Transitioning from Large to Fast (and Fast to Large)
In my roles as headhunter, VC, head of talent, and CEO, I've interviewed roughly 2,500 executives over the last 18 years, each interview lasting between an hour and 90 minutes. Interviews are invasive and revealing. I take them seriously. For me, each of these interviewees becomes an important relationship, and over time a bit of an experiment. How and why are some executives successful? And why do some fall short?
Over the years, and across a couple thousand instances, patterns have emerged.
One pattern in particular relates to the importance of stage-specific capability. It’s a pattern we pride ourselves in understanding at Mercato. My first lesson on this came when I was a rookie headhunter at The Diestel Group. We were retained to fill an SVP of Sales role at a hot startup with $50mm in recent funding from top-tier, Bay-area VCs. We’d narrowed the choices to three candidates. Two had early-stage growth experience. One did not. But all of the candidates had killer industry and function-specific experience. And all of them had a large and relevant rolodex (i.e. great connections). Our firm—and the somewhat new CEO of this venture—argued heavily that one of the two executives with startup experience should be hired. However, one of the investors on the board aggressively argued for a candidate that came from a large, well-known company, but had no startup experience. This investor was so excited about the company that he assumed the CFO role. He was a New York investment banker with prestigious companies and titles on his resume but no startup experience.
The CEO of that company is still a friend. We talk from time to time. To this day, he counts this decision, in which he deferred to the investor-turned-CFO to hire the “big-company” candidate for the critical SVP of Sales position, as the company-killing decision. The candidate simply couldn’t do the job. After hiring him, they realized he had three executive admins at his previous job, and he mostly played golf every day. Over the years, I heard reports that this Sales SVP literally didn’t know how to use Excel or how to create a PowerPoint presentation. Because of the dot-com implosion that occurred just six month later, and the nuclear winter that followed, the company never recovered. Investors lost millions.
He was a big-company figurehead, and this newly VC-backed environment was like a different planet to the poor guy. He fell flat on his face.
I’ve seen some version of this story play out repeatedly over the last 18 years. In fact, it is pretty rare that a “big company” executive is a fungible talent in both an early-stage (1-100 full-time equivalents, or FTEs), or a growth-stage (100 to 400 FTEs), and a large corporate environment. There are so many things about these environments that make them fundamentally different than a late-stage company. The VP of Marketing of one startup who had come from HP said it well;
“In my startup right now, my entire marketing budget is $1.2mm. At HP, my roll-out budget for just one new product was $50mm.”
But it’s not just that it’s the same discipline with smaller numbers. It’s entirely different physics. It's like jumping from Newtonian to Quantum or vice versa. Sometimes an executive can handle both environments. But in too many cases, expectations and learning styles are just too incongruous.
As a VC and headhunter, I’ve watched a few hundred executives transition successfully—and unsuccessfully—between these environments. I’ve also operated in all three environments as a head of talent and CEO. I offer the following suggestions to help executives who are endeavoring to make the transition from early-stage to large corporate, or from large corporate into early-stage.
TRANSITIONING FROM FAST TO LARGE
Quality. Then Cost. Then Speed.
If you want to look like a fool in the large-company world, then light some fires, try something new, and don’t be afraid to fail. But conversely, if you want to be brilliant in the startup world, then light some fires, try something new, and don’t be afraid to fail. In fact, fail fast. Some will tell you that even in a large company environment, you should move fast and break things. It’s probably true that doing so would be for the ultimate benefit of the corporation, but mark my words, it will be at the expense of your longevity in that firm.
But hey, you’re a startup person anyway; you don’t care about tenure, right?
Coordinate Your Team
This one may be hard to understand, but functional depth and breadth of ability is invaluable in a startup—everyone is a Swiss Army Knife. But in the corporate world, functional and executional integration is very often not helpful if you’re in an executive role. It’s better to spend your energy coordinating with other leaders and delegating than to do some grass-roots analysis yourself in the name of getting things done quickly. Really great startup executives are willing to do whatever it takes to get to an MVP, or a first customer, or traction, etc. They will spreadsheet or PowerPoint, or code, or use a soldering iron if they need to. In fact, this is part of the appeal of working in a startup. It suits an ADHD person quite well.
Don’t get me wrong. I’m not saying large company executives can’t—or wouldn’t—do the same. They can and they may. This isn’t a dig on them. It’s a dig on you.
No matter how excellent you think your MVP is, it has holes— lots of them. You don’t even know what you don’t know about rolling products out, or conjoint analysis, or swim lane charts, or managing multi-departmental execution and communication, or all kinds of things that are needed to get something properly out the door in a corporate world. So settle down, collaborate, and coalesce your team. The final outcome may not look like your brain child—but it isn’t about you.
The staff meeting isn’t for making decisions, it’s for affirming that which everyone already knows. In my experience, startup executives are much more willing to break new news in an executive staff meeting. It’s sort of the point of the meeting. In the corporate world, that is how you immediately draw multiple enemies in one moment and jeopardize all your efforts due to lost horizontal sponsorship. This isn’t just a large-company thing, its best practice: never introduce new information in a weekly or monthly executive staff meeting if it can be socialized for weeks prior thereto. In a large corporation it’s a fatal error. Always pre-wire those meetings.
Generate buy-in and sponsorship. Then do it two more times. Then present the information in a meeting (as though it were new information).
TRANSITIONING FROM LARGE TO FAST
Don’t Say, “We don’t even have…”
When executives with large-company experience first enter the startup world, they most often are completely confounded. They’re AMAZED at what doesn’t exist in the company. It doesn’t take long for them—and their co-workers—to learn they’re not in large-company-Kansas anymore. And so, in an attempt to cover their own situational inadequacy, they will often put down the team, the company, etc. It sounds something like; “It’s so bad here, they don’t even have [fill in the blank… could be a conference booth, marketing materials, an HR department, a defined process, whatever]. So here’s the thing: it’s a startup. Executives who have been through a couple startups—especially a successful one—know there’s no end to what most startups DON’T have. But the implied rules of startup accountability don’t allow someone to use the fact that there’s a dearth of resources, process, or direction as an excuse—for anything.
The problem isn’t this startup. This problem is endemic to all startups.
“Startup people” know this, and they’re comfortable with it. If it’s truly needed, then it’s your job to make it, do it, find it, materialize it—whatever. But pointing out that this company—and everyone in it—doesn’t have their stuff together is not an exposé on them—it’s an exposé on you. You are officially in the trenches of a brand-new war that has never been fought.
The fog is thick in this new war. Don’t blame the soldiers or generals for not knowing exactly which trail to walk to destroy an enemy that NOBODY is even sure exists. Instead, pull an overnighter for your platoon and go on a reconnaissance mission by yourself, do some dirty work when the enemy is asleep, and then come tell your team about it… WHEN IT WAS SUCCESSFUL.
Otherwise, shut your yapper about what you don’t have, and start making it happen.
Efficiency is Not a Thing... Yet
I believe the fundamental difference between startup culture and large corporate environments is that startups are principally innovation-driven environments, and large companies are efficiency-driven environments. I know that’s going to offend a lot of you larger-company types. I’m fully aware that some large companies have introduced discontinuous products to market, but it’s by far the exception. Large companies are not a vacuum of innovation, and startups are not a vacuum of efficiency, but they each tend strongly respectively.
An executive who comes from a larger environment often uses the language of efficiency to solve problems that necessitate innovation-driven thought processes. “We need KPIs,” or, “we need to get an ERP system,” or, “we can’t build something when we don’t even have the requirements from a product team.” All are all familiar gripes from the non-startup-native. Instead try the following: “In the last week I’ve been working until 3:00am every night to build a mockup of the product using Balsamiq. It’s rough, but I think this will meet our potential customer’s need.” Or try, “Since the product isn’t quite finished, and since we don’t have any leads, I spent the last week cold calling some of the key figures in [company/industry you’re targeting], and I have three CXO would-be buyers that said they’d give their first born child if something like this existed. They’d be glad to beta test our product when we’re ready.” So, although measuring KPIs is important, try to understand this company’s current context and find ways to help accordingly.
For example, when I was CEO of Chargeback.com, I had to let go of a super talented person. This was their first run at a startup. On this employee’s last day, they thoughtfully spent time to do a hand-off debrief. Their most significant endeavor prior to their last day was inventorying our office equipment to make sure everything was accounted for. We were 18 employees, not yet profitable, and burning cash every month. Inventorying equipment would literally be the last thing I could possibly care about for the company at that moment. It was a confirmation for me that parting ways was the right move, even though this person was otherwise an impressive human being. By the way, we turned that company around… but that’s for another article.
Good, Better, Best… and Good Enough
If—or more strongly, “when”—executives in large companies become petty and start pointing fingers at each other, it often has something to do with how one of the other executives is not communicating adequately or somehow skipped a sub-step of a sub-step of a step-step. “How dare they!” The essential root of the indictment; speed over quality. It can be a fatal error. But when executives in a small company get petty and start pointing fingers at each other, it will often have something to do with taking too much time—essentially over-prioritizing quality over speed.
Did I mention that a startup with <30 heads will often not have a QA person? All audit functions are the proverbial ugly stepchild of the startup world (cough cough... HR…cough cough.)
This may sound easy, but if you spent ten plus years in a large corporate environment, and you have recently joined your first early-stage company, it’s incredibly difficult to see the forest through the trees when it comes to managing the speed-quality-cost paradox. You are from Mars and your new team lives on Venus. I wish I had some great advice about how to acclimate, but I don’t.
Quality, Speed and Cost
“Ready, Fire, Aim!” and “If you’re not breaking things, you’re going too slow.” I heard the former phrase was used by an experienced, frustrated large-company executive in reference to a new acqui-hire talent from a small-company whose background was mostly earlier stage—and who was not performing well in the new large company. The latter is a virtual mantra in the startup world and a quote I heard from a “unicorn” CEO. You can imagine the reception these approaches have in a mature company vs. a startup company. The first indicates a swift execution at the expense of quality. The second champions the “fail fast” mantra of the startup world. The fast-and-loose approach is necessary and productive in a startup. It’s a recipe for failure in mature organizations.
Finally, if you’re the CEO or hiring manager in either of these environments, it’s critically important that you make stage-appropriate experience an integral part of your job requirements for the role. I’ve seen too many early stage CEOs regret a key hire because they fell in love with a candidate’s resume cache (which so often comes from large, recognizable brands/companies) and they didn’t consider the importance of exposure to THIS particular stage. I contend that stage-fitness is AT LEAST as important as functional experience. Since I also believe that learning agility is of greater value than existing knowledge, I’m convinced that stage fitness is more important than functional experience.
TechBuzz welcomes Dennis Wood as a guest author-expert on growth scaling, leadership, and people strategy. Dennis leads the human capital practice at Mercato Partners, helping Mercato's portfolio companies navigate human capital issues specific to the early and growth stages. Dennis can be reached at firstname.lastname@example.org.
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