Balance of Power in #startups

Startups are like small countries–if the balance of power is not maintained, bad things like death and destruction happen. The following is a set of scenarios you want to avoid.

All Hail Engineers

The technical half of a two co-founder startup dominates all decisions. He starts out as the CTO but muscles his way into the CEO spot, leaving the business co-founder with a VP of Sales position. The company plans to hire 50 new engineers and a minimal sales staff because the CEO believes the product will “sell itself”. Support is dying for more resources, marketing is dying for more resources, but engineers are paid way over market. This is reminiscent of Facebook in its early days and you’ll find many stories of talented people leaving the company because they were unhappy with the fact that the culture was too engineering-centric. Remember the movie “Social Network” by Aaron Sorkin? Avoid that.

Rowing the Boat

The business half of a two co-founder startup dominates all decisions. He is CEO and there is no CTO, just a bunch of engineers. The company is very sales-focused and eschews things like R&D. Engineering is viewed not as a source of innovation but a team of slaves “rowing the boat”. This makes me think of today’s Yahoo. The talented research team was fired, many of the engineers have jumped ship, and one of its multiple personalities thinks of itself as a content company. Yahoo isn’t a startup anymore, but there’s a strong tendency to forget–especially as startups grow up–that in the tech world you innovate or someone will innovate you out of existence. Without a strong engineering voice, you might as well be walking the plank.

Microcosms

The first two scenarios are the most glaringly obvious ones that are easy to spot–others take a trained eye. When a startup hires a stable of VPs and each one is off to the races on Day 1, it’s hard to have them all run at the same pace. Some departments may not even have a horse in the race! It’s subtle, but you will be able the see the effects of unbalanced power. Instead of quick and decisive course corrections, you’ll get reactionary jerks. For example, when Netflix announced that they were raising prices and killing off their DVD service in a cold email, I suspect something was awry in the top leadership because up ’til then, Netflix was known for its customer relations. They refunded customers when service outages happened, CEO Reed Hastings routinely wrote candid emails to customers explaining decisions, employees broadcasted their uber-flexible vacation policy, etc. Certainly, a balanced leadership would not have supported such an uncharacteristic move?

Maintaining Balance

This is damn hard for a startup. You start with 1+1–that’s easy. That’s a simple handshake. You add a VP or two after you get your Series A–not too bad. That’s a basketball team huddle. You add a few more to grow your other departments after you get your Series B–hm… That’s a football team huddle. You add SVPs and let’s not forget the ever-growing Board of Directors after your Series C–shiznit. That’s a village. It’s a challenge, but the company has to listen and weigh equally, every single voice all along the way, even if some are quieter than others and especially to those voices that are missing.

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