Jason Cohen is a hugely successful entrepreneur – he is the founder of Smart Bear Software and WPEngine (which recently passed $100m in annual revenue). In this, his 4th talk at Business of Software Conference, he raises the issue of Founder Health. Are you the Hacker News ‘Founder in Pain’? Or maybe you struggle making the big, emotional decisions that necessarily come with running a business? Jason has words of comfort and challenge for you.
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Jason Cohen: Wow! I’ve got to live up to that music. This is not a presentation, this is a sermon. And we’re gonna take up as our object of study today a passage from the book of hacker news. This is an anonymous post that was written there a couple months ago and it’s titled I don’t want to be a founder anymore.
“I’m using a throw away account because there’s a lot to lose from speaking how I feel. I founded a company several years ago, fast forward to today: we’re profitable, growing steadily, debt free and we’re about to be acquired. You may ask what’s the problem? The problem is I’m supremely unhappy. Each morning my first thought has been what could today be like if I didn’t work here? I drift off into exploring what it would be like to work at Walmart or the construction site outside, it seems stress free. Then my phone starts to ring and I snap back into reality. This morning I locked myself in the bathroom with the shower running because I don’t want my wife to know and I cried my eyes out. From my possibly skewed point of view I have two options: Quit, which effectively kills any acquisition and the company as well; or suck it up and work on the same thing for 2-5 more years. I’ve been mulling over a third option which is hiring someone to do my day to day. But I don’t know how to make it work, the product is too complicated for someone to come in and take over, because it requires tons of domain knowledge. Additionally, the product isn’t that interesting – it’s a glorified crud app and it’s been hard to retain developers. Is it common for a founder to go through this train of thought before an acquisition? Is there a trick to convince yourself you want to keep doing this? Please tell me I’m missing something, maybe I’m depressed and need drugs. Signed: a founder in pain”.
So that’s not good. And if you ask people in this room how many people feel like this or have felt like this, it would be a lot more than you think and there’s a lot of people nodding their heads even now so it’s not that funny actually.
Let’s answer his question. Is it common? Yes, first of all I experienced it myself when I was selling Smart Bear which I’ll describe later, of course. I’ve seen it, 3 other founders just this year, contacted me just because they felt comfortable unloading I guess. At Colombia business school in combination with Credit Suisse, they did a study. It was only 22 entrepreneurs, so it’s not like statistics but it’s interesting. 22 entrepreneurs who’d sold their businesses for more than $100 million. So a good financial success by any measure. All but one experienced this sort of depression after selling their business.
Here’s another one you might know. This is Marcus Persson, he founded Minecraft and sold it for $100s of millions to Microsoft. So here’s a guy who has everything, all the money you could possibly want, especially in Sweden where nobody has money but no one is poor which is nice but not good for entrepreneurs though. He made hundreds of millions of dollars and a product everyone loves and he melted down this time in public on Twitter so I can show it. He’s alienated from everybody who he worked with and liked, couldn’t find people to relate to, he talked about staring at his monitor, waiting for his friends to get off work. Someone said he shouldn’t have sold the game. He said no, it’s the best thing I did. There’s probably a story behind that. But even though he’s in a state of it’s still the right thing, according to him. So he was stuck, just like this guy in the article. Just different maybe bigger stakes but still stuck, it’s really common.
So it’s not exceptional and it’s likely your future whether the company is small or large. Whether if it dies of natural causes, or you sell it, or whatever – there’s lots of outcomes and yet very often the outcome is sad. Why the hell are we doing this if it won’t make us happy? This is hard, why are we doing this? You may think this – boohoo, you have 100 million, deal with it! But I think it’s not boo hoo because it’s so common and likely.
So is there a trick to not have this happen? No, of course there’s no tricks but we knew that already. But there are ways to get around this, there are solutions. It turns out the solutions, the things we can do about it, not only help avoid this fate, but also make the business stronger along the way which I hope to demonstrate to you as I show you these things.
And there are some questions he didn’t ask which I think he should like, how did I get here? Because after all he’s stuck and unhappy and we know the person in our object of study is unhappy otherwise the answer would be clear. Don’t take the offer, run the business you’re happy running – that’s clearly not the case. This didn’t happen instantly, it wasn’t like he was happy forever and then all of a sudden supper unhappy, that’s not true. It was probably a frog boiling in water, right? There’s probably stuff all along the way he could have noticed or done something about. Also the company is clearly not healthy, right? He said that if he left, it would die. That’s not very healthy already. So there’s probably stuff that could have made the company stronger and we should do that. There’s no way he did this on purpose. There’s no way he set out to become in this state and none of us do, right? So that means we’re all not on purposely setting out to do this, it’s an accident. So that means we have to be aware of something new and do something new to avoid this, right?
Make the emotionally difficult decisions
So what could you have done differently is the better question we should ask. I will make the following case, that the trick is to make emotionally difficult decisions all along the way. That there’s these things we want to avoid and not face and act on and if we can identify them and do it along the way – and I will be specific about them – then we could avoid some of these things. That means you have to decide to face them. You don’t have a boss probably, and that means no one will make you do anything. It’s part of your problem cause it means you do only what you need to do. So you have to be your own boss and hold yourself accountable.
We can see that here, if he quits he kills the company which means it’s brittle. Why might this be? He says the product is too complex and only he can do it. That sounds like a good reason, we have things we feel only we can do. But if you think about it, aren’t there 10,000 more products in the world more complicated than this guy’s? Is it true it’s too complex to help? That’s not the real reason, it’s a good reason but it’s not the real reason. Who knows what the real reason it? Maybe he likes the fact that he’s so powerful or the smartest one in the room? Maybe it’s an excuse for not being able to find good talent that can work on stuff. But that’s not the reason. The product being complex is not the reason. He also says product is boring, it’s just a crud app. So it’s too complex for anyone to work on and a crud app? Gotcha! It sounds like a good reason, it’s not. It’s hard to retain developers cause it’s so boring. There’s many boring projects that millions of developers work on. So that’s not the real reason. The key thing to take away from that is it’s been hard to retain developers. That’s the crux. Why is that? We don’t know him or her, so we can’t say, but there’s probably something real going on there that this person doesn’t want to face.
Holding on too long
So let’s see for ourselves here. Show of hands, who’s ever taken too long to fire somebody? Right. Probably anyone with an employee, right? Ok, it’s funny because it’s true. Now raise your hand if you fired anyone too soon? Nobody, interesting. Ok, one. So this is interesting. A consistent predictable failure of judgment which is what it is. Didn’t you know you needed to fire this person? If you said it took you too long means you knew you should have done it already and didn’t. You say you put the company first, no you didn’t. You say you put your teams first, no you didn’t. It’s better for the teams if this person is not there, obviously. Good reasons are things like it’s better to have someone than not, but we know it’s not true. Another one is the team would have a bigger burden if that person left, especially if it’s a key employee. Isn’t that a failure of management? If someone is so important that they say gets hit by a bus, that the company can’t continue. That’s a failure of organisational management. You want to face that? No. The thing is just simply that you don’t want to do it cause you’re scared because the conversation will be hard and the person might cry and you might cry and they may not understand and they may pitch a fit. Someone else in the company may not understand and cry and pitch a fit and they may leave and you may have to take out a restraining order. I had to do that. It’s legitimately scary. It’s ok to be scared of that, that is scary, it makes sense. That’s the real reason, you don’t want to. Too hard, emotional difficult choices that you have to face. Simple example all of us have faced.
Am I avoiding what needs to be done?
So here’s the way I think about this. There’s things you want to do and you don’t want to do, things the business needs you to do or doesn’t need you to do. Things that need to be done, and of course what you normally do is the stuff you want to do cause you’re a founder and that’s why you did this in the first place cause you don’t like authority or sermons. That’s what you do, that stuff and on the right column is what you ought to be doing, you know that. So this tends to be what you run away to because you know how to do it, it’s easy and valuable, a bit. It’s not really that important but it’s easy to justify instead of dealing with the things that need to be done that you don’t want to. So the question is; how do you know when you’re in this box? What is the signal that this is happening? That something does in fact need to be done, and you’re avoiding it, and how do you know that?
So the way I know it is because I can’t stop thinking about it. It’s very simple. Thinking about it at 2am, I think about it constantly – it won’t go away! The fact it won’t go away is an indicator it’s probably something I have to do. Because if it wasn’t that important, I just wouldn’t think about it, that’s the case. So I think when something is difficult, that’s when you wrestle with it. When something is emotionally difficult that’s when you wrestle with it. Therefore when there’s a decision that is emotionally tough and you can’t figure out what the right answer is, it means the harder choice is the answer. Because that’s the one you don’t want to do, otherwise you would have done it already, that’s the signal.
How to do the tough thing
What does this look like when you address it correctly? How do you address tough choices correctly? What are the things you do to do it?
So I will tell you a story of the first time that I had to fire somebody. So I took two years to let somebody go that should have been. The problem was this person was very smart but academic, wanted to work through all the stuff, and do formulas, and wait till the exact right answer was there, and we needed people to get stuff done. This isn’t economy. So I was worried the team wouldn’t understand and all this kind of stuff and the team would get upset and all the things I just said, but it was the opposite. The team said things like what took you so long? Didn’t you know how unhappy that guy was? Why did you make him unhappy by keeping him? Why didn’t he leave right? It is our job to do that for people sometimes, right? Delaying doesn’t help, never helps. But it can cause for example the team to see that you aren’t a good manager or put extra burden on them or maybe your good people leave because of the environment. Bad things happen often when you delay.
So then let them go, give them a good severance, help them find a job etc. He found a job doing something that required academic computer science. Yes! He was there for 6 years after that and happy. It doesn’t always work that way. On the other hand, if they aren’t successful and happy they definitely won’t find fulfilment there. You’re definitely preventing them. It’s still up to them to eventually find fulfilment, but you can decide whether you help them to do that or not. It’s a kindness to let go of somebody where they aren’t be successful and can’t be. It’s a kindness to the team and yourself. You’re going to do this anyway, you don’t deserve 2 years of turmoil first, right? So that’s the first example of that. What could he have done differently? There’s these difficult things he should have done and didn’t that could have made the business better and also his own psychology.
So let me go on to another piece where he says the product is complex, I have to do it. This is very common. I’m sure many people in this room feel like they’re the smartest one in the room lots of times, I bet an interesting percentage of people believe that about this room. One person is right by definition! Why not you? So that’s fun. But of course there’s that phrase, right. If that’s true, you haven’t built your company to be very strong or very good. Your team is obviously not that good if everyone is not as good as you. But it’s common for founders to be this way, in fact, we have to because when there’s no one at the company or only 3 people at the company, we have no choice but to be as good as possible at things we’re not expert in. We’re all experts in something like maybe software, product or design. There’s probably just this small little window of stuff that’s useful enough to build a company, but isn’t broad in which we’re expert in. And we have to just make marketing and sales work and finance work somehow, so we had better be pretty good at faking the stuff we’re not an expert in.
That’s fine, there’s nothing wrong with that unless this is also your hiring pattern. And you know this thing already, right? You hire A players, they hire A players, if you hire B players, they hire C players and then you have a crappy organisation. Steve jobs is actually the one who said this that surprised a lot of people. You can see some of the A players that worked at Apple there, you can tell.
So here’s what this generally looks like for a start up founder or any particular job that you need done, you ask yourself am I an A player? For someone like engineering the answer is yes. Great! I know how to hire them, how to interview them and how to manage them afterwards and I know if they are doing a good job or not and so on – ok great. And then for the case where you’re not an A player like doing AdWords or something like that, that you’ve maybe not done that before. You say how hard can that be? I met many people and they’re not as impressive as I am and I’m an engineer and we can do anything with engineering. I don’t know why we think that, I guess cause we’re good at it, but anyway. So I’ll do the AdWords, I will learn how it works, then I will know how to hire a contractor or person, I’ll know what to ask them, how to tell them what to do, cause I will have done it myself, therefore I will be able to hire the A player. This is the normal concept.
The fallacy is this step, the part where you become an A player in a couple months. This is pretty insulting to anybody else who is an expert in marketing or sales or finance. Now you may not need an A player in finance when you’re small, that’s fine. If you don’t need it that’s cool, but why are you hiring anybody to do it if it’s not important? If it’s something that’s valuable to the business like growing the top line through marketing or sales, then why – there’s no way you’re an A player in sales after a couple months. That’s not true! Since you think it’s true, you think you’re hiring A players but it’s not. You’re a C player, that’s what it means to dip your toe into something, even if you’re really smart and then you hire other people who are only as good as your dumb ass, who only have 2 months of experience in the thing so that’s bad. Then you build this organisation where maybe in one area, your area of strength, you are strong and in these other areas you’re not.
So actually this isn’t the organisation you build, you usually build this kind of organisation because you understand this and bring this mentality – everything can be solved with code, algorithms and machine learning is next and that will take all the jobs so I might as well start. That’s fine – it just ends of with companies that have pretty good products and not a lot of growth and bad in other ways. Again, not only is it insulting to other people – it’s not our job to insult or not insult people, but the business is not getting the benefit of someone who is good at these things and you probably need to be, so the business suffers when you do this.
And also Steve Jobs didn’t do that. This is what he said. He said ‘we don’t hire smart people and tell them what to do’. Which is the pattern we just said. ‘We hire smart people that can tell us what to do’. You may think well that doesn’t sound like Steve Jobs because he was the one who told everyone what to do all the time, wasn’t he? Except, no he wasn’t. Steve Jobs was the one who hired Jony Ive who is probably the best industrial designer ever. And Jony Ive is the designer and Steve Jobs worked with him but he’s the designer, right. He hired Tim Cook who is probably one of the best COO’s alive. Right? And then he worked with him. Now did Jobs hold everyone to incredibly ridiculously high standard? Yes, but that’s different. That’s being an editor, not a writer. To get the best people you can, even people better than you and then be an editor. Yes, hold them to high standards, but get people that can do their jobs better than you can do their jobs so rather than telling them what to do you’re holding them to a higher standard. Like crazy Jobs – I know it’s bad to use that example cause it’s one of a kind but nevertheless.
So, instead, you should hire people that are better than you at the job but that’s hard. How do you do that? That would be like us interviewing a pancreatic surgeon. I’m not sure what to ask. Point to your pancreas! So right, how do you do this? It’s just like people who are not at this conference wondering how they will hire the first developer. A good question, right? Cause they say all kinds of acronyms but who knows? It’s a good question so let me explain how to do this cause it’s so important.
How to hire and manage outside your expertise
Two things. First of all, you should walk away from your interview with this person feeling like you are now uncomfortable with the amount of ignorance you had before on this topic. It should make you feel insecure about what you thought you knew on the topic, say marketing, and in a good way. Like, ‘oh my God, I have to take half the things the person just said and do them whether we hire them or not! Like, oh my God this is incredible!’ That should be the feeling! It doesn’t prove they’re right, maybe they’re a good sales person – that’s possible. But it’s part of what you need to see, that kind of incredibleness.
Mark Zuckerberg, another person you think of as very controlling and opinionated, said that he hires people who he himself would work for if the circumstances were slightly different. And it’s hard to imagine for anyone like Zuckerberg working for anybody right? But nevertheless that’s exactly how he thinks about it and what he says. Would you work for this person, are you that excited about it? If the circumstances are different obviously don’t do that. So it should feel like learning, that’s the first thing. And then of course the bonus is if you have friends in this area where you can say they said these 7 things which sounded good to me. Is this true or crap? Am I excited for nothing or is this real? Hopefully you have someone you can ask that. In the best case you can have someone else interview, but that’s usually too hard. So that’s the first thing.
The second thing is to hire for a results oriented person, rather than action oriented person. Let me explain what I mean. Let’s say it’s event planning. An action oriented event planner when you ask them a question like tell me about a great event that you put on recently. The action orientated events planner says, oh yeah, we had this venue and it was nice. We had these curtains and it was backlit. The food was really good, people said they had a great time. People stayed late so I’m pretty sure they were happy about it, it was a really great event. Action orientated – all the stuff they did.
The results oriented person says this, it was a great event, we had this cool venue, the food was great. 98% of the people we pulled afterwards said they would come back next year so I’m sure we added a lot of value. Also, we put 15 leads into the sales pipeline and 4 of them closed so we’re pretty happy with it. Results oriented!
What was the purpose of the event? Did it do it? Not what the food was like. Of course you want people who care about their craft and want to talk about the details of the food that’s ok, caring about it, being proud of it, that’s good. But ultimately the question is what is the results? If you hire people who already think about results, then you already know how to manage them because that is how you are going to manage them. You won’t tell them what to do with the food or how to pick a venue. That’s the whole point, for them to do their job. What you will do is hold them accountable to produce whatever results you agreed for the purpose of the event. To create sales leads or brand or whatever the reason. You want people who are oriented that way, who are happy to have the goal set up. Ok, 10 sales, awesome! Get out of my way so I can go get it! Perfect! So you want to hire people who think that way already because that is how you are going to manage them and hold them accountable to doing their job. And then edit. It’s ok to edit. I don’t like the colours we used, I think the headline message of the event isn’t powerful enough. These are thing you can do – you’re not fully hands free, you’re an editor and that’s good!
By the way, that’s the right way to hire everybody, including the people who are in your area of expertise. Just because you’re a superstar engineer doesn’t mean you don’t want to hold engineers accountable to results as opposed to micro-managing how the architecture works. After all, that’s the fun part of being a developer, to design stuff and prove you’re right by doing it. That’s the fun! So even if you hire the people in your expertise, don’t take the fun away and don’t do all the fun stuff like architecture and leave them with the rest of the stuff like the last 10% that takes 90% of the time. That shouldn’t be their job – their only job, it should be part of the job. They should be able to do both the first 90% that’s fun and the last 10% that’s not fun. That’s should be their job. Don’t take that away from them.
This is tough to admit. I don’t know as much, I can’t learn that as quickly, I need people who are better, I will surround myself with people that are better at the various disciplines than I am. What kind of weird situation is that? But that’s what the best CEOs do. They surrounded themselves with the very best. Of course! How else would you up level the capabilities of the business except to hire people who are better than you, always? Is there any way to up level the power of the business? It’s not egoless, you’re the CEO or founder or leader, it’s not that. You’re still that person, but it’s your job to build up this team around you that is that good. That is exactly not obviously what this person did, exactly not. And it would have solved some of these things. Again, then what would the emotional state be if that were true? If you were surrounded by people who were better than you at writing code, design and marketing? How would it make you feel in terms of stress? The whole company is still on your shoulders, that never goes away, we know that. Still, there’s a difference between – there’s all these folks and I have to tell them what to do and; there’s are all these folks and they are making the company better and all I have to keep the bar as high as possible in a positive way. That’s a much different kind of stress and a obviously much stronger business as well. Both.
So we’ve gotten a couple techniques, but I want to spend half the time talking about the end, this acquisition thing and it’s so often all of this stuff ends in something negative. That’s a pretty brutal reality which maybe some of these things help that I just said, but that can’t be the full story, there’s something else going on here.
I want to talk about this so-called success. So he says there’s two options, then he lists 3 options. There’s really 4 options because it should’ve been an option but he doesn’t want to. So he has no options in other words. Which is scary. So why is this? Here’s my question thinking about this. Why isn’t the answer to sell the business? He’s unhappy, there’s all this nonsense, he’s clearly unhappy – get rid of it! Get some money and leave and get to a situation that’s not as unhappy, with money. Isn’t that obvious? But it’s hard to sell, we know the phrase selling your baby. And you say that’s not a good analogy. I have kids and it’s not like that. I have sold businesses and I wouldn’t sell my kids, so it’s not the same. Thanks for applauding me not selling my baby! Yeah, I’m such a good dad. Wouldn’t even sell my daughter, that’s amazing. Very progressive!
So there’s a study which Sherry Walling, here in the front row who you’ll hear from later today, told me about on this very subject of start-ups and babies. In the study, they showed founders neutral images like this and they have an MRI so they’re scanning the brain for what lights up and this is normal stuff looking at the landscape and then they show them a picture of their kid. And of course, their brains light up in this way, oh it’s my kid, whatever kind of stuff their brain is doing about that. Then they show them back to landscapes and the brain goes back to neutral state and then they show them pictures of the logo of their company and the brain goes right back to baby. It is your baby actually. Maybe it’s not surprising that those 22 entrepreneurs again not statistically significant, but 21 out of those 22 had what was effectively post-partum depression and the same kind of depression. Interesting. So yeah, it’s the same thing.
I remember the moment when I sold Smart Bear but before then I had gotten this offer that was pretty good. This is my previous company and it was bootstrapped and I was there for 6 years and you know how that goes, everyone here understands that situation. Single founder and everything. And I got a pretty good offer to sell and so I go home and tell my wife, so over a plate of super enchiladas, I just got this offer and it was good, I don’t know what to do. She says you have to sell! I said well – the business was doing about a million in profit per year so I didn’t have to – what do you mean I have to? She says well, don’t you realise how unhappy you are? Nope. Right? Just like this guy, right? But in my own way. I did end up selling the company and I thought as I sent the 87 page through the fax machine to NY, selling the business, I thought well now I’ll feel good! Cause I sold the thing. I was burnt out of course and this is common. And so now it will feel good and of course it didn’t. It felt bad. Again, what the hell? That’s a trap! So why? What is going on?
What I think it is, it’s that the start up is your identity, it’s the only thing you thought about when you wake up at 2 in the morning when you’re supposed to be in vacation, you’re only still thinking about this. This is you. You don’t have hobbies or do that kind of stuff. This is it, this is who you are. And what do you do when who you are goes away?
Here is an example. And I did get permission from Dries to do this, so I’m not speaking out of school. This is Dries Buytaert he is the founder of Droople and the logo of Droople is this. So his comment was I don’t like this photo cause my mouth is open. Well you’re better looking than I am so you can shut up. So it’s your identity and even if your face isn’t your logo, it’s your identity. What happens though is you get in to this situation, like I did, like other people I’ve talked to this year, which is sort of like this. Where we’re constantly trying not to die for so long that finally we can take a breath cause the company is working, there’s a reason we can take a breath and look up and consider what’s going on and it’s kind of funny but it’s too late you already built something. It’s already an organisation, a thing, you’re already burnt out cause you weren’t thinking about it all along which is logical. Who can think for the future? I don’t know what I’m going to have for lunch tomorrow. Who can think about 5 years from now or what’s your purpose? Shut up, I’m trying to get another signup today so we don’t go under. I don’t care about purpose. Jesus! So that makes sense.
But then we don’t know what it’s all about but that’s a problem and it leads to this problem and also asks an existential question of why do this at all? So what entrepreneurs often do after they sell is they sometimes find a new purpose in philanthropy but often they start another company. People say it’s for the highs but I don’t think it’s for the highs because this is what I think it’s like to be an entrepreneur. It’s mostly toil. Toil is a good biblical word for a sermon. So no, I don’t think – that doesn’t sound fun actually. But it’s a new identity and what you know, how you attach yourself to something that’s important again.
So one conclusion can be to never sell! Because you will just end up doing this again, you might as well not start from scratch. That sounds harder but it’s not true. It wasn’t true for Minecraft guy, Marcus. No, sometimes you do need to change. As Seth Godin says, I know he’s coming on next, sometimes you have to push through it and sometimes you don’t. I don’t know if that’s anything useful. So it’s not as you have to sell. A Smart Bear is a good point right here. Should I have sold? Look at that, It was just sold to Frisco this year for $450 million and I sold it here. So maybe I should have stayed and shouldn’t have sold. Maybe even if I was unhappy I should’ve just pushed through that for the big pay day perhaps? This wasn’t the trajectory when I sold it. This was the trajectory when I sold it. And there’s no reason to believe it would do all that. That happened with different leadership, different goals, different strategy, injection of money – all sorts of things. There’s no reason to believe that would happen. What you should expect is the thing that happen for the previous 6 years would continue to happen more or less and me being unhappy the whole time. That sounds pretty bad.
In fact, it could look like this and there’s many companies that get to a couple of million revenue a year – whatever it is. Even 10 or 20, stall out. Once it stalls out even an acquisition you don’t get as much money as you want. I feel like a lot of small companies have this problem. I had my old Camry that was 12 years old and the thing would turn on the first time you ran it, it purred and it was so good. And the Kelly blue book value of this car is low, it’s like $2000. There’s no way I could buy any car on Earth for $2000 that would be as good as this car – impossible! Cause I know it’s a good car but the value in the market for a used Camry is not much. So I feel that many small companies are like that – they’re like my used car, they are more valuable to the founders cause you know it will generate this kind of profit next year and you’re probably right but that’s not the market value and a lot of times that’s what happens so it’s tough.
It was the right thing to do because not just because – financially this isn’t correct and because there’s risk and also because I was burnt out. And the what happened then? I then I finally left cause my wife was pregnant and I was a stay at home dad for a year and I wouldn’t give that away cause it was amazing! Then I had the space because of stuff like that and not having anything to do. But then having the money to not have something to do. So I was able to wait until it’s a great idea that I could validate. I had some ideas and tried to validate them and some were not great ideas but then one was. And that turned into WP Engine and now we have a sign on the building in downtown Austin. We have 500 employees and 70k customers and we’re still growing. It’s bigger than Smart Bear now, even though Smart Bear is 17 years old now. That wouldn’t have happened. That doesn’t mean it’s automatically success the next time – that’s not true. Nevertheless, in retrospect it was absolutely the right thing to sell so you can’t say because you lose your sense of identity it means you shouldn’t sell. It’s the perfect example of why I should have – even in retrospect.
The issue here is change often sucks, even for us who like change, we like a dynamic environment and we like saying things like I like my job cause every day is different. That’s kind of what we say, but it’s hard – and ultimately especially in these difficult things it’s hard.
So the company could grow and now your job is to manage the managers and you want to go back to coding, that kind of change is bad. Or you say I will go back to coding and hire someone to run the company but then you give up control and what if he messes up? You did this cause you want control over something even though we know the last thing a start-up is is a thing you have control over. It’s a bad thing for that. When you don’t sell, the company fails or you do sell and are unhappy, all these changes feel bad but they’re coming – so what can we do with that fact?
So what we do is we understand that each of these things that happen are the point, this journey of creating a start-up and all the stuff we do, that is the point. In other words, the end isn’t the point. Even though that’s our goal, it’s not the important thing cause who knows what that is or if it will be good? All the stuff in the years between you starting the company and whatever the goal is, those have to be the years that matter, the time in which you’re fulfilled. This has to be the good times, all the time, not the one little unit at the end which may be good or may not happen. It’s cliché to say it’s the journey so I hesitate to say it but that’s true.
So there’s the parable of the wooden ship that leaves London. Of course London – it’s an old parable. Hey you made fun of Boston, I have to make fun of how everything in London is old and crusty. So the wooden ship leaves London and it goes around the world and as the wooden ship goes around the world, the wooden planks rot one by one so along the way each plank that rots is replaced to new wood so when it returns to Iberia every plank is new. So the question is did the ship go around the earth? Not the same ship, but something went around the earth I guess, people did maybe? So it’s an interesting question. So what I think is that it did go round the earth because the point is the journey, it doesn’t matter what the planks are and this is a good analogy to start-ups, because the plans, planks, people will change, your first employee will quit. You don’t want to face that. Or maybe your co-founder. Maybe you will sell it. Everything about the company is about to change, but the journey did happen, it did. And that’s why that is actually the thing that matters. And can you do this right? The answer is yes, because I’m doing it right now at WPEngine and I want to tell you about how I’m doing it right. So yeah, here’s where I apply all the things I just said and more. I will show you what we’ve done.
This is a picture of me and Heather Brunner our CEO, winning together the Ernst & Young entrepreneur of the year award for central Texas. There’s a lot of awards that don’t matter but the Ernst & Young one is prestigious so this was a real honour. And another thing you should know about Heather is she joined 3 years into the company, as CEO. I was CEO first and then about 80 people in or so she became CEO. So some of you may be thinking why is the winning an entrepreneur award if she came in 3 years in? That’s exactly the kind of thinking I’m trying to get you to not have, as if only the founder can have a huge or transformative impact on the business, can be so good and so smart about the culture or direction or team composition that only the founder – he does have a lot, not taking away from that. It’s not true that 30 people had that kind of power but to say no one can is self-fulfilling. Then no one will! That makes it a weak business and it’s harder for you cause that means it’s all on you.
So there were two pieces of making this decision of not being the CEO anymore and having Heather. By the way, tremendously successful in retrospect – it’s now been 4 years since then so it’s easy to tell you what happened in retrospect. And all those great numbers I just told you about and how successful we are – that was Heather. You know that curve? That’s kind of what WPEngine’s curve looked like too, because Heather hired and managed the whole executive team and I could go on and on about all the things.
So, there were two pieces, one was the intellectual decision – is this the right thing to do? Which I want to give you that framework. It’s a good framework for a variety of things, not just this one topic of should you be CEO. And by the way, I’m not trying to say you shouldn’t be the CEO, it’s just a good question and there’s other similar kinds of questions so I will give you a framework for making those decisions that summarises all this.
There’s also the emotional decision, of course. How did I get through the difficult emotional decision? And the fact I was wrestling with it indicates that it was probably the right move. But how do you get over that as a founder? So what happened was I was at this bar called Linc in Austin, it’s a wine bar. So I had this conversation with an advisor and he says – he’s been the CEO of companies and has gone through a lot of stuff. He says I know what you’re thinking. I said what? He goes you want the credit. What do you mean? He goes if you ever ring the bell, you want the credit. I said well, it’s not like I would think I did it all, not that kind of credit, but there’s some kind of it’s your company and it was successful – and I said yeah, you’re right. That’s true. It’s a shallow thing maybe, but maybe not. Maybe you should and it’s ok to be proud of something like that and want the credit. So he goes well you’re the founder, you will always get the credit. And that was it, that’s all I needed to hear. I know it sounds so trite, but I needed to hear that, so maybe it’s useful for you to hear the same thing, like for me. You’re gonna get the credit anyway, it will happen, you get all the good stuff. In fact, if anything is hard and tough, Heather is the primary responsible person now and if it goes well, I can walk around conferences like this and say my company has many employees. Get the credit! It doesn’t mean you have to do it, sometimes it’s simple to put your ego aside and still get your ego. I still get it.
Everyone deserves fulfillment
So the way I would summarise the intellectual decision as well as summarising everything we talked about just now into one final framework that you can use to make decisions like these is the following. And you’ve probably seen this framework before but probably in a blog post and it makes sense and you forgot. So hopefully now it’s one you can actually use cause now there’s meat on it and you can say I will make decisions with this.
So what does it mean to be fulfilled? Got to have joy and like what you’re doing. And of course there’s stuff you’re good at and there’s an intersection, boring. The stuff in here – the stuff you’re not good at but you like it’s entertainment or if it’s professional then maybe it’s learning. That’s what it means to get into something but you’re not good at it yet. You’re still learning. And this is toil, you don’t like it, but you’re good at it so you do it. Like the books in your business or whatever, it’s just there. It’s ok, you have to do it sometimes. And it’s ideal and for many engineers it means when you get lost in code for 10 hours and you forget to pee or eat. Or when you do it all day and then you go home and open the laptop and keep doing it. Recently, Ben said in response to why do sales people get commissions? Why can’t they just work really hard like engineers? He says when an engineer works on all day, he goes home, turns on the laptop and works on code some more because you love it. When an executive enterprise sales woman goes home, she does not then do enterprise sales on the side. It’s toil. It sucks! So you have to pay her for that. Anyway, you want to be in this and we do as engineers so it’s lucky for us.
That’s not insightful, this is what brings it all together. What does the company need someone to do? This is where I made the decision intellectually about bringing on another CEO because when you ask them what does a CEO need to do, there’s all kinds of bullet points like hiring and managing that executive team I talked about of people who are better than that to run global sales and consistently bring in more revenue every month. A 24/7 extremely high performing support team with hundreds of people. The kind of finances, that’s more like 100 million revenue needs in governance and controls. These are the kind of things. Managing a real board of directors. There are all kind of things that it means to be a CEO of a certain size, at least for us. And when I kind of thought am I good at that stuff with only 1-2 exceptions the answer is no. And do I want to? It sounded like fun! Again with 1-2 exceptions, the answer was no. So that’s a good way to burn out. It needs to be done though, the company needs it to be successful. Just to wrap it up, this part where it’s fun and you’re good at it and you don’t need to do it, that was on the other framework, this is doing the feature that we don’t really need to do.
This is the trap where you’re doing the AdWords because it would be fun to learn it and the company needs AdWords that work, or maybe you need someone more broad than that, whose charter is to double sales, figure it out. That will take a special person, they may even need money. But doubling sales actually changes the business and mucking about with AdWords probably doesn’t. Right?
And then there is the burn-out which is probably where our object of study is, where our object of study probably is doing things business needs like writing software and doing sales, cause it’s a company and it’s going and no one will work for it – I guess he does the work he needs to be done but he’s burned out cause he doesn’t like it. I was doing that at Smart Bear too. I could have hired either a Heather or somebody else at Smart Bear too but it was too late for me then. So the whole point is; that’s ideal, you can’t be here all the time. But what you can do is set as a goal that you and everyone in your business should be there as much as possible, cause that is where they will be more productive and happy and it’s most efficient for the business too, it’s both.
So when you do that and realise it’s not about you, but about everybody, about us. You realise you’re not an emperor, it’s the wrong sense, shepherd is a better sense. And there’s employees, and partners, and customers and maybe investors. There are different people you would shepherd rather than emperor and you should not be the centre of the universe but a force in it maybe even the primary force but a force not an emperor.
There’s a great passage that describes exactly this that was written 2,500 years ago in case you thought anything was new or humans weren’t like this forever, and needed advice. So this is from Ching and let me read the 17th chapter cause again it’s a sermon so I have to read a chapter of something, right?
The best leaders, people don’t know they have them. The lesser leaders are loved and praised, even lesser are feared, the least are despised. Those leaders who show no trust will not be trusted. Those leaders who are quiet, their words are valued. With the best leaders when the people’s task is completed, they will say, we did it ourselves.
So be a shepherd, not an emperor. Hire the right people and let them do the work themselves and be proud of it. Be an editor not a tyrant. Be a shepherd, not an emperor. Do the hard things, that are also the right things. Set your ego aside because you will still get all the credit. Thank you!
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Mark Littlewood: Thank you! I’m kind of torn, that was a fabulous sermon to start with! I studied geography at university by the way and there’s one thing. We’ll take 2 questions but you will be around for the whole time. So questions!
Audience Question: Thanks for a great sermon and amen! When you started the talk the founder in pain, he talked about one of his options being his life being hell for 2 to 5 years because the expectation was that after acquisition, he would have to work for the company that was acquiring them. I appreciate that wasn’t exactly your experience but I imagine you have some experience with that. Could you speak to what that experience is like and how we should be thinking about it cause it sounds like a big consideration?
Jason Cohen: It is a big consideration. One fallacy people have about selling is they’re fixated on the price tag, the valuation, and not on the terms. And the same valuation at 3 years stick around and 1 year stick around that’s a different proposition cause your time is more valuable than that. So this is one of the terms and terms are always negotiable. So it’s very common for founders to want to leave or other executives especially in certain areas like finance where the finance is rolled up and so forth. So generally if you leave sooner you get less money and you can negotiate that upfront or they will load it into the terms. It’s fine and better to do it upfront so that everybody knows. And whether is good or bad is variable. I will give you an example. There’s a company that was sold to Rackspace a while ago and one of the founders quit on the day that he could quit and have all his compensation, the other one stuck for another 5 years at the company that bought them. The employees stayed for years. That shows it depends, which is a shitty statement because it’s not prescriptive but it’s true. For example, the reason this person stayed is they were able to go to the place and do M&A and they found that interesting. So doing the acquisition side of M&A you had to be in a big company for that to become interesting. This is fun! I like this! So even though you had a boss and there were other reasons that interested him as part of his – if not career interest level and that worked out and then the other one said I gotta do my own thing. Would it change if you were acquired by Google or Oracle? Would the time you want to stay around change? Maybe, but even then you have people that stay at Google cause they died and went to heaven, then other people think it’s not all that’s it’s cracked up to be. You never know what you will get. You can either have it in the terms and see or you can negotiate and see how that changes the deal.
Audience Question: Jason, how do you balance that venn diagram where there’s joy and need and someone wants to learn how to do something they’re not yet good at? So even the M&A thing, they didn’t have the skill going into that yet they were good at the end. How do you balance that, specifically yourself at WPEngine, putting people into jobs where they will learn how to do something well?
Jason Cohen: First the context. If it’s a start-up with two people, we don’t have time for people to just figure things out. If we need a whole person to do marketing, we need them to be successful. We don’t have time for them to muck about for a year. Do it! If you can’t do it, we need someone who can. We don’t have this money or time to spend. And in a larger organisation like WPEngine, we have people where they start in their area of strength, where you’re skilled, and that’s your primary job. Then there’s some area you’re growing into and we do that too. There we expect you to be failing and doing less than good work because that’s what you’re doing, you’re growing that way. You also have a basis of ability we also need and that’s just what you are doing. Also, if we have a team of 10 engineers, some can be junior. There’s room and space, we can mentor and it’s ok. If there’s only 2 engineers in the whole company, 1 cannot be a junior. So I think the context matters of what can you invest in? Because that’s what the company is doing – investing in people. So of course it’s great, we do it a lot and have a 10 person learning and development team in the company to teach people how to become better. We believe in investing in people and growing them and doing that learning but of course we didn’t have that early, that was only when we had some kind of scale so I think early on you can’t be generous like that because there’s no spare time and dollars.
Audience Question: Ok! At the end of Smart Bear it was your wife who had that difficult conversation with you and said you’re unhappy and that was a shock to you at the time, what strategies have you learned since then with this new venture that you’ve been on? Internal and external for monitoring your state?
Mark Littlewood: Ask his wife more often!
Jason Cohen: Yeah! Keep asking. Well I have a monthly 1:1 with my wife. It actually is good to keep friends that can tell you the truth. Most ones don’t. I found that Heather can be that person. I think again especially as founders we feel like we don’t want to be vulnerable at work or anywhere. And it is true that if I walked up to someone who’s employee 462 and I don’t remember their last name in support and I’m like I’m about to have a nervous breakdown, that would freak them out! There’s a time and a place. I like to say a founder has an invisible hammer, everything you say and do – if you’re walking like, that has a huge effect on the room. It can have an effect if anyone does that, right? But if you do it, everyone is like what’s wrong? Do you think we’ll miss our numbers next month? Are we ok? They start interpreting things differently. That person’s project stopped. All this stuff is going on just because you were in a humph one day. It’s frightening. And you’re always on and you’ve got this hammer. If you ask a legitimately curious question, how is it going with that project? You try to show interest – why is the founder asking me this? Its great and they re-prioritise the work to do the thing cause they think that it matters. This happened to me. And then their manager comes to you and asks why did you tell him to work on that and not that other thing? You have a hammer and it’s really difficult actually. And so who can you ask? You can think you can’t be vulnerable all the time because of the hammer, that doesn’t work. But there has to be a few people where you can and it’s nice to have 1-2 people in the company cause they know what’s going on and they have more context to talk about stuff. Life does this, sometimes you’re here and that’s ok, maybe you just have to be here for a bit. What does that mean? There’s been times where I had 0 direct reports. Right now I look after product. It might be another day when I’m back to 0. Dharmesh Shah, of course kind of famously, has always had 0 direct reports. That’s nice. In other words, I say that to say there are many ways. It has to make sense for the company. We can’t just say you’re the founder, we will put you here – it can’t not make sense. It has to be where anyone in the company can look at it and ask why is that happening? And someone says oh and in one or two sentences says it and they say well that makes perfect sense. So for me, not having any reports, why does that make sense? Jason’s fantastic at talking to the press or ripping someone out of the job at another company and saying you gotta come work here and also looking after strategy! But what he’s not good at is building and managing large teams, he’s a founder not a personality that can scale team! He can make new stuff and talk a lot and beat people up until they agree with him out of exhaustion if nothing else. That’s what he’s doing. Oh, of course, why would a founder be good at running a whole group? So it has to make sense. One of the tricks Dharmesh uses is he says I’m always working on just 3 things. They can change, some of them don’t – like looking after culture. Some do, some are projects. But I just have 3. So what are you working on? Right now it’s these 3 things, everyone can say ok great! I think you can get creative about what is the role, what does that mean for other roles needed in the organisation and how can you still be useful and not just in the corner, happy to work on something that’s not useful? That’s not good, that’s not healthy. Just quit if you will do that cause people will notice. But there are often ways, we’re creative and we can figure out ways!
Mark Littlewood: Cool! Jason, thank you!
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