rails” of the business to be successful at scale.
Now, some people can make the transition as the company grows. But, many, especially those who are self-aware in terms of the environment in which they thrive, reach the conclusion that they are neither delivering value nor enjoying the experience of being at that startup. Companies struggle with these transitions especially when entire teams of friends and early employees who have suffered through the early years with their blood, sweat and tears, have to be let go. The situation is exacerbated in situations with large founding teams. The lead founder/ceo feels an obligation to keep the entire founding team intact, often to the detriment of the company. While easier said than done, self-awareness is a huge part of the aptitude test. The person ideally should know when he/she is no longer a fit for the company, given the stage and scale that the company has reached.
As an investor, I have tried to instill this framework in our entrepreneurs as they make decisions to hire and over time retain employees. Usually it’s the aptitude that takes a hit as companies scale. The rigor and discipline of systems, processes and KPIs lays bare the discomfort with that level of accountability and rigor. Often the early employees or leadership may see new professional managers come into the company in more senior roles. The reporting structure shifts. The ones who had many reporting to them suddenly find themselves reporting to a new senior hire. That’s often an emotional hit. By the way, one of my pet peeves is an entrepreneurial team that take OPM (other people’s money), wants zero oversight or questioning from the Board/investors, and be allowed to run the company freely. I tell entrepreneurs bluntly that if they want a “lifestyle” business, please do not take OPM/VC. Apologies for the aside, and now back to the task at hand…
Let me shift now to the decision-making exercise, and how to go about the difficult exercise of transitioning entire teams. The very first step is realization that there is a mismatch between what the company needs at a particular stage, and the aptitude of the existing leadership or middle management. This, interestingly, is the blind spot for most entrepreneurs. That is because the emotional attachment to the early team (whether co-founders or other early employees) is simply too strong. And they fail to see or embrace the eventuality. Sometimes, new lofty titles are created to make people feel good about still being part of the company “leadership”. In other cases, the ceo may simply be over-protective of another co-founder even when they know in their heart that the co-founder is just not the right leader or manager at that point. This emotional attachment, by the way, can create significant friction between management and investors, as well as detrimental to the company. There are multiple techniques to come to grips with people issues, especially as companies scale.
In an ideal scenario, the Board truly acts as a partner to the founder CEO. Often, however, the CEO feels like there is an “us versus them” relationship between management and the Board. In those circumstances, I strongly recommend either or both of the following: 1) A very warmly introduced Executive Coach. Entrepreneurs may feel that they have “it all figured out” or feel like they “need to look strong” and nearly invincible. The reality is that life of an entrepreneur is highly stressful with constant twists, turns and curve balls (or googly’s based on your sport). They need and deserve support. 2) A supportive peer group with whom the founder/ceo can feel vulnerable, and truly open up. Groups like YPO can help, but there are new cohorts of domain based regional groups (growth stage SaaS startups, for example) that are also being formed with other entrepreneurs who have faced and dealt with similar set of market and people challenges. A conversation with one’s peers is often a lot more comfortable than with investors.
Life of a startup is a like a Bollywood movie. There are plot twists, different types of love triangles, and dance sequences between various constituents. The rational and the emotional parts of the brain are often at odds. It is non-trivial to deal with that conundrum. Meditation and breathing helps. Accepting the fact that there is an issue if the first crucial step. That is the “what”. The “so what” which follows is the action plan which could include Board conversations, executive coaches, peer groups, spouses, therapists and random conversations with strangers (just as a venting mechanism). Then comes the “now what” and actual execution. But whether you are an investor dealing with your own team issues, or a startup founder trying to scale without destroying co-founder friendships, just know that you are not alone. That many others have struggled with the same set of people issues. And there are indeed mechanisms and techniques to identify gaps, internalize the situation, create an action plan (with support from others) and execute. I also have a “trust your gut” pattern recognition to the timing of the execution. Once the attitude and aptitude gap is apparent, it is time to act and the sooner, the better. For example, after observing for a few months, as a ceo either you or others in the ecosystem (investors, customers, partners, service providers) are identifying a key weakness in an individual, it is time to make the decision. There is often a tendency to “give it time” and the person will somehow get better with more time. More often than not, the writing is indeed on the wall that the individual needs to move on. While there could and should be a courtesy transition period, the key is to get going on the decision of hiring the right individual immediately.
Bottom line: I have said it before and I will keep saying…no matter what business you are in, you are in the people business. Aptitude and attitude matter for startups. Paying attention to the aptitude and attitude mismatch in an organization and knowing when to transition team members in and out will help reduce downstream issues. There are exceptions. There are people who can evolve with the company as it scales. One such example is a star Iron Pillar Network member, Lars Nilsson, for example, who has been on a seed to IPO ride with several companies. I suppose if you are able to do that once, you then have the experience and the credibility to rinse and repeat, something that Lars has done very successfully for decades. And we are humbled to have him as part of the Iron Pillar family.