Of course, there is always plenty to do at a startup and the CEO is usually the head cook and dishwasher, but the question of where I should be productively spending my time continued to nag at me.

I was pretty aggressive about reaching out to other CEOs and mentors and this question was my biggest area of inquiry: “Hey, when you think back to when your company was my size, how did you spend your time?”

There were a number of suggestions that were specific to the company lifecycle stage like, “Get some alpha customers teed up” or “Get together a launch plan for Europe.” However, there were also some core, evergreen pieces of everyday advice that applied throughout the company’s growth:

Push the team

After you’ve hired rockstars in every essential VP role, it’s the CEO’s job to challenge them to do extraordinary things. Here are a few things I used to do:

• Set aggressive goals. As a company we would set three goals every quarter and then I would individually negotiate three specific and measureable goals (such as “Hire a director of X” or “Meet with 20 customers”) for each of my direct reports that supported the company goals. Everybody needed to accomplish something more than just doing his or her job.
• Give frequent feedback. In addition to giving extensive bi-annual performance reviews (see my previous post on the dysfunctional CEO), I would constantly pull VPs aside after meetings—“I like the way you handled that” or “Dude, that was a bit harsh”.  I’d keep in mind the “shit sandwich”, a piece of constructive feedback in between two specific, positive comments.
• Hold weekly staff meetings. This was not a rote set of updates but a place where arguments were had and decisions made. After every meeting we’d send out a list of decisions and discussion points to all managers.
• Schedule bi-monthly 1:1s. I’d usually spend an hour (no interruptions and paying attention!) going through progress on goals, how I could help, what’s going on within their teams, etc. The tone was positive, but I would constantly challenge them to do more with less.

Sell the vision

Shortly after our first round of funding, my co-founder, Scott Banister, turned to me and said, “I’ve heard you tell 100 different people a slightly different version of the same story. I had no idea you spend so much time selling!” He was right, I was constantly selling: soliciting investors and advisors, signing recruiters and PR firms, hiring employees, securing first customers, conducting company meetings, convincing reporters and sparring with industry analysts. They all demanded a compelling story, told with enthusiasm, and the CEO needs to be on the front line with these critical meetings that might turn into the tipping point between success and failure.

When I think about all the important things CEOs must do, succinctly and convincingly articulating “the story” is right up there. But there’s a catch: it must be told with both authenticity and passion—like it’s literally pouring out of them. We refer to the best of these entrepreneurs as “glow in the dark”.

Arbitrate disagreements

Half.com founder and CEO Josh Kopelman once told me that the thing he hated most about being CEO was when two of his smartest people would disagree and he would have to come down on one side: “These decisions were usually 51/49% and I was left having to console the ‘loser’.” He’s right. Arbitrating these disagreements is one of the hardest and most emotionally draining parts of the job, but many CEOs just avoid it and nothing breeds a horrible culture like a CEO who puts offs decisions or, worse yet, makes too many compromises.

I firmly believe that if the VPs aren’t periodically at odds with one another, then the company isn’t being nearly aggressive enough. Why can’t we get the customer feature in the next release? We should pre-announce new functionality and run under the ball! Great sales and marketing VPs constantly push the envelope with engineering, operations, finance and product.

Management By Walking Around (MBWA)

This is one of the few acronyms I retained from my undergraduate finance studies. I vividly remember reading it in some Management 101 textbook and thinking how simple and silly it seemed. Years later, I’ve come to believe that it’s a really important part of being a CEO. I probably spent three to five hours a week on MBWA and would put hour-long blocks in the calendar specifically for this purpose. Just a simple plopping down in an employee’s cube with a “Whatcha working on?” would yield so much valuable information. As the final decision-maker on so many difficult calls in a fast moving business, the CEO’s connection to the people that are actually writing code or talking to customers is critical. And you don’t get it from sitting in your office.

Talk to customers

A CEO should probably be spending about 30% of his or her time with customers, and this is especially true for an enterprise CEO. But this doesn’t mean talking with just the CIO or SVP, who most likely barely remembers signing the purchase order. However uncomfortable, I would insist on talking to the person actually using our product. I want to speak with the guy in the bowels of the datacenter, the one who probably comes into work without having showered and with bedhead. With just a slight prompting of, “Hey, I know you like the product but how can we improve it?”, he would unroll his manifesto of feature requests, bugs and other stuff to think about. Some of our best product ideas came on the plane ride home stitching together all the feedback.

Now, there are certainly a ton of other important activities—like raising money, setting a culture and hiring executives—that fall primarily on the CEO’s shoulders, but the aforementioned list includes the “responsibilities” I would hold myself to every single week.

My head was usually buried in a comic book, only half listening. However, there was one story that stuck with me and I have struggled to make sense out of it throughout my business career:

Son, you never, ever promote your best salesperson to be the sales manager. This is a classic mistake that other car dealers make. A bunch of my top producers came from their failed attempts as sales managers at other places. You commit two wrongs with these promotions: First, you take your top producer—someone raking in two to five times the average salesperson—off the sales floor. Second, you put them in a new job that they are totally unqualified to do successfully. This usually ends in disaster for everyone involved.

His advice seemed to make sense until later in my career when I was actually faced with the problem. Some of our best salespeople and engineers at IronPort wanted to move into management and if we didn’t give them the opportunity, then it was clear they would go elsewhere. Of course, there’s not much of a dilemma when the high performer is a natural leader and people-person. Promoting great people from within is preferable on so many dimensions: there’s context, history, relationships and it all leads to a much better chance of success than hiring from the outside. The difficult corner case is the high-performing individual contributor that you can tell will likely fail in a leadership position. I’m talking about the sharp-elbowed, passive aggressive salesperson with little self-awareness. Or the my-way-or-the-highway, smartest-guy-in-the-room, workaholic engineer with horrific personal hygiene. How do you deal with that?

If they were really that good and were hell-bent on being a manager, then I came to believe that you had to give them a shot. That said, in my own experience, only about 25% of these experiments succeed in leadership. However, if managed carefully, the majority of the failures can ultimately be coached back into individual contributor roles, which is still a win. The key to all of it is making sure that there’s a sponsoring executive that is willing to spend a boatload of time coaching the budding leader. Here are some specific suggestions:

• It all starts out with hard, raw conversation about the shortcomings you’ve observed and how they need to be grinded off for them to be a successful manager. E.g. “You can’t keep answering all the questions; leading is getting others to contribute.”
• The coach needs to meet weekly and do frequent check-ins with peers and subordinates in almost a constant 360 degree-feedback loop. Even if it isn’t working out, the constant coaching and feedback will ensure a soft landing back into their old role.
• It helps to have some great leadership training. In my experience, most leadership training courses suck. You get two hours of useful information spread out over two weeks of mind-numbing presentations. We put together a rapid fire, two-day course and had our leadership team teach it. Interviewing, performance reviews, 1:1s, career planning, holding staff meetings, etc. We all got together and boiled down the best practices for all the important areas into short, punchy presentations/role plays. Every new manager went through it to give them some tools that were culturally consistent with what we were doing.
• Develop a legit dual-career track. Bestowing a new title like Principal Engineer or Fellow along with a commensurate bump in salary and equity can help take the sting out of being removed from a leadership role.

I know this all sounds like a ton of work but some people are just that special and totally worth it. Some of our best managers came out on the other side of these experiments and we had at least a handful of failures that we were able to retain as employees. My father built his business with castoffs from these experiments gone wrong at competitors. Perhaps because they had already failed elsewhere, his top performers didn’t aspire to try management again. Only in this context can I make sense of his guidance, as my experience has been quite the opposite.

The reason is simple.  We are fortunate to work with some of the best entrepreneurs and technologists in the world, and in the process help create great and valuable companies.  That activity, done well over decades, can generate a lot of money that can then be productively deployed philanthropically back into the society that makes it all possible.  We love participating in this process, and we hope that our philanthropy can, over time, help make the world a better place.

As an initial catalyst, we are making an immediate group donation of $1 million to a set of six vital Silicon Valley-related nonprofit organizations.  Those causes, and their respective sponsors, are:

Ben and Felicia Horowitz: Via Services
Jeff and Karen Jordan: Ecumenical Hunger Program
John O’Farrell and Gloria Principe: Second Harvest Food Bank
Marc and Laura Andreessen: Fresh Lifelines for Youth
Peter and Martha Levine: Canopy
Scott and Pamela Weiss: The Shelter Network

Signed,

Ben, Jeff, John, Marc, Peter, and Scott

As it turns out—not really.

Foursquare was first to crack the code… It was really the first killer mobile, social, local application and it, at first, had nothing to do with meeting up with your friends. It used clever game mechanics to get users to check into places they frequent. As a tech savvy old dude, I enjoyed my short reign as mayor of many of my Millennial-free establishments. When I checked in to a new place, I saw the picture and name of the mayor and immediately looked around to see if they happened to be there at the same time. Hmm… New person, near me, with a name and picture—imagine that?!

This was one of the key insights that Christian Wiklund and Niklas Lindstrom had when they were forming Skout—people actually want to meet people they don’t know. By focusing the product features around this phenomenon, Skout has exploded into the largest network for meeting new people—adding a million new users every month! Today, we are announcing that Andreessen Horowitz is leading Skout’s $22 million expansion round. Here’s why we’ve invested:

• The founders, Christian and Niklas. are two of the most determined, creative, passionate and iterative entrepreneurs we’ve ever met. They traversed a long, hard road before figuring out the right combination of features that resonated with users.
• The growth and engagement numbers are through the roof… The average Skouter checks in 8-9 times a day and spends an average of 45 minutes chatting, exchanging gifts and posting photos on the app.
• Skout is obsessed about keeping the community fun and safe with a zero tolerance for bad behavior. They are over-investing in community management tools and people that monitor and eliminate inappropriate behavior.
• Unlike most sites associated with dating, the application is inherently viral and doesn’t have the usual absurdly high marketing expenditures associated with filling the funnel.
• Lastly, Skout is one of the few mobile apps that are monetizing at a high rate and are currently running at break even.

I’m thrilled to be joining Skout’s board of directors and can’t wait to help Christian and Niklas continue to grow the company into the premier global network for making connections and meeting new people, anywhere, anytime!

“Necessity, who is the mother of invention”
—Plato, The Republic

As we evaluate investment opportunities, we like to dive deep into an entrepreneur’s background and story… What did he study in school? What were his important life choices or challenges? When did he demonstrate courage? How did he come up with the need for creating the company? We typically spend the first 20 minutes of a one-hour pitch meeting asking questions that draw out personalities and motivations.

Some of the most compelling company formation stories stem from a quest to solve an intractable problem that the entrepreneur has encountered personally. Like finding a place to sleep when all the hotels were booked (Airbnb), stopping fraud at eBay (Silver Tail Systems), or the frustrations associated with transferring files (Box).

Daniel Mattes has one of these compelling stories. Daniel was formerly the CEO and founder of Jajah, the main competitor to Skype in the Voice over IP (VoIP) market. Of all the challenges Daniel faced when building Jajah, the one that stood out as the most vexing was combating online fraud. As it turns out, VoIP services, online travel sites, online gambling and virtual goods economies—primarily games—have incredibly high fraud rates. Since hotel vouchers, VoIP minutes and gaming credits require no physical shipment or delivery address, they can be easily transferred around the world as currency. Unfortunately, the situation has gotten so bad that many of these companies will decline credit card numbers from an entire country. Let’s take Afghanistan as an example: Fraudsters use stolen credit cards to create thousands of Skype accounts with $100 credits and then have street teams that sell them for $20 apiece at coffee shops and airports.

The credit card companies are well aware of this problem and end up charging these digital goods companies higher rates and make them liable for all chargebacks. As Daniel recounted the battle to me, you could feel his desperation: “Everything I did to combat fraud resulted in significantly lower revenue. I knew every additional verification, screen and decline path was frustrating and trapping millions of legitimate customers.” Couldn’t there be an easier way to tell apart the people who were holding real cards from the fraudsters? The credit card companies know a really simple way: seeing the actual card. So-called “card present” rates are five times cheaper than typing in a credit card on a website for the reason that if someone steals your credit card number, they can use it for years, but if they steal your actual card, then you usually cancel it immediately.

What if there was a technology that could eliminate the fraud AND increase these companies’ revenue? That’s exactly what Daniel’s new company, Jumio, has solved.  Here’s how it works: Jumio’s flagship product, Netswipe, uses a PC webcam or a smartphone video camera to identify, read and process the actual credit card.  Instead of typing in your card details, you hold the card in front of the camera and the software analyzes the encrypted video stream to read the numbers and identify the logos. It can also tell the difference between a plastic card and a paper copy. All of Jumio’s customers have experienced nearly zero fraud and have actually increased their total revenues after implementation.

We are announcing today that Andreessen Horowitz has completed Jumio’s Series B financing totaling $25.5 million. Here’s why we invested:

• Daniel Mattes is an impressive and determined serial entrepreneur with a track record of attracting top talent and making great products.
• The company secured strong patents and intellectual property protection up front.
• During our reference calls, we heard sentiments along the lines of, “This is wonderfully elegant and Apple-esque. You just hold up the card and the transaction is done!”
• The customer uptake has been spectacular: The company is on track to exceed a $100 million run rate this year.
• One of my partners, Jeff Jordan (formerly the president of Paypal), exclaimed after meeting with Jumio, “I’m pounding the table on this one—I think it will be as revolutionary to online payments as PayPal!”
• In addition to the Netswipe product line, Jumio is launching NetVerify, a solution that uses the same video streaming technology to verify IDs such as passports and driver’s licenses.

As part of the financing, I am thrilled to be joining Jumio’s board of directors and our entire team is looking forward to helping Jumio and Daniel win the market!

It was in this context that I was riveted reading Steve Jobs’ biography by Walter Isaacson. Given the number of different interviews and unfettered access granted to Isaacson, it felt like an incredibly authentic account of Jobs’ life. His greatest accomplishments, mistakes, superpowers, and flaws were laid out about as raw as I’ve ever read.  Steve’s superpowers were many: He was wickedly brilliant, could see around corners, and had unparalleled understanding of how people interact with technology, to name just a few.

Did Steve have an Achilles’ heel?  From the book, one could conclude that he was an extremely demanding boss.  Like a beacon, superstars from every function (e.g. engineering, design, marketing, etc.) were drawn to work for Steve. They described his aura as absolutely overwhelming. And Steve pushed these A+ players to extraordinary, impossible achievements.  Steve’s drive for speed and perfection often resulted in harsh, public criticism—usually directed at his very best people.  Steve would constantly look over their work and declare, “This is shit!” or “This really sucks!”  On my Kindle, I searched the words “shit” and “sucks” and counted 24 instances where he used one of those phrases referring to someone’s work/product.

I’ve had a number of entrepreneurs suggest that this persona isn’t unique to Steve Jobs but a common trait among some of the most successful founder/CEOs in the world. Larry Ellison, Bill Gates, Larry Page, and Jeff Bezos have all been reported as similarly caustic at times. Is this something to be emulated?

As I was reading the book, something struck me like a hammer: Despite Steve Jobs’ choice of words, lack of empathy, and sometimes prickly demeanor, he spent a huge amount of time giving his most talented employees constant, hard, critical feedback.  Thinking about how most companies dole out feedback—if they do at all—it’s usually directed at the bottom quartile of performers versus the top. A typical manager at review time spends 80% of their time preparing detailed reviews on the bottom 25%. The top quartile gets lame, short reviews—the equivalent of “You’re doing great, keep up the good work!” So, a manager takes all that time and effort to get someone doing the work of half of a full-time employee (FTE) to do the work of .75 or 1 FTE. In contrast, Steve Jobs—with his feedback energy directed at the top—manages to motivate people already doing the work of 2 or 3 FTEs to do the work of 10, maybe 20 FTEs. Now that’s serious leverage! Could this be a superpower comingling with a weakness?

I’ve found that the A players are comparably lazy with regards to their potential. Without serious motivation, they will never reach it—or even try.  Despite his delivery, I believe Steve’s critical energy was directionally correct.

Here are a few other suggestions for motivating top talent:

• Flip the feedback equation to 80% of your energy spent on the top quartile.  This is really hard in practice as the feedback is usually more nuanced. And the top performers are usually defensive.
• Infuse some damn passion.  The best people don’t just want money, they want to go on a crusade and make a difference.  An entrepreneur needs to constantly re-enroll the troops with a compelling, authentic story of how and why we will do the impossible.
• Set stretch goals and push like hell to meet them.  It’s great if these goals have meaning as well—e.g. we need the software release out before a major industry conference.
• Find a bogeyman competitor to hate.  (Preferably a company bigger than yours—Microsoft!)  At IronPort, we called out our competitors to the entire company and rallied the team to play catch-up.  We also gave bonuses to the sales teams for rip-outs of a competitor’s appliance and then mounted them like trophies on the wall…
• Work your ass off by example.  A leader who is always present, ridiculously responsive and contributes real, hard work sets the right pace and tone.

A constant challenge for leaders is to find effective AND positive ways to motivate… The very best companies have inspirational founders who have found a way to coax the superpowers out of their top employees.  When the top quartile contributes at 5x to 10x, it makes a serious difference.

If you’re a newly promoted team, it’s time to augment your roster quickly in order to compete. Rockstars that were impossible to attract in the second league suddenly want a tryout. Winning in the first league is all about signing a few new superstars and integrating them effectively with your existing team.

There is a similar analogy with the talent wars at technology companies. For recruiting purposes, when a company’s metrics start to explode and they raise a significant round of capital, the company has effectively been promoted to the “first league”. When a company hits a sustained plateau or is acquired by a large public company, they get relegated to the second league. As far as talent goes, Silicon Valley is akin to 15th century Florence: the best of the best have moved here to work in technology. For all the talk about how hard it is to hire in the Valley, first-league companies can literally have their pick of the best people in the world at every function. This phenomenon is especially true of CFOs and sales VPs as these leaders are usually hired later in the company’s lifecycle and the best people can be extremely picky waiting for the right first-league company to come along.

One of the biggest mistakes I made as a CEO was not hiring these rockstars as soon as it was obvious we had been promoted. I was overly worried about the cultural fit and hegemony of the team. Specifically, after I parted ways with my first VP of engineering, I tried a number of experiments with my existing team. I promoted some director-level managers and then moved the responsibilities under another VP. Things didn’t go well and we ended up slipping a major release by nearly a year. My reluctance to bring on a “been there, done that” executive almost tanked the company.

After royally screwing this up myself, I have some hard-earned suggestions to pass along to others in this situation:

• Once you have a sense that you need to make a change, start the process immediately. It almost always takes longer than you want it to (think 6-9 months, not 2-3 months)
• Aim high—higher than you think you should. Work with your entire network (mentors, investors, customers, partners and friends) to help you triangulate on the top ten people in the world for the role. Try to meet every single one of them, even if they are not looking. It helps to know what to aim for. I was surprised how many superstars were actually very humble, approachable and culturally compatible with my team. This was not my going-in assumption.
• Don’t be cheap. Use great recruiters who will know—or unearth—the crazy-great candidates who are often stuck vesting out at larger (second-league) companies.
• Interview the hell out of them. When we were adding members to the executive team, we did 20+ interviews with the finalists. That process included lunches, dinners and drinks. The very best need to be pushed back on their heels a little bit, not just sold.
• Make the time to integrate the new executive a priority. I learned (through several mistakes) that as the CEO, I needed to be all over making the new person successful during their first few months. Plan on being in the office, actively managing introductions and role definitions, checking in with peers and coaching the group toward success. Don’t do it alone—the whole executive team should actively participate.

I sent a draft of this post to a first-league CEO who is grappling with this exact situation and he asked some very relevant questions. I’ve answered them here:

Q: When do you know which existing players don’t make the cut any longer?
A: If there’s some reasonable doubt about anyone’s ability to scale, you are probably right and you have an obligation to go meet some rockstars to compare. Few CEOs ever say: I was too fast in making a key change with an existing player. I certainly waited too long on several occasions.

Q: Do some players deserve the chance to keep playing in their current role because of history, dedication, effort and loyalty?
A: I’m all for keeping hardworking, dedicated and loyal employees on the team, but they may need to be coached into a different role that is more suited for their abilities. I think every CEO knows who’s beyond-a-reasonable doubt in their roles. If there are people on the fence, then you need to start scouting.

Q: When is it appropriate to bring in rockstars underneath existing execs that are not scaling to help make them successful?
A: Very rare occasions when the existing exec has outrageous strengths that give you confidence they can make it over the hump. Is the existing exec special enough to get a few rockstars interested in reporting to him? That’s a good test.

Q: Clearly this logic, taken to the extreme, without any qualifying criteria, would leave you shuffling your entire organization, is that what you are suggesting?
A: I hate to keep coming back to the sports analogy but if you are playing in the NBA, then you have an obligation as a coach to put the best talent you can find on the court. That said, running a business is a team sport so team chemistry is crucial and you also need role players. But talent is talent and if you are overly loyal to players who don’t have the skills to compete in the first league, then you will put your company at a disadvantage. It’s a balance.

Q: Finally, once you get to the ‘premiere’ level, how do you separate the ‘mercenaries’ from the big league people who want to play for real with you?
A: This is a big risk that is mitigated by interviewing and reference-checking. This was one of my biggest fears that I later came to believe was unfounded.

I also took great pleasure in derailing his procedures: I hid his special cereal spoon one morning and remember hearing him slowly come unglued as he banged around the kitchen. He eventually shouted out, “Hey, where’s my spoon?!” I choked back the laughter and replied, “Your spoon? I don’t know but there’s a whole drawer full of them in there!”  In spite of his idiosyncrasies, he was remarkably self-reflective and would actually change his behavior.  My aunt commented, “You should visit more often, he actually started wearing clothes that matched for a change…”

I’ve come to believe that the main driver of my dad’s eccentricities was a lack of feedback.  There was nobody close enough to him that was willing to call out the strange behavior.  So, left to his own devices, it just got progressively worse.

This dynamic is especially relevant to CEOs.  Most companies don’t have a good mechanism to give the CEO real, honest feedback.  Sometimes the board gives feedback, but it’s often based on impressions at board meetings, perceived success of management hires and overall results of the company; no specifics on how to lead and inspire people, conduct better meetings, or deal with conflicts, to name a few.

Some of the most dysfunctional organizations I’ve observed have evolved from dealing with a leader’s idiosyncrasies: He’s stereotypically passive aggressive, erratic, a bully, or plays favorites.  Whatever the weird behavior, it drives massive turmoil as the company adapts a workaround to the “Emperor’s New Clothes” syndrome.  The frequent resolution is the CEO is fired because dysfunctional organizations underperform their peers and the board finally reacts.  The sad fact is that the vast majority of these CEOs are likely great leaders who had poor role models and lacked frequent, candid feedback to know how to change.

After experimenting with a number of different approaches, I believe there’s an unassuming process to solicit feedback for just about any leader:

• Present it as a private “for your eyes only” gift that has no other purpose than to make the recipient a better leader.  It has to be separate from any other evaluation for advancement or compensation.
• The interviews should be conducted and delivered by a truly independent and unusually competent third-party—typically an external consultant.
• A critical mass of 360-degree feedback should be gathered from 10 to 20 different people. For a CEO: the entire board, direct reports, customers, partners, admins—the more the better.
• The interviewees need to be prepped as follows: 1) this is to make the recipient a better leader, not for compensation evaluation purposes; and 2) everything is kept extremely confidential (e.g. quotes are anonymized and intermingled with a critical mass of other interviewees).
• The questions are short and simple: What are the leader’s three greatest strengths?  Three biggest areas for improvement?
• The interviewer must create a comfortable, trusting environment and press hard for examples.  Ideally, he should read back the quotes to the interviewee to ensure clarity and anonymity.
• The feedback should then be summarized and the raw quotes attached as backup and presented to the leader.

Feedback for leaders is often nuanced and difficult to deliver.  That said, hearing you are passive aggressive from 10 different people described 10 different ways becomes hard to ignore.  And this shouldn’t be a one-time thing.  It’s important for a leader to hear about his blind spots on a regular basis so working on them is periodically top of mind.  For example, I’m not a particularly good listener.  I don’t like sweating the details and I’m pretty disorganized.  To be a better leader, I need to stay on top of these shortcomings and being reminded really helps.

Lastly, the leverage from feedback can be powerful: not only can it grind off a leader’s ingrained dysfunctional behavior, but it can also convince him of the value of a strong feedback process for the entire organization.

First of all, when he walked around the store, he was constantly picking up trash. Little wrappers, paperclips, cigarette butts and the squashed paper cup that didn’t quite hit the trash can. When I first noticed it, I thought he was trying to drive home a point to me personally—after all, I was the assistant janitor—but it became clear he wasn’t just picking up trash in front of me, he did it all the time, naturally and quietly. You never heard him say, “Can’t they make it into the wastebasket?” He just picked it up and put it in. He was also always straightening: fluffing pillows, righting picture frames, sliding back barstools and getting down on his knees to level a rickety table. One day, the intercom rang out in the back of the warehouse, “Scott Weiss, to the front for a carry out.” Recalling my work ethic in junior high school, I certainly didn’t sprint to get there; I arrived just in time to see my uncle following a lady out with an end table in his hands. “Doh!” He never mentioned it—just did it.

Although this was a high-end furniture store, Uncle Ed was also unusually thrifty. He didn’t cut corners on quality but abhorred waste. “Scott, you don’t need to use that much bubble wrap for a lamp. Here, let me show you.” At home, he would set paper towels on the counter to dry after washing his hands: “They’re not dirty, just wet.” OK, thrifty was an understatement.

There were 80 employees at the furniture store and Ed knew every one of them by name. He knew their families. And whenever he passed anyone, anywhere, he’d have an authentic interaction with them—not a glad-handling schmooze. “When does your son graduate?” “How were you able to fix that scratch? Wow, looks perfect.”  Always with a smile and interested eyes that communicated, “You matter to me.”

In a competitive, low-margin, high-hustle retail business, Ed wanted to project Bloomingdales with a Wal-Mart budget. The showroom had to be beautiful, spotless—just perfect to look the part. Customer service was paramount. In order to be successful, every employee had to have this mentality.

Although we didn’t call it that then, I’ve come to believe that Ed was creating a company culture. We often get wrapped up in Silicon Valley with the “new-new” way that we can forget many times we’re simply rediscovering well worn lessons that date back to the beginnings of commerce.

Like it or not, everyone watches the leader. What does he do? What does he say? What does he not say? How does he react? His behavior is mimicked and amplified throughout the organization. The CEO and the leadership team ultimately set the company culture with their behaviors verses a set of policies rolled out by the HR department. Inspired by Ed, here are a few takeaways that I believe apply to all startup CEOs:

• Naturally and quietly demonstrate, on a regular basis, that no chore is beneath you: clean up after a conference room lunch, carry the heavy crap to a trade show, replace the water cooler, wipe up the spill. When everyone pitches in a little, you can strip out 5% in overhead.
• Do your own calendaring and wait as long as possible to hire an assistant because once you do, everybody suddenly needs one. One great office manager can scale to ~50 employees if everyone calendars themselves.
• Write thorough, thoughtful, candid reviews and be on time with the process. If you don’t take it seriously, nobody will.
• Get to know everyone by name and something about them—no excuses up to 500 people. This was really hard for me because I have a terrible memory, always have. Get creative: we printed out flashcards from the badge database when I inherited 900 employees at Cisco.
• Prepare ahead and interview candidates hard—don’t wing it.
• Be noticeably thrifty: fly coach, stay in cheap hotels, eat in diners.
• Be unbelievably responsive, available and punctual.

Some of the suggestions above are simply about making a CEO more approachable—one of the hardest and most important attributes for a leader to exude. Are people comfortable disagreeing with him? Will they tell him when something is wrong? In my experience, the more formal the CEO is, the more formal the leadership team is and thus they all become less approachable. And it’s not just about wearing jeans—it’s about behavior. My uncle’s store was a very formal environment: he wore a tie and everyone addressed him as “Mr. Kalin”. That said, he was able to overcome this outward formality with fanatic friendliness, a familiarity with everyone and a willingness to get his hands dirty. Approachability, however you create it, is absolutely critical to creating an innovation environment where employees speak up and challenge the status quo.

“We like what you guys are doing but there’s no way we’d replace the aorta of our communications infrastructure with a beta box from a 20-person startup.”
—Director of IT, Fidelity Investments (circa 2002)

Call it the enterprise startup conundrum: how do you earn legitimacy if no one will give you an opportunity to become legitimate? The enterprise world is different from the consumer world: barriers to entry are higher, switching costs away from incumbents are bigger, and the risks for failure (for both buyers and sellers) are greater. And while there’s definitely no single right answer, an enterprise startup that can’t crack this conundrum is a dead enterprise startup.

At IronPort, we had built a radically better email gateway. It crushed the popular and arcane sendmail—the free, open-source software that we aimed to replace—in every dimension. Our product was even cheaper to own, as it ran on one-tenth the hardware, but we were unproven and email was mission critical. To make matters worse, for our early adopter industries (ISPs, media, tech, and financial),  no email service meant no work. We were so good, but yet so puny.

We felt like the little kid that kept getting turned away at the height chart at the rollercoaster—we can handle the ride, just give us a chance! Somehow, we had to find a way to look bigger and more credible quickly. After an intense brainstorming session, we hit upon a really important concept: since perception was reality, any weakness that the customer couldn’t see and couldn’t touch did not exist. By being absolutely maniacal about each of our customer touch points, we would appear to be far bigger than we were. No matter how rinky-dink the “man behind the curtain” was, it didn’t matter because the Great Oz would be massively impressive. We called it “Project Blowfish”.

We examined everything the customer could possibly touch. It had to look like it came from the big boys: Cisco, Microsoft or Apple. How would they do it? We asked and researched. Here’s what we came up with:

• We looked big. We paid up for the best graphic designers for the website, business cards, and the sales collateral. Heavy cardstock business cards. High gloss datasheets and well-written content. Smart, insightful—as perfect as possible.
• We felt big. Our appliance that sold for $50,000 was at its core a cheap-looking Dell 2650 2U rack-mounted server running our software that cost $3,500. At great debate from our board, we hired IDEO to design a thick, aluminum faceplate and backplate with our branding. And they did it for equity. (Here’s a picture: http://www.ironportstore.com/web-security.asp). The shipping box was packed smartly with very high quality cardboard that had our logo silkscreened all over it. It was reminiscent of how Apple packs it products.
• We projected total professionalism. For the physical manual, we took inspiration from the Sony Handycam and the Cisco Router manuals. It had clear diagrams, was well organized, and had a laminated Quick Setup guide. We shipped all of our evaluations out via Fedex next day, which made a really strong impression on customers who typically waited weeks for competitor’s products. They got it much faster than expected and when they opened it up -everything they saw was impressive.
• Our ads were on brand as well. We took out full-page ads in major IT publications. Great product pictures, clear, clean, and uncluttered messaging.

All of these details mattered, but the key to the entire plan to make our little company appear big was to perform like the very best large companies. For us, this meant dramatically beefing up customer care (CC). In general and especially in high tech, CC had been a backwater—treated like a cost center to be minimized. Since this was arguably the most important early customer touch point, we took a completely opposite approach: we treated it like a marketing expense. With a firm belief that this was the primary catalyst for word of mouth, we invested heavily in the entire post-sale ecosystem. Our approach was to answer email inquiries instantly and telephone calls on the second ring with little to no hold time. We concentrated on how to deliver the best possible experience first and then went back and figured out how to cost-optimize it later. Here are a few ideas that ended up working:

• For the first six months (until we were absolutely overloaded), the entire leadership team was on the CC email alias. We were aware of every issue, saw the thoroughness and timeliness of the responses and chimed in with suggestions. This helped set the customer care culture: it was damn important and always had a bright light on it.
• We hired the best of the best to lead CC and gave them a ton of autonomy to make decisions quickly. (I’m extremely proud that our first two heads of CC subsequently became venture-backed CEOs: Cyan Banister and Patrick Peterson.)
• We hired the best all-around athletes, paid them above market, trained the hell out of them and then gave them a legit career path into sales engineer, engineer or CC management. We hired for friendly, intelligent and responsive…
• We tracked all of the metrics relentlessly and then posted them everywhere. Big screen monitors hung in CC and showed constantly moving progress charts which then linked to internal status websites and dashboards. We had green signal lights around the office that turned yellow and red when a customer was on hold too long. The visibility throughout the company helped to make it a special place to work.
• We opened in different time zones early for 24-hour coverage. We found that the best people would rarely work the graveyard shift so it was much better to hire in a time zone when they were naturally awake. I remember this saved our bacon during our evaluation at Goldman Sachs. Goldman, based in NYC, had a CC acid test for hot tech companies, especially ones from California. They’d send in an urgent email at 7am EST or 4am PST. Our newly opened CC center in London picked it up in 30 seconds and gave a detailed fix and thorough answer. They were floored.
• We had a direct connection between CC and product management with regular reviews. In fact, some of our best ideas came from customers working through problems with a CC rep.

Ironically, the most fanatically apostle customers were the ones that had the biggest problems—catastrophic failures. It was during those times that we showed our mettle. We had a funny saying about it: “When you save someone from drowning, they quickly forget that you were the one that pushed them into the pool in the first place…” In retrospect, by focusing on all of the touch points in an effort to look bigger, we actually became that company. What started out as a bit of a façade became real and we grew into the oversized shoes.