/ Leadership

Tech Startup Leadership - Does It Even Matter?

Let's talk about leadership...technology startup leadership. The general consensus is that leadership is ESPECIALLY important for tech startups. The general consensus is, as is so often the case, dead wrong. Read on to learn how leadership is literally the least important of the "Big Three" factors that lead to startup success. We will also do our best to debunk a few myths about leadership along the way.

Why Should You Listen to Me

I have personally been in charge of over 50 teams, ranging in size from 3 to over 150, in military and civilian organizations, in both peacetime and forward-deployed situations...and I have consulted on enterprise-level technology transformations for companies ranging from "mom and pop" shops to household names. I have developed an innate ability to recognize both good and bad examples of management, leadership and corporate culture almost instantly. I have worked for managers of just about every kind. I fondly remember those that I would have followed to the ends of the earth, and wince when I remember those that could not pour pee out of a boot if the instructions were written on the heel.

Moreover, I am a lifelong learner with a desire to amass as much knowledge as possible, particularly in areas where I have both interest and aptitude, such as building and leading high-performing teams. It's what I have done and will continue to do. I still apply lessons, both good and bad, that I learned at my very first job (McDonald's), and every subsequent job, to increase the performance of every organization I come in contact with, whether they are paying me or not.

I have never failed. I have either succeeded or I have learned.

One last point here - if you are looking for the typical "leadership" blog post, replete with positivity and group-hug goodness, you might want to strap in. I have not, do not, and will not sugarcoat anything, on this blog or anywhere else. Luckily, I have a large depth and breadth of expertise, backed up with hard earned lessons that can only come from practicing leadership in the real world, and am seldom wrong in these matters. That is not always the case with other areas of my personal and professional life. If I suggest something to you about how to make your startup better, ignore it at the peril of yourself and your company. Just sayin'.

One Caveat

As you read through this, you will find yourself saying, most likely out loud, that there are several ingredients missing, and there is so much more to the sucess or failure of a startup than my "Big Three". Hopefully, there are at least some others present when you do so, and you are not, like me, spending increasing amounts of time talking to yourself, talking to people that are not within earshot or otherwise careening with ever-increasing speed toward mental frailty and general senility.

Anyone that knows me or has been reading my stuff knows that there are two things I like to do for my clients, and they are both extremely effective at driving toward effective outcomes. The first thing I like to do is take things that are extremely complex and come up with ways to make them simple, or at least appear simple. I oftentimes like to come up with a simple device that everyone can understand. It's no surprise that this can be traced back to my days in Business Intelligence. If you have ever been on-site with me longer than a week or two, you have most likely heard me say, with a nice shiny dashboard projected on the screen, "Green, Yellow, Red; even an executive can understand that."

The second thing that I REALLY like to do...and it is very often even more effective than boiling down the complex...is the diametrically opposed action. I like to take things that SEEM simple and make them complex...or, more accurately, expose the complexities therein. It's just a very effective device we consultants like to use, as it forces folks to think about things that they have not thought about before, and never might think about, without someone forcing them to acknowledge all of the myriad minute moving parts. This is especially germane in the type of transformational projects I like to deliver, as something small can turn into something big very quick...and in case you never heard this, there is a bit of a pervasive "blame the consultant" problem out there. It's true.

Before we get into the "Big Three", there are a few things that I want to highlight, as they can really become large problems for you and your startup.

Let's start with a quick...

case-study-banner

I want to keep this simple and short...and also try to avoid being too critical of folks that I have worked with in the past. So...just the facts. And in bullet form. Hopefully, they will stick around for a few minutes in your headspace and be illustrative to whatever else you read below.

  • I worked for a software company based in Silicon Valley in the late 1990s and early 2000s -- as in, bursting bubbles.
  • The well-published business model was to have an IPO (optional) and get acquired (not optional).
  • The leaders of the company had successfully grown and sold a software company to a larger software company in the mid 1990s. Due to this fact, they were convinced that they knew what they were doing.
  • The company that I worked for had a, without question, great product in an exciting niche.
  • The company that I worked for had, without question, poor luck, as did everyone that was trying to replicate what had been done just a few years earlier. It was just a perfect storm of fool's gold that was ripe for a significant correction, which, as we all know, happened.
  • The company that I worked for had, without question, leaders that were completely capable of having great success, as long as there was no adversity or bad luck. In short - as long as there was no genuine leadership required. When the storms came, they were completely overmatched.
  • We were forced to endure three separate layoffs and an eventual acquisition for pennies on the dollar for what the company was once worth.

Like I said - try to keep those thoughts of an often-repeated example in your head as you read on. Now, let's address a couple of key points.

Don't Be Tricked By Your Success

We have all heard, and many of us have seen first-hand, examples of people being tricked by their own success. If you read the Case Study above, you know my experience. Imagine someone running a tech startup that would think the following: I grew this thing from a $10 whiteboard in my parents' basement into 200 people. I am a leader.

First of all, if this is you, there is no guarantee that you are a leader, just because you were able to grow your company. In fact, there is also no guarantee that you are an effective, or even halfway decent, manager...or that you could even find your ass with both hands. Your abilities as a leader have very little to do with the success of your venture, at least initially. If you are lucky enough to get to grow something out to a certain size, then you really do have to be a good leader, or at least be smart enough to...

Hire People Smarter Than You, and Keep Them Close

We have all heard executives say I am not afraid to be the dumbest guy in the room. It has been an en vogue thing for exectives to say for over 20 years now.

Here is the problem - culture and personality. I have written about this before...but if you SAY that you don't mind being the dumbest guy in the room...then you are actually IN a room with people that have heard you say this...and you are WITHOUT A DOUBT the dumbest guy in the room...but act like everyone else, and their ideas, are beneath you, since they are below you in the org chart...well, guess what that makes you? Hint: NOT a leader.

Here is what I tell anyone running a startup - hire the best you can get/afford, give them the authority to run their area, hold them responsible for the results, and by all means, stay the hell out of their way. It really is that simple.

I do want to address the "keep them close" part also. Do not fall into the big company way of thinking - keeping people in the roles for a defined period, or being held hostage by someone's age. If you look at someone that is a junior developer, and you clearly see the future greatness, then you need to act on it. If the end goal is to maximize your chances at success, you need to identify your best people, regardless of age, background or tenure, and get them as close to you as possible...and involved in the decisions that are setting the direction of the company, as soon as possible.

Leadership is Always Nice to Have

All other things being equal, it's better to have a good leader, or even a bunch of them, on board as soon as possible. I think that goes without saying, but I definitely want to get that out there. You see, throughout the next section, we are going to seek to prove that leadership is not a requirement for tech startup success. I maintain that such proof, although far from scientific, will be irrefutable. I urge you to just think about all of the tech startups you know about. The product is the king. You simply do not need a great, or even good, leader to have a successful startup.

Even if good leadership is not a requirement, it certainly is always nice to have. A key point here for you and your startup is to solicit brutally honest feedback from everyone in the organization about how THEY feel about YOUR potential as a leader. Ask them directly: if money was no object, would you rather have me leading the company into the future or have us hire a seasoned executive leader to help guide us? You can even line out the different levels of growth, either according to revenue or company size, or whatever other metric you want. Your people might, for instance, think you are a capable leader of the company up until it becomes large enough that you are no longer able to keep your brilliant hands in the technology. Being a better geek than a leader is not a knock. Just go with it. Ask honest, difficult questions, with no fear of reprisal, and your employees will reward you for asking.

Now, you may get your feelings hurt...but if that happens, and there is even a small chance that you would ever let it change your management of the company or your relationship with the person who said it, you should abdicate as much personal responsibility within the company as quickly as possible. There are people and their families depending on you, and you very likely going to let them down when things get tough. Once again, this is not a knock. Know your lane, and stay the hell in it. Your employees deserve no less.

The "Big Three"

The-Big-Three-1920x1200-9

Quick Note and/or Pro Tip: Take a good look at F-D-friggin'-R in the picture above. The cat is wearing some kind of goddamn cape with a velvet collar and burning a heater. Can I just say - this is what a President is supposed to look like. That is all. Let's move on.

Let's make this brief. As I like to, I came up with three simple-to-understand tenets of what could lead to tech startup success. By way of a tease -- I have also found a way to combine them into a simple-to-understand visual device that may help drive the points home even further. Without revealing too much, let's just say that John Venn himself would be proud...or is spinning in his grave. I am good either way.

Here they are, listed in order of importance.

1. Great Product and/or Service

This is legitimately so far above and beyond the other two that it needs to be first. Furthermore, you could absolutely, and without question, have a successful startup with only a great product or service...especially a tech startup. Vastly shortened delivery cycles from concept to viable product, and the fever pitch at which new niche products that solve a bona fide need are devoured, make your product/service itself the only real metric that matters. Let's repeat the mantra again: product is king.

2. Great Luck and/or Timing

But a little bit of luck never hurt anyone. I think this one speaks for itself, but you cannot discount luck and timing as a key factor. Let's not get it twisted, though - the literal perfect combination of luck and timing cannot make people like a product or service that they were never going to like in the first place. Once again, product is king.

3. Great Leadership

We briefly covered this earlier. Having a great leader is always preferrable to not having one. But to think that there is some kind of requirement for a great leader, or even a good one, for a successful tech startup, is a complete fallacy. Just look at the simplest objective comparison here. There are literally thousands of examples of successful tech startups where a great product was able to overcome poor leadership. Have you ever heard of a single example where great leadership was able to overcome a poor product or service, leading to a legitimately successful tech startup? If you have, I would love to hear about it...and I'd be willing to bet that the good luck and timing involved were off the charts. Don't worry, we will discuss these scenarios in the next section.

The Venn Diagram of Tech Startup Success

Venn Diagram

If you are not familiar with a Venn Diagram, take a quick minute and hit the Google box. You really should understand the concept before reading on.

Now, as you see, we have identified the "Big Three" and put them in the standard Venn Diagram layout. Please note the I have not forced this to be drawn "to scale", as it might have been a challenge to represent how very little leadership has to do with success...without making the diagram itself look off-kilter.

Another point - don't be alarmed by the gray areas in the diagram. I chose to set them apart from the beginning because we are going to call out all of the intersections in turn.

Intersection #1 - Great Leadership, Great Luck/Timing, Bad Product/Service

Intersection #1

Companies in this section are going to have a very difficult time staying viable. Without a great product or service, all the luck and leadership in the world are just not going to do much for you. Just think about what kind of products/services/solutions we are talking about when dealing with tech startups. If you don't have a great site, app, social network, or whatever...people are going to give you one shot and move on to the next thing.

Intersection #2 - Great Product/Service, Bad Luck/Timing

Intersection #2

I chose the words carefully here. There are certainly many companies that fit this mold that will have even better outcomes, but at a minimum, these companies have a great chance to survive. The product alone can ensure that. In fact, if you notice, I decided to show this "intersection" in such a way that leadership does not matter. This is not an accident. The true "intersection" is the small wedge where Product and Leadership actually intersect. Product itself trumps the intersection.

Thinking back to our case study -- even with the poor leadership we had, and even though the company did not survive in and of itself, through the acquisition, the company is still alive through the fact that the PRODUCT is still alive. As expected, the only real thing that mattered was the product itself, and it was able to overcome bad luck/timing and bad leadership all by its lonesome. Should we all sing from our hymnals one more time? Product is king!

Intersection #3 - Great Product/Service, Great Luck/Timing, Not Great Leadership

Intersection #3

These companies are poised to succeed, even with less-than great leadership. When you can combine a great product with a little bit of luck, you really have a great chance.

Intersection #4 - Great Leadership, Great Product/Service, Great Luck/Timing

Intersection #4
These are the unicorns. Now, I maintain that if the product and timing are good enough, rare enough and in-demand enough, great leadership could even be an optional component here. I decided to leave it in, and keep it separate from the Intersection above because companies that operate in this space tend to grow so quickly that leadership, even though it absolutely does not matter initially, is required to not only manage the company at its future size and complexity, but also to manage the agressive growth pattern the market will thrust upon it.

The Analogy

A great analogy I like to use for this is college basketball and the NCAA tournament. Now, I know that sports in general tend to incite feelings that are akin to religion and politics together. There really is no end game here that will not have certain people pissed off. Meh. The analogy proves my point. Also, I know a lot about this, and the facts of my analogy are mostly irrefutable.

So, I judge NCAA coaches by their performance in the NCAA tournament, fair or unfair. There are basically only two rules. Remember - I like to keep things simple.

  1. Championships matter. The agreed-upon best team does not always win, as there is just too much that can go wrong in a competition where each game is a literal winner-take-all proposition. Even if you have the clear-cut best team in the tournament, you still get credit for cutting down the nets.
  2. How did your team perform, relative to PROPER expectations? I use the word PROPER because expectations should generally have nothing to do with the actual seeding, or anything else that the corrupt ass-hats at the selection committee come up with. They base every decision on revenue and not reality. Given the money involved, I can't really blame them. Of course, the fact that they lie about it at every turn to keep up the facade of amateurism, well that is just disgusting...but also a rant for another day.

So, that's basically it when I take the measure of a coach's career - over the years, how many games did your team win that they should have lost, and how many did they lose that they should have won?

So, the effectiveness of college basketball as an analogy for the "Big Three" of tech startup success tends to break down a little bit, because great coaching (leadership) can very often overcome a less-than-great product (players), especially in the win-or-go-home format. In the world of tech startups, you can't really take all the risks that a well-seasoned tournament coach takes, knowing that, even though there might be a large bill to be paid when those risks come home to roost, none of it matters if you do not "survive and advance".

But here is where the analogy is spot on. First, let's just assume that luck will eventually even out over time - you will get snakebitten over your coaching career just as often as you get benefit. So, think how easy it is for a good (not great) coach to win a basketball game where he clearly has the best players. "Upsets happen all the time" is a great argument, until you actually look at the percentages. The assumed "better" team wins something like 81% of the time. Now, think about what a huge coaching challenge it is for a greach coach to achieve victory when he knows going in that the other team has better players, and in the huge sample size of past results, he knows he has less than a 20% chance at success.

See -- I managed to do that without mentioning any names of overrated and underrated coaches. Even surprised myself. Let's wrap up.

Conclusion

So, there it is - an oversimplification even an executive could understand. It really is as simple as this:

Product is, always was, and always will be THE key indicator for technology startup success. Product is KING!

A great product can overcome bad leadership, especially if you have a little bit of good luck.

Great leadership can never, ever overcome a shitty product. Ever.

Leadership is a "nice to have", not a requirement...right up until it IS a requirement, and you damn sure better have it in place already, because you might be approaching unicorn status.

Joe Mack

Joe Mack

Joe Mack is the creator of this blog. He is an Enterprise Transformation consultant with over 30 years of leadership and technology experience.

Read More