Five Key Takeaways After One Year as a Startup CEO (spoiler: contains provocative viewpoints)
Eugen B. Russ – 7. Jan 2015
It’s now been a little over a year since I took over the position as CEO of Erento on December 1st 2013. That’s why I thought this would be the perfect time to summarize my personal key lessons from our failures and successes of transforming a company from a traditional marketplace to a digital solution provider (read more about our vision here).
Erento as a company is now over 10 years old, but I’m still calling it a startup and identifying myself as a startup CEO. Why? Well, we are completely turning the company around and changing our business model, and often times it means building everythingfrom scratch. You might have noticed this already if you’ve read any of our other blog posts.
Back in 2013, I thought four tough years of management consulting at one of the most prestigious consulting companies worldwide and an Ivy League education would have prepared me well for the challenges ahead. I was arrogant enough to believe that turning around a company would be easy and accomplished in a matter of weeks.
It turned out I could not be more wrong. In the end, the only thing that kept me going was my ability to learn and quickly adapt.
I have summarized my top five lessons learned – some of which might be a bit provocative:
Be good at hiring AND firing
When I was facing a vacant position, I felt compelled to rehire for that position ASAP. As a result, I hired sub-optimal fits more than once. Consequently, we as a company spent a lot of energy coaching someone who was not a perfect fit, only to get mediocre results. Disappointed with a person’s performance, we had to let them go and were back to square one: a vacant position.
It is better to keep a position vacant and do the job yourself rather than filling the position with a mediocre fit. Don’t shy back from making tough decisions.
When speaking with fellow CEOs, they quickly reassured me that they have never made the mistake of firing someone too early. I can 100% attest to that. Firing someone is an uncomfortable decision that, unless you are a sociopath, you will try to avoid at any cost.
Moving forward, I promised myself to follow the management philosophy of Netflix: Imagine an employee comes into your office tomorrow and tells you that she was leaving the company. Would you do everything in your power to convince her otherwise? If the answer is no, you should let that person go immediately with a generous severance package to free up the position for someone else.
The people in your team make all the difference: be sure to select the right team to work with or you will not succeed!
Be resilient: The path to success is not a straight line
Rome was not built in a day. Don’t underestimate the effort involved in creating a great company. You will have to be in this for the long run: it’s a marathon and not a sprint.
When I first joined Erento, I was convinced that we could turn around the company within a year, launch a great product and change the world.
While we have been successful in creating an outstanding young, dynamic and ambitious team, we are still far from having a great product and changing the world.
After finally making the hard decision to replace key people in product development back in September (again too late), our new development team has recently and successfully launched a first MVP with www.erento.fi, which is being improved and added to every day.
I wish I had read the book “The Hard Thing about Hard Things” earlier. It is the story of Ben Horowitz – a serial entrepreneur and now VC. He describes very transparently the hardships, failures and lessons he faced as an entrepreneur. I highly recommend this book to anyone who is running a company: knowing that other (now successful) people struggled as hard or even harder makes the daily struggle more bearable.
One thing I have come to realize is that the path to success is not a straight line from A to B, but rather a journey with a lot of obstacles, challenges and setbacks. It often feels like for every two steps forward, you take one back.
What helps me every day is simply being aware of this and not getting too frustrated about it.
Have a vision and build a culture
Right when we departed on our journey to transform Erento, we defined the company vision and culture. We put those principles into writing and added them to the regular performance evaluations (upward and downward feedback) to ensure we would hold ourselves to these standards (see here for how we designed an employee performance evaluation system, and how we later updated it).
Be sure to communicate clearly and often on vision and expectations: we have a very open feedback culture at Erento. We make sure people know exactly what is expected from them and where they stand in terms of performance.
Alignment is the A and O of a well-functioning culture: we strive to have highly aligned but autonomous people working at Erento. We believe that this allows us to get the best out of people.
We also do our best to promote a positive, fun and creative working atmosphere. Hereyou can read more about the things we’ve done to make Erento a company that’s fun to work at.
For more insights, I can highly recommend these two videos on engineering culture at Spotify:
Be close to the customer
I have made it my personal goal to meet at least four real customers face-to-face every month and have calls with several more over the phone.
Being close to the customer is crucial if you want to understand how people use your product and what their fears, desires and goals are.
When I see a customer I usually lead with a question about how we as Erento can improve and make their life easier. The conversation usually goes from there and I am busy taking notes and occasionally asking follow up questions. During a typical customer visit day, I meet four customers for 1.5 hours each.
On my flight back, I reflect on and try to summarize the notes from each visit into a maximum of three takeaways and actionable items. We then discuss these notes in the management meeting and together decide on which actions to take.
We also strongly rely on immediate customer feedback when developing our product. We quickly release an MVP (such as www.erento.fi) with a minimum amount of features and then develop the product further together with the customer.
Have a passion for technology
I programmed myself as a kid, have overclocked (tuned) PCs and almost got kicked out of school for hacking the old Windows NT server system (via a well-known exploit).
Even though I have not coded myself for more than a decade, I still share the passion of building great software with my development team.
I believe it is crucial for a CEO of a tech company to understand the fundamentals of coding. My big goal for 2015 is to get back into coding deep enough that I can contribute with at least one functioning feature to the Erento 2.0 production.
Lastly I would like to share the top five books that have helped me within the last year:
- Entrepreneurship: Ben Horowitz: The Hard Thing About Hard Things
- Product Development: James Shore: The Art of Agile
- Sales: Robert Cialdini: Influence: The Psychology of Persuasion
- Startup: Eric Ries: The Lean Startup; Alistair Croll and Benjamin Yoskovitz: Lean Analytics
- Behavioral Economics: Daniel Kahneman: Thinking, Fast and Slow
We hope you have enjoyed this post. If you have any questions, comments or suggestions please don’t hesitate to contact me or anyone at Erento. Again, thank you for joining our journey of transforming Erento into a great company!
- Be good at hiring AND firing: Be very selective with the people you have on your team.
- Be resilient: Have patience and endurance. The way to success is not a straight line but full of obstacles.
- Have a vision and build a culture: Communicate often and clearly. Ensure alignment and autonomy of people. Do your best to make your company a fun place to work!
- Be close to the customer: Solicit customer feedback often AND act on it. Be a customer-driven company.
- Have a passion for technology: Share your developer team’s passion for building great software and enable them to do so.