Thinking of Joining an Entrepreneur-led firm? Part 1

February 5, 2014 at 9:18 AM

 “But I don’t want to go among mad people," Alice remarked.
"Oh, you can’t help that," said the Cat: "we’re all mad here. I’m mad. You’re mad."
"How do you know I’m mad?" said Alice.
"You must be," said the Cat, or you wouldn’t have come here.” 

            ― Lewis CarrollAlice in Wonderland

 
The executive was feeling pretty good. One of the fastest-growing entrepreneurial companies in Canada wanted him to be its new Chief Operating Officer. Discussions had moved quickly with the celebrity founder himself making the case that the firm’s over-burdened systems and processes desperately needed the executive’s world-class operational experience. Topping it off, the word ‘successor’ was even whispered at the close of one late night dinner discussion. After some heart-wrenching deliberation, the executive decided there would never be a better opportunity to catapult his career. He accepted the company’s offer and resigned from his employer of twenty-three years………Six months later he was unemployed, richer only by the knowledge that his impeccable credentials had in fact been glaringly lacking of the only experience and skills that truly mattered.
 
Working for Entrepreneurs
 
Professional managers are typically hired into entrepreneur-led firms with two sets of challenges, though only one is openly discussed during the courtship process.  There are the business and function-related challenges for which the individual is being hired, most commonly some variation of professionalizing, driving, stabilizing and/or bringing specialist management experience to the business. And then there are the less clearly defined challenges of fitting into a company defined and dominated by a single individual, the entrepreneur.  For the uninitiated, this is the proverbial rabbit’s hole where wonder and sometimes madness await.
 
As a breed, entrepreneurs are a unique lot. The word itself derives from the French word enterprise, which was used in the 12th and 13th centuries in reference to actions of war. The word entreprendre meant to “attack a person or a castle for pillage or to take prisoners for ransom”. Though time softened the term’s marauding sharp edges, the entrepreneur has always been associated with risky behavior and a rule-breaking ethos, one untethered to the customs and norms held by the dominant society. The distinction between deviating from the norm and deviance is at times lost on some entrepreneurs.
 
Modern day entrepreneurs are noted much more for their laudable ends than the means by which they secure them. Images of scoundrels have given way to paragons of innovation, and economic benefit. Entrepreneurs are now coveted by all levels of government and policy makers who fuss to attract, fund, and incubate them. Corporations seek to inject their spirit into their cultural blood streams while schools try to create them through all manner of innovation and entrepreneurship curriculum. But image makeovers notwithstanding, prototypical entrepreneurs remain rebels, contrarian outsiders who because of circumstance, circuitry, or destiny see opportunities where others do not, and challenge the current convention. And their sine qua non is obsessive passion, hard work, unconventional thinking, salesmanship, ambition and a never-say-die drive. Working for such individuals must, however benignly, differ from the experience of working within more traditional corporate walls.
 
A current bestseller, titled The Everything Store, profiles the improbable story of Jeff Bezos and his quest to build Amazon, the now $100 billion dollar per year ubiquitous on-line retail juggernaut. It is a compelling story of vision, perseverance, moxy and ruthlessness. And it highlights certain entrepreneurial attributes and business characteristics that appear common to many such individuals and their organizational creations.
 
In this two-part discussion on tech sector entrepreneur-led firms, we look at three such characteristics. In Part II we complete the overview and discuss their implications for professional managers who are considering or presently working for such firms.

1. Straight-Talk Cultures – Welcome to Nutter-land
 
“Are you lazy or just incompetent?” Jeff Bezos
 
When a firm lauds its ‘straight talk’ or ‘absolute honesty’ culture, it is an almost certain indication that the ideals of respectful dialogue, mutual respect, support and social cohesiveness rank down in its hierarchy of values. It is also a not-so-subtle hint that a fair bit of screaming likely goes on in this company.
 
In entrepreneur-led firms, the rules of engagement invariably mirror the values and personality of the entrepreneur. Prototypically, these individuals are in the business of challenging convention in their search to uncover value. They are contrarians, disrupters who occasionally annoy and rub market incumbents and people alike. In the technology sector these individuals are often high intellect analytics who are far more adept with matters of reason than emotion. For such individuals, (Jeff Bezos, Mark Zuckerberg, Elon Musk are illustrations) building a business is a problem-solving exercise, an intellectual thrust and parry with markets and competitors. Meanwhile, matters such as corporate culture, morale and employee ‘feelings’ border on irrationality, sapping as they do one of the entrepreneur’s most precious resources, time. Considered logically, it is most efficient for all concerned to apply simple, straight-forward, ‘bull-shit free’ approaches to communication, problem-solving and co-existing.
 
Straight talk can be a constructive and positive approach to interaction and firms as large as Intel have embedded it as a core cultural value. However, when it is not tempered by emotional intelligence, maturity and control, straight talk runs the risk of being personal, harsh and even abusive. And in organizations where terms such as ‘emotional intelligence’ are considered either oxymoronic or simply moronic, that is exactly what one can get. The non-confrontational and sensitive types should take note. One former Amazon employee recalled an encounter with founder Jeff Bezos as follows, “He called me a complete f*#% ing idiot and said that he had no idea why he hired idiots like me at the company. Then he said, ‘I need you to clean up your organization’. It was brutal and I almost quit. I was a resource of his that had failed.”  The biographies of Jeff Bezos and the late Steve Jobs, to name but two, devote full pages to listing their more colorful and quotable straight talking.
 
Straight talkers usually argue that episodes of vitriolic incontinence are never meant to be personal.  As another Amazon employee explained, “Jeff Bezos is not someone who takes pleasure in tearing someone a new a- - hole…he is not that kind of person. Jeff just doesn’t tolerate stupidity, even accidental stupidity’.  In other words, straight-talk eruptions are rationalized as reactions to employee malfunction and thus, it is not the ‘nut’ (derived from ‘nutter’, the term used by Amazon employees to describe a Jeff Bezos eruption) who must bear responsibility for his or her emotional control, it is the employees.

2. Meat-Grinder Cultures
 
“If you are not good, he will chew you up and spit you out. And if you are good, he will jump on your back and ride you into the ground”……on working for Jeff Bezos
 
The press loves to profile the exceptional lengths taken by firms such as Google to attract, delight and retain employees.  Driven by the desire to be ‘employers of choice’, and/or by highly competitive labor markets, these firms provide all manner of exceptional benefits and working conditions to enhance the experience, productivity and retention of their most valued assets.
 
Then there are the firms that appear to be the antithesis of this approach. These organizations drive staff hard, treat them as expendable, interchangeable assets, and pay little attention to working conditions and benefits. The term ‘meat-grinder’ culture has become a common descriptor of these environments.
 
Pundits will argue that employee-friendly organizations far out-perform their meat-grinder alternatives. Inconveniently however, they would be hard pressed to cite the wildly successful ‘Everything Store’ as evidence. Amazon is an organization that grinds with the best, or is it worst, of them.  An unrelenting, charging, take-no-prisoners organization, it counts its own employee among the regular casualties. As one employee states, “many just can’t take working for Bezos after a while. He demands more than they can possibly deliver and is extremely stingy with praise”.  As for a ‘balanced lifestyle’, one former Amazon employee stated categorically, “It is absolutely not a friendly environment or one compatible with raising a family”.  And it is unlikely that you will see YouTube videos of Amazon employees singing Kumbaya amidst the company’s vast cubicle farms. That is because Bezos “abhors what he calls social cohesion………he’d rather his minions battle it out backed by numbers and passion”.
 
There is a simple logic to the meat-grinder culture found in many entrepreneur-led firms, and it is not one born out of sadism or evil. From Amazon’s inception, Jeff Bezos’s vision has been so outrageously grand and daunting that only Herculean determination and effort stood any chance of avoiding total failure. It is fully expected that not every employee will have the ability or almost irrational drive and stamina to endure such an uncertain and difficult mission. For those who fall or fail to keep up however, there is simply no time for coddling. The quest cannot be interrupted. These casualties must be removed and replaced with fresh troops. This is simply common sense and sentimentality has no place in the equation. Such logic also drives Amazon’s ‘top-grading’ practices where the employees rated ‘least productive’ must be replaced every year. One can assume that Steve Jobs’s ‘zero tolerance for not performing’ had a similar genesis and ripple effect at Apple.
 
Though turnover has always been high at Amazon, new employees are not difficult to find. In fact there is a long line-up of executives who covet the opportunity to join the 90,000 employees who already work there. This is despite the fact that Amazon pays only median industry salaries and has a four year, heavily back-end loaded employee stock option plan. The reason for this apparent mass masochism is straightforward. Runaway success transforms even the craziest entrepreneur into a genius, and reframes even the most punishing of environments into an attractive test, or rite of passage.  And an appreciating stock value has always been the payoff in the tech sector quid pro quo wherein employees trade servitude for dreams of riches.
 
For firms without the counter-balancing stock performance or likelihood of a lucrative exit, meat-grinder cultures quickly wear thin,  rumor mills swirl, and high performing employees become ever-more difficult to attract.  Such organizations either pay what amounts to ‘danger pay’ (also known as a meat-grinder ‘tax’ premium) to attract talent or begrudgingly resign themselves to hiring ‘B’ players while lamenting the shortage of ‘good people’.
 
There is an interesting rub to working for meat-grinder firms such as Amazon...while employees find working conditions unrelentingly demanding and thankless, survivors (alumni) look back with a certain fondness, if not awe, at what they were able to accomplish with their feet held so close to the fire. They come to appreciate that good entrepreneurs drive their people to achieve more than what seemed possible. This is not to say survivors ever want to revisit such a life but the memories, on balance, will be positive. As one former Apple employee said of Steve Jobs, “I hated working for him but I have to admit I did my best work for him, hell everyone did”.

3. Hiring:  Followers or Fighters
 
“When you got right down to the nut-cutting, you either clicked your heels and said ‘yes sir’ or there was trouble. Ted Rogers was very much an autocrat. He would tolerate a discussion, but he would not tolerate his edict not being followed when the discussion ended”…..  on Ted Rogers in High Wire Act
 
Assembling high performing executive teams is a challenge for most organizations. For entrepreneurs it is especially difficult as they must compete with larger, more entrenched, safer and better capitalized interests for that talent. Even before that, they must figure out exactly what ‘high performing’ means to them.
 
Entrepreneurs know, or at least believe they know, where they want to take their businesses and how they want to take them there. They also know that along the way they need to put together a team that can effectively execute, organize, administer tasks and manage others.  While this is straight-forward what is less so is determining where a host of other executive attributes fit into the mix. For example, the ability to make decisions, think strategically, independently, and delegate are foundational management competencies in most large corporations. Many entrepreneurs reason that they too should recruit managers with these seemingly positive executive attributes. Unfortunately, while these qualities may be ‘positive’ they simply do not fit into a firm where the leader’s own list of attributes include controlling, untrusting, directive, and highly attentive to the minutiae of the business. Thus, hiring executives who are independent thinkers (“I don’t like being micromanaged”) and delegation-oriented (“You want me to stay on top of every single account? I have managers for that”) is a recipe for conflict rather than success in most entrepreneur-led firms. Similarly, a highly strategic executive will quickly learn that the realm of strategy is very near and dear to the entrepreneur’s heart and there may in fact be precious few opportunities to flex those intellectual muscles. As a case in point, when Jeff Bezos agreed to hire a seasoned Chief Operating Officer (his board of directors called it ‘adult supervision’) he recruited an executive from Black and Decker. On the executive’s arrival however, “Bezos kept his hands firmly on Amazon’s steering wheel ….. voicing detailed opinions about everything from acquisitions to minute changes in the appearance of the company’s homepage. The executive thought he had signed up to run the company, and eventually began to agitate for more authority”.  Unfortunately, as the executive agitated, Jeff Bezos became agitated and the writing was on the wall. To this day there is no COO or president at Amazon.
 
Many of these potential conflicts are not obvious to the well-intentioned entrepreneur and thus the risk of hiring for attributes that immediately become problematic is quite real. If such mistakes are not fatal, entrepreneurs will in time reconcile the conflicts in one of several ways:
  • Some entrepreneurs come to see their firm’s growth as inextricably tied to their personal growth. They take steps to develop their leadership skills so as to better be able to integrate professional managers and systems into their firms. They retain coaches and/or mentors, join presidents clubs, take leadership development training, read books etc. etc. etc. Over time they mature and grow though the journey is usually halting and prone to lapses under stress. Consider for example Jeff Bezos’s efforts to “modulate his management style and keep his notoriously eviscerating assessments of employees in check.  In one meeting Bezos reprimands one of his executives telling them they are stupid and to come back when they know what they are doing. Then, he walked a few steps, froze in mid-stride as if something had suddenly occurred to him, wheeled around, and added, ‘but great work everyone’’’.
  • For those entrepreneurs less concerned with ‘personal growth’, they slowly become more adept at hiring managers who will ‘fit’ with them. They eventually ask themselves whether they really want an ensemble cast of stars or a supporting cast to THE star. The latter executive team may well be very competent but individually each accepts his or her place in the shadow of the star.  The term ‘yes men’ is sometimes used colloquially to describe such management teams, which are common in entrepreneur-led firms.  Meanwhile, elements of the ensemble of stars can be found at Amazon.  Jeff Bezos began his career as a ‘quant jock’ on Wall Street, a marketplace where firms are “unapologetically elitist” in hiring the smartest, most driven, aggressive and money motivated. Jeff Bezos enjoys sparring with the ‘hyperintelligent’, individuals who keep him intellectually fit and primed for battle. He is not only attracted to those of like-mind but also of like-temperament. This is why he hired Jeff Wilke, an MIT engineer/MBA whose “cerebral and occasionally impatient management style mirrored that of Bezos’’. It bears noting that this so-called “impatient management style” is referenced later in the book as “a volcanic temper”.  Another key manager is described as a “whip smart, tireless worker, demanding ….and a screamer”. And yet another key executive team member is described as a “battering ram…who wants to drink blood”.  Amazon’s gladiator culture is relished by the most ferocious and brightest combatants while being feared by others. However, notwithstanding the skills and effectiveness of any individual Amazon gladiator, as in the Roman Empire, they are all still the Emperor’s slaves.  And at Amazon, there is only one emperor and he is also happens to be the best gladiator of them all.
In Part II we will outline the remaining characteristics of entrepreneur-led firms and offer thoughts for professional managers who are considering joining their ranks. 

 
About The Author
Robert Hebert, Ph.D., is the Managing Partner of Toronto-based StoneWood Group Inc, a leading executive search firm. He has spent the past 25 years assisting firms in the technology sector address their senior recruiting, assessment and leadership development requirements.
 
Dr. Hebert holds a Masters Degree in Industrial Relations as well as a Doctorate in Adult Education, both from the University of Toronto.