The Great CEO Within by Matt Mochary, Alex MacCaw, and Misha Talavera
To put it simply, learning how to run a company while running a company is extremely hard. It always seemed like there was just no time.
So in 2015 I became the "one-day-a-week shadow CEO" at a company called NeoReach. During that one day each week, I held all the company’s internal meetings (one-on-ones with each executive, and the executive team meeting). I ran those meetings and was able to show the founding CEO my method. After only a few months, the knowledge transfer was complete. The founding CEO was able to run the meetings (and the system) as well as I could and so took back over. I have since served as a one-day-a-week shadow CEO at other companies—Brex, OpenAI, Clearbit, Bolt, and AngelList—and will likely continue to do so at others.
In my coaching, I found several things: I repeatedly see the same core issues in nearly every company, and I work with my mentees to address them. While there are many books out there with excellent and relevant knowledge for founding CEOs, there is no single book that is a compendium of all the things CEOs need to learn. Becoming a great CEO requires training. For a founding CEO, there is precious little time to get that training, especially if the company is succeeding.
There are many reasons to create a company, but only one good one: to deeply understand real customers (living humans!) and their problem, and then solve that problem.
Solo founders have high rates of burnout. The emotional burden is just too high. As with any trend, there are exceptions. But the rule generally holds. Y Combinator has a strong bias toward accepting co-founder teams (versus solo founders) for this reason. Owning much of something is better than owning 100 percent of nothing. Find a partner, someone who has complementary skills to yours. Share the emotional burden with them. That will ease the load significantly. Give up a large percentage of the company. It’s worth it.
Y Combinator has another strong belief: founding teams should never grow beyond six until there is true product-market fit. Product-market fit (PMF) is the milestone of having created a product that customers are finding so much value in that they are willing to both buy it (after their test phase) and recommend it.
Combinator has another strong belief: founding teams should never grow beyond six until there is true product-market fit. Product-market fit (PMF) is the milestone of having created a product that customers are finding so much value in that they are willing to both buy it (after their test phase) and recommend it.
The first goal of the company should be to achieve real PMF, not vanity metrics that fool people inside and outside the company that PMF has been achieved.
Updated: Dec 12, 2022
Tasks should be written as single actions (as opposed to broad goals). The key is to not have to think about what needs to be done again once the next action has been written down. The next action should be written so clearly that all you need to do is follow its direction when you read it next.
In startups, fires never cease to burn. One of the most common complaints I hear from CEOs is that on a day-to-day basis, they seem to have infinite things to do, yet weeks will go by and they don’t feel like they have accomplished anything. This is the result of getting bogged down with the small, immediate things and losing track of the important, long-term ones. The top goal framework will help you fix this. Greg McKeown, who wrote a phenomenal book on productivity called Essentialism: The Disciplined Pursuit of Less, boils this down to one key concept: Schedule two hours each day (i.e., put an event in your calendar) to work on your top goal only. And do this every single workday. Period. The earlier in the day you schedule this top goal time, the better, so as to avoid other issues (and people) from pressing for your attention. Research shows that we have more decision-making and thought-processing energy early in the day when our brain is freshly rested. Take advantage of this high-quality brain functioning by doing the important stuff first. During this top goal time, do not respond to emails, texts, calls, and messages. Only work on your top priority (your top goal for the current quarter) during these two hours. If you follow this pattern each workday, you will achieve amazing things.
When in meetings, I often see CEOs making the mistake of constantly checking their messages. They cannot get away from being "on," if even for a second. This is not only disrespectful but also defeats the purpose of the meeting, which is collaboration with the attendees present. It sends a message that the meeting’s content is relatively unimportant. Furthermore, it also breeds a bad habit for the entire company—one that will be hard, if not impossible, to break down the line.
Whenever you find yourself saying something for a second time (to a second audience or in a second situation), it is highly likely that you will end up saying it again and again in the future. To vastly improve the quality of the communication and reduce the amount of time that you spend communicating the information, write it down.
Updated: Mar 24, 2023
It turns out that we perform our best when we are having fun and feeling good about ourselves.
The easiest trigger, in this case, is a piece of paper with the word gratitude printed on it and taped to your night table, the wall by your bed, or the mirror in your bathroom. When you see it each morning, you say the phrase "I am grateful for ________" five times with a different ending each time. (You don’t have to say it out loud; you can say it silently to yourself.) The key is to be as specific as possible when you declare what you are grateful for.
Life and company building don’t have to be hard or painful. Daily gratitude helps us realize that. Appreciation is simply an outward extension of gratitude. In gratitude, you speak to yourself. In appreciation, you speak to others. The content is the same. When you catch yourself feeling grateful about someone or something that they have done, let them know. When you hear something nice said about someone, let them know.
In a First Round Review article titled "How to Become Insanely Well-Connected," Chris Fralic of First Round Capital says that he reserves one hour each week for follow-ups and outreach, most of which include appreciations. I recommend that you do the same.
Get two highlighters, pens, or pencils of different colors (red and green are ideal, but any will do). Print out the last week of your calendar when you were working. Go through each workday hour by hour and ask yourself, "Did that activity give me energy or drain my energy?" Highlight in green those that gave you energy, and highlight in red those that drained your energy. There are no neutrals; every hour must be marked one color or the other. When finished, look for patterns of where and how your energy is drained. Now think of ways to outsource or eliminate those activities. Keep doing this energy audit each month until 75 percent or more of your time is spent doing things that give you energy. If you do, you will be able to achieve far more in less time because you will perform far better. You will be in your Zone of Genius.
What is the Zone of Genius? Well, there are four zones: Zone of Incompetence Zone of Competence Zone of Excellence Zone of Genius Tasks in the Zone of Incompetence are the things that other people probably do better than you (e.g., fix your car), and therefore you should outsource if they don’t give you joy. Tasks in the Zone of Competence are the things that you do just fine, but others are as good as you (e.g., clean your bathroom), and therefore you should outsource if they don’t give you joy. Tasks in the Zone of Excellence are the things that you are excellent at (i.e., better than others) but don’t love doing. This is the danger zone. Many people will want you to keep doing these things (because they gain significant value from you doing them), but this is the area that you should also look to move away from. This is the hard one! Finally, tasks in the Zone of Genius are the things that you are uniquely good at in the world and that you love to do (so much so that time and space seem to disappear when you do them). This is where you can add most value to the world and yourself. This is where you should be driving toward spending most, if not all, of your time.
Leaving Engineering I almost think that it’s easier for founders with less technical ability to become great CEOs. They build version one of the product, hire engineers, realize they are quickly out of their depth technically, and focus on acquiring the skills needed to become a great CEO. On the other hand, founders with a deep love of programming often struggle to focus on other areas of the business.
Many CEOs that I coach find that they sleep far less now than they did before they were running a company. For some, that means waking up in the middle of the night thinking about an issue or a to-do. For others, that means going to sleep late (to finish emails, etc.) and then being woken up by the alarm clock to make it to their first meeting.
Updated: Mar 25, 2023
Instead, know that there are two absolute numbers that are significant: $10 million and $100 million. Most people at $10 million of liquid net worth have the feeling of safety. They breathe a sigh of relief. They are no longer at risk. However, once they sit with that number for a while (and start to raise a family), their mind begins to play through disaster scenarios of how that net worth could disappear completely. Once their liquid net worth grows past $100 million, the catastrophe scenarios dry up and a sense of abundance follows. This is what you are driving for. The reality is that $10 million is more than enough to live a wonderful life. But give the mind what it wants. After $100 million, each additional dollar will likely not add in any way to your life but may well create a burden (if you buy assets that need to be maintained and supervised). Therefore, as soon as your company’s equity begins to have significant value, start to sell secondary shares until you have sold $10–100 million.
So start by placing your liquid assets in a brokerage firm. Then invest all the cash into US Treasuries while you decide on your investment strategy.
David F. Swensen is the chief investment officer for the Yale University Endowment. He is considered the grandfather of portfolio management. He wrote a book specifically for the individual investor titled Unconventional Success: A Fundamental Approach to Personal Investment. I consider it the bible for individual asset management. In it, he convincingly describes how professional money managers’ ability to create alpha is exceedingly rare, and what few of these managers there are, you likely will never meet them, as they will choose to raise capital only from the most desirable LPs (e.g., Yale University). The money managers you do encounter will likely never create positive net returns for you (after they siphon off their fees and carried interest) when compared to the public equity markets. Therefore, the best approach is for you to simply invest in low-cost index funds (e.g., Vanguard) according to a specific allocation (he recommends about 30 percent US equities, 25 percent non-US equities, 15 percent real estate, and 30 percent US Treasuries) and then rebalance as often as possible. Unfortunately, rebalancing means putting in lots of trades, and that is painful. Luckily, someone built a tool to solve that problem. Wealthfront (wealthfront.com) is the leading auto-rebalancing investment engine. Many others have copied it, but as of this writing, it is still my preferred vehicle.
The methods to making a decision are as follows: • Method 1: The manager makes the decision, announces it to the team, and answers questions. ○ Pro: Takes very little time. ○ Cons: Creates very little buy-in from the team. Gets no benefit from the team’s collective knowledge and experience. • Method 2: The manager creates (or assigns someone to create) a written straw man (a hypothetical answer designed to inspire discussion), shares it with the team, invites the team to give feedback (written and verbal), facilitates group discussion, and determines the final answer. ○ Pros: Creates more buy-in. Gets some minimal benefit from the collective wisdom of the team. ○ Con: Takes more time. • Method 3: The manager invites the team to a meeting where the dilemma is discussed from scratch with no straw man. The manager and the team equally share ideas. The manager acknowledges each idea before making a final decision. ○ Pros: Creates the most buy-in. Gets a lot of benefit from the collective wisdom of the team. ○ Cons: Takes the most time.
Jeff Bezos, founder and CEO of Amazon, requires that anyone who wants to bring up an issue or proposal must write up the item fully before the decision meeting (with someone else writing up a counterproposal if necessary). The meeting is then spent reading the write-ups. Once the decision-making team has read them all, a decision is made.
Peter Reinhardt, CEO and co-founder of Segment, says, "Apparently at Amazon they require the most junior people to speak and ask questions first. [This] also becomes a great way to show off junior talent, give more senior folks a chance to observe and give feedback, etc."
A very common cause of inefficiency in startups is sloppy agreements. People don’t show up to meetings on time, and they don’t complete the goals that they declare (or they don’t declare goals at all). The result is a spreading virus of unproductiveness and decreased morale. The antidote for this is simple: impeccable agreements. These are (a) precisely defined and (b) fully agreed to (which almost always means written) by all relevant people.
Your team members are smart. When there are problems, they know it. Hiding negative information from them does not make them feel better. If anything, it makes them more anxious. Just as you don’t know if your team members will share negative information with you until they do so for the first time, your team members don’t know if you are willing to share negative information with them until you do. Our imaginations are much more powerful than reality.
Updated: Apr 15, 2023
At any point, a leader is either above the line or below the line. If you are above it, you are leading consciously, and if you are below it, you are not. Above the line, one is open, curious, and committed to learning. Below the line, one is closed, defensive, and committed to being right. Many people lead from below the line—it’s a common state stemming from millions of years of evolution. As soon as we sense the first whiff of conflict, our lizard brain kicks in. Fear and anger rise up, then we get defensive and double down on being right. At this point we’re firmly below the line. Knowing that you’re below the line is more important than being below the line. The first mark of conscious leadership is self-awareness and the search for truth. The second is pausing, taking a second, shifting yourself into an open and curious state, and rising above the line.
I commit to taking full responsibility for the circumstances of my life and for my physical, emotional, mental, and spiritual well-being. I commit to supporting others to take full responsibility for their lives.
I commit to growing in self-awareness. I commit to regarding every interaction as an opportunity to learn. I commit to curiosity as a path to rapid learning.
Most leaders resist play because they think they will fall behind if they aren’t seriously working hard. Organizations that take breaks to rest and play are actually more productive and creative. Energy is maximized when rest, renewal, and personal rhythms are honored.
Spiritual teacher and author David Deida goes one step beyond recognizing and releasing negative feelings and teaches that empathy is the key to success. To truly feel the feelings of those around you—customers, investors, and team members alike—you must get very curious about their situations and then really imagine yourself in their shoes. If you do this, people will sense it and immediately trust and like you, because they will feel that you care about them and understand their circumstances. They’ll trust you to lead them because they know you’ll truly consider their interests in your guidance.
When people start diving into the conscious leadership work, they quickly lose their fear. And just as quickly, they realize that fear was their primary motivator—fear of failure, fear of letting people down. Once fear is gone, their life becomes much better, but their business suffers. If you find yourself in this situation, keep pushing forward with the conscious leadership work quickly to get to a place where you are motivated by joy. Then you will have the best of all worlds. Joy is an even better motivator than fear, so your business will thrive. And your life will be amazing!
The first: Have each person imagine that they are the CEO and ask themselves the question, "What are the most important issues (maximum three) for me to solve in the next ninety days?" Allowing people to put themselves in the CEO role gives them permission to think like an owner.
At every quarterly off-site meeting that I facilitate for team bonding, we do the following exercise: 1. I ask all team members to open a document that only they have access to and write down their thoughts about the company when they source their joy, excitement, sadness, anger, and fear. 2. For their thoughts of anger and fear, each person writes: a. Fact. This is what a video camera captured. There is no judgment or opinion here, only physical actions that have occurred that no one would dispute. Keep this short. b. Story. These are all the thoughts, opinions, and judgments that you have on the facts above. c. Proposed solution. These should be very specific action items with DRIs and due dates. 3. While they are doing that, I create a document with those headings and give access to all. 4. Then I ask everyone to copy and paste their writings (with no attribution) under the correct heading in the group document. 5. We all read the document. a. The writings of joy and excitement make us all feel inspired and renew our feeling of group success. b. The writings of sadness allow us to feel bonded over shared loss. c. The issues and solutions posed in anger and fear give us an issues roadmap to be unpacked and resolved one by one in the weekly leadership meetings over the course of the upcoming quarter.
If you start sharing your perspective, I will be uncompelled and unwilling to truly listen, because you haven’t been willing to consider mine. And the cycle spirals downward to distrust and dislike. There is a simple fix. I only need to prove to you that I have "heard" you. And to do that, I only need to repeat back what you’ve said in summary form (by saying, "I think I heard you say…") until you say, "That’s right!" Then you will feel heard. You will now be open to hearing what I have to say. Here is an experiment that proves this principle. The next time you encounter a person who is repeating themselves, stop them and ask if you can state back what they’ve already said. They will say yes. You then summarize what they’ve said and ask if you got it right. If they say yes again, then watch to see if they continue to repeat themselves. They will not.
For you, as a company leader, to resolve conflict, you only need to get each person to state their deepest, darkest thoughts, and then prove that each has heard what the other has said. This can be done verbally or in writing. I prefer the written method, as it takes about a third of the time, requires almost no facilitation (i.e., it’s easy to stay on script), and the action items that come out of it are impeccable agreements.
If you are the facilitator, here’s how the written method works. First, get both people in the same room. Have them bring their laptops so they can share their documents with each other at the appropriate times. Then go through the following steps: Step 1: Ask each person to write down their deepest work-related thoughts about the other person. You say: 1. Open up a document. Please give me (the facilitator) access, but do not give access to the other person yet. On the document, write five categories: a. Anger (present) b. Fear (future) c. Sadness (past) d. Joy (present and past) e. Excitement (future) 2. In every major relationship that we have, we have feelings of anger, fear, sadness, joy, and excitement. When you think about the other person and you focus on the anger that you feel, what thoughts come to mind? Please state those thoughts in the following way: a. Feeling: Anger b. Fact: You did or said… (This should be only what a video camera would have seen; no opinion, thought, or judgment.) c. Story: The thought that I had was… d. Request: You do or say… (This should be an action that the other person can take to fully address this situation.) Here is an example: a. Feeling: Anger b. Fact: You walked by me the other day and I didn’t hear you say hello. c. Story: The thought that I had was that you purposely ignored me and thus were really saying "screw you!" to me. d. Request: From now on, when you walk by me, please say hello. As the facilitator, look at both documents and make sure that they are filled out correctly. Encourage the separation of fact and judgment as much as possible. Make sure they are as specific as possible about the actions the other person did and how it made them feel. Realize that any conclusions drawn from the other person’s actions are simply stories in their head, only the feelings one has, and any specific actions are facts. If one or both are reluctant to say anything, which is often the case, you supply the thoughts that you might have if you were in their shoes. Be dramatic. Become an actor. Get into the role. State the thoughts as explicitly as they would appear in your own mind. Use swear words. The participants will start to guide you. They are likely to say, "That’s close but not quite it. The thoughts I have are more like…" When they slow down or don’t seem willing to go further, again state the thoughts for…
When creating company culture, do not underestimate the value of fun. If people are having fun, they spend more time, energy, and awareness at the company. This leads to better problem-solving and collaboration, which leads to a stronger company that creates more value. Host events that you enjoy, and then invite (but don’t require) your team members to join you. Your litmus test is whether your team members are hanging out with you and one another outside of work. If yes, you are likely creating good culture. If not, increase your efforts to practice conscious leadership (chapter 15) and keep working to create buy-in for your values.
Remember to always lead by example. Be the first one to show up each day. Be the last one to leave. Once you have department heads, they should also set this example for their departments. Do not hire department heads who are unwilling to do so.
It often begins very innocently: "Excuse me, can I please talk to you about a raise? I have been at this company for a year now and have shown utter dedication by doing such-and-such, and I believe that I now deserve a raise…" This sounds compelling, and you, of course, want to reward dedication. But if you give a raise based on this conversation, then the whole company will learn that the way to get a raise is to simply ask you for it. Suddenly everyone will be trying to curry your favor. Be very careful here. You may enjoy this behavior, but it is toxic for the company. The only way to prevent politics is to never allow lobbying to be successful, and the only way to do this is to have a written policy about as many situations as possible, particularly around compensation, raises, and promotions. Apply this policy to all team members, all the time.
The most successful method I know of is called grade level planning (GLP)—at least, that’s what Tesla calls it (another common term is "Levels and Ladders"). It calls for a very detailed definition of every position in the company and every seniority level, along with specific compensation metrics for each position and level. This is then shared throughout the company. Team members can then clearly see what they need to do to receive the next compensation and title level. Managers must not deviate from this written schema.
Whenever two people form an agreement, it should be recorded in the task-tracking system and have an owner, a comprehensive description, and a due date.
Create a document that lists all of the company’s functions and, for each, the directly responsible individual. This is the AOR list. It serves as a routing layer for any questions and ensures that no functions fall through the cracks.
A well-run company has no single point of failure. To create a team with no single points of failure, do two things: Write down all processes. As soon as you or your team members find yourselves doing something for the second time (see chapters 7 and 19), you should write down the steps of that process exactly. Place these written processes in a company-wide wiki. Cross-train a second person for each role. Map each function in the company (from the AORs) to a backup person. Have the backup person co-work with the primary until the backup knows how to perform the role. (Of course, having all the processes already written down will vastly improve this training process. So have your team write down all the processes first.) It’s a good standard practice for at least two people to know how to do any given task in the company so that if the lead person is too busy, is sick, or leaves the company, they can request that the secondary person assume the responsibility.
Determine the company’s five or six most significant KPIs, then track them religiously and make them available for the entire company to easily see on a daily basis. Post the metrics on a TV screen in a central place in the office, using a tool such as Geckoboard. As we learned from Andy Grove, former Intel CEO and author of the book High Output Management, it is also important to define and track countermetrics to provide necessary context, because metrics are sometimes optimized to a fault. For example, engineering tickets will vary in importance, so if your engineers have closed the critical tickets, they’re doing better than if they close most tickets but only the easiest ones. Similarly, if half of candidates who accept your job offers are less skilled than the half who decline, then you’re doing worse than the raw percentage indicates.
In a First Round Review article titled "Why You Need Two Chiefs in the Executive Office," Mark Organ, CEO of Influitive, gives a thorough description of COS best practices. To me, the two priorities in creating a great COS are (1) their background and (2) how you train them. When it comes to background, the best chiefs of staff that I have seen are highly organized, are excellent communicators (both written and oral), and have broad strategic business knowledge.
Most senior candidates are not attracted to the COS role because they view it as an assistant role (and in many companies it is). When you’re recruiting, dispel this concern by showing the candidate that they will have full access to all the information that you do. Being a COS in this capacity is the single best training for becoming a CEO (or head of any department) that exists.