Month: March 2023

What you need on day one is to ratchet up expectations, energy, urgency, and intensity.

You can engulf your organization with energy, step up the tempo, and start executing the basic blocking and tackling with a lot more focus and higher expectations. It will feel like busting a log jam. All of a sudden, everything is moving and shaking.

Don’t let malaise set in. Bust it up. Raising the bar is energizing by itself.

MBO causes employees to act as if they are running their own show. Because they get compensated on their personal metrics, it’s next to impossible to pull them off projects. They will start negotiating with you for relief. That’s not alignment, that’s every man for himself.

The questions you should ask constantly: What are we not going to do? What are the consequences of not doing something? Get in the habit of constantly prioritizing and reprioritizing.

I always operated as if I owned everything, whether I did or not. That didn’t always sit well with peers or superiors. I have since always tried to increase our people’s sense of ownership so they will act as owners. That mentality needs to be nurtured.

We coped in ways I have used ever since: hire people ahead of their own curve. Hire more for aptitude than experience and give people the career opportunity of a lifetime.

We still say, “Architecture matters”at Snowflake; all of our successes at the three companies where I’ve been CEO trace back to superior architecture.

Underperforming tech assets seemed to follow me around like a bad habit.

I had to explain that there is no such thing as an override for CEOs. I said, “You can go to the board and see if they’d like to fire me and give you your old job back. In the meantime, we are doing as I outlined.”

There are times you need to check your own views at the door and bet on the conviction of others.

Today I am less driven by career ambition than by a hunger for sport, action, excitement, teamwork, and a never‐ending pursuit of self‐improvement.

When you take over a company with a wide range of issues, you have to start solving the more straightforward problems as fast as possible so you can narrow the focus on the harder ones. Bringing in some proven performers was a no‐brainer.

As I got more experience, I realized that I was often just wasting everybody’s time. If we knew that something or someone wasn’t working, why wait? As the saying goes, when there is doubt, there is no doubt.

For a more recent example, remember that when the Coronavirus pandemic first hit the US, lockdowns were described as a short‐term strategy to stop the contagion from overwhelming our healthcare system. But before long, lockdowns became the designated method to control the pandemic indefinitely, dragging on in many states for well over a year. Pandemic responses began to seem like a “make it up as we go along”approach to policy, completely untethered from any clear mission.

Not that there’s anything wrong with financial metrics or showing progress to investors or shareholders. I take those targets very seriously, but they are never our mission.

Investors and executives take huge risks on start‐ups that need to be rewarded when a company is successful.

Urgency is a mindset that can be learned if it doesn’t come to you naturally. You can embrace the discomfort that comes with moving faster instead of avoiding it.

Only the government can print money; the rest of us have to take it from somebody else.

The more high‐achieving people who desert their current employers to join us, the more we are winning.

As long as there are no new challengers with new ideas, you can do fine with an incremental approach. But in free markets, somebody is always thinking about dramatic changes. You’re much better off doing so yourself rather than hoping it won’t happen.

Folks prefer narratives that make them feel safe, however removed from reality those narratives might be. Intellectual honesty is a frequent casualty in business.

If you don’t know how to execute, every strategy will fail, even the most promising ones.

One of my favorite observations is that “good judgment comes from bad judgment.”Experience may be overrated by some, but it’s hard to find a substitute for it.

When we promote inexperienced managers to senior roles, chaos ensues. It becomes the blind leading the blind. Organizations cannot scale and mature around inexperienced management staff.

We sometimes use the expression “that dog won’t hunt”—not in reference to a person but to a strategic approach that just isn’t working, no matter what we do. It’s hard to say that if you’re irrationally attached to a strategy.

A strong product will generate escape velocity and find its market, even with a mediocre sales team. But even a great sales team cannot fix or compensate for product problems.

You should resist this temptation by remembering an old joke: “Consultants are people who borrow your watch, tell you what time it is, and then keep the watch.”

The bottom line is that great execution can make a moderately successful strategy go a long way, but poor execution will fail even the most brilliant strategy.

Hire Drivers, Not Passengers, and Get the Wrong People off the Bus

Passengers are largely dead weight and can be an insidious threat to your culture and performance. They inadvertently undermine the mojo of the organization. They sap the animal instinct and spirits you need in business to thrive.

“How do I know if I’m a driver or a passenger?”My flippant answer was that he’d better figure it out before I did.

Don’t surrender to the temptation to go into wait‐and‐see mode, hoping that time will reveal everyone’s true value. You need to make things happen, not wait around and hope for the best. You have to practice sizing up people and situations with limited and imperfect information—because that is all you are ever going to get.

If you don’t act quickly to get the wrong people off the bus, you have no prayer of changing the overall trajectory. We often believe, naively, that we can coach struggling teammates to a better place. And sometimes we can, but those cases are rarer than we imagine. At a struggling company, you need to change things fast, which can only happen by switching out the people whose skills no longer fit the mission or perhaps never really did in the first place.

those standards, that’s fine too. I know this philosophy may come across as harsh. But what’s even harsher is not doing the job you were hired to do as a leader. If you can’t find the backbone to make necessary changes, you are holding everyone else back from reaching their full potential.

Then I started moving faster to replace people who were badly suited for their roles. And often not even catastrophically bad, just worse than the caliber of people we knew we could hire to replace them. This process of systematically upgrading the talent at each key role is called “topgrading,”a strategy developed by hiring expert Brad Smart.

You can’t wait till you have an acute need; that is a reactive posture. If you wait for a vacancy to open, you can only tap the then‐current supply, which may be quite suboptimal. So create a vetted, prioritized list of possible candidates for each critical role you are responsible for.

The problem is that people don’t learn from posters. Like children and pets, they learn from consequences and the lack thereof. If you want to drive a more consistent set of behaviors, norms, and values, you have to focus on consistent and clearly defined consequences, day in and day out.

Accountability is uncomfortable because we all live with the anxiety of not being good enough and the anxiety of telling others they aren’t good enough. But if you want a great company, you can’t give out free passes for mediocrity. Good enough is never good enough.

Culture doesn’t just happen because of a CEO’s declaration or because senior management exhibits the willingness to act on core values. It happens when most of the organization is willing to defend and promote those values and call out deviations on a day‐to‐day basis.

The paradox is that any business that’s large enough to have functional silos must pull together as if these organizational delineations barely exist.

My role as CEO is to facilitate their initiative and encourage them to reach creative solutions, not simply to tell them what to do. Everyone gets a seat at the table as we hash out challenging issues.

I am generally not a fan of just trying things, throwing ideas against the wall to see if they stick. We lose time and waste resources that way. Let’s try a rifle shot instead of a scatter gun.

Customer grievances are best solved by establishing proper ownership, reducing internal complexity, and removing bureaucratic intermediaries.

Good sales managers are constantly hiring and firing, which helps them develop a clear sense of which candidates are likely to become gunslingers.

Never simply throw them into stone‐cold territories without a viable plan or support. That’s setting them up for failure, which will lead not only to their own failures but to your reputation as a leader who breeds failure.

I have often distinguished between actual profitability and what we call “inherent profitability.”

The question is what would profitability look like if we substantially stopped investing for future periods altogether? Inherent profitability is driven by unit economics, or the gross margin line in the profit and loss statement. If things cost more than what we sell them for, the business will obviously never become profitable. The next question is how operating efficiency will benefit from increased scale. Those answers help us understand what the inherent profitability of the business really is.

So they play it safe. But trying to hang on to a modest business doesn’t mean you have a viable business.

How can I possibly answer those questions for someone else’s business? The answers are relative and situational.

If possible, always own your distribution rather than delegate it to a third party. Nobody cares about selling your product more than you.

It takes intellectual honesty and humility to admit how big a confluence of factors gave rise to your original success. Just because you struck gold once doesn’t mean you know how to do it at will.

I know I said earlier that growth should be prioritized over profitability, but when it costs much more than a dollar to generate a dollar, you don’t really have a business.

I cannot emphasize enough how important it is to have strong financial oversight and discipline on sales compensation. You may be tempted at some point to make your comp plans more generous to recruit and retain top sales talent, but abandoning financial rigor can be a fatal mistake—not just during the planning stages of each year but every day, literally from one sales deal to the next.

But the most valuable leaders are those who can combine the scrappiness of a start‐up leader with the organizational and diplomatic discipline needed in a big company. Those who can scale up or scale down as required. Those who can set aside their experience when necessary, apply first principles, and think through situations in their elementary form.

When a truly new market does appear, it’s usually due to a confluence of industry‐wide factors and circumstances, not the innovations of just one company.

The issues we faced in scope, expansion, and runway now preoccupy my thinking. As a leader, you need to make time to assess these issues from day one; don’t wait for the crush of urgent business to calm down.

Having a bunch of roles on your resume without clear success at each one can become a strike against you. You start to look like a passenger, not a driver.

Start‐ups typically need hard drivers, passionate leaders, goal‐oriented and achievement‐focused personalities—the kind of people who are easily frustrated in larger, more rigid, slower to evolve enterprises. We often liked people with a chip on their shoulder, who had a lot to prove to themselves and others. But it is easy to see how others would be less enamored by such personalities.

The longest‐serving employees tend to be the most prone to nostalgia, constantly reliving the romance of the early days. Those days always seem better in retrospect than they did at the time.

Dan Warmenhoven, the highly successful CEO of NetApp, once remarked that every great CEO has a large ego because you simply could not do this kind of work any other way—but if you can’t keep that ego in check, you’ll be insufferable and therefore ineffective. That’s an uneasy balance.

Even so, continue to share credit as much as possible with the founders. Never lose sight of the fact that success takes a village, and the founders are still honorary members of the village.

Conceding the board’s authority for every major decision isn’t playing it safe. In fact, in the long run it’s much riskier than asserting your own authority and legitimacy and taking responsibility for your own decisions.

You’re not there to make friends or get a gold star for obeying orders; you are there to win.

Apply those experiences, and the insights we’ve discussed in previous chapters, to become a truer, more honed, more effective version of who you already are. Finding your own path, however long it takes, will unlock your personal power.

At the end of the day, great leaders at any level have great outcomes. You can be the most empathetic, charismatic, and popular leader ever, but none of that will matter if your business falls short. And when it does, there will be nowhere for you to hide. No one will care about your legitimate explanations, let alone your excuses. No one will care about the unlucky breaks that were completely beyond your control. Is that fair? Of course not! But it’s the world we live in, the world we have to accept as leaders.