Startup Therapy Podcast

Episode #188

Ryan Rutan: Welcome back to the episode of the startup therapy podcast. This is Ryan Rotan joined as always by my friend and the founder and CEO of startups dot com. Will Schroeder will. I was talking to one of our founders last week about his longing, his yearning for the days of old. When all he worried about was shipping product, servicing customers innovating on what they're delivering. And now he's spending all of his time in meetings about meetings and hr policies and what next year's benefits package will look like and what should they get as the Christmas gifts this year? Why does this happen to startup companies? Why does this happen to us?

Wil Schroter: You know, it's funny, I don't think people realize it's happening. I think it happens so slowly that one day we were playing offense and that's all we were doing just getting the M V P out, getting traffic to the site trying to get our first dollar in the door, which is where our focus is supposed to be, that's called building a business. And then all of a sudden it started, you know, this business started to grow a little bit and we need to do some hiring, right. You know, we need to create a little infrastructure, et cetera, but our focus as leadership changed and all of a sudden we woke up one day and like you said, we weren't really building an outward facing business anymore all of our time and all of our teams time was totally internally focused at the expense of growth, at the expense of revenue at the expense of customers. And I think we think about it like, you know, as founders, whatever we think about it as look at us, we're growing, we're hiring et cetera. I look at it as you are wildly distracted from your customers and that's dangerous.

Ryan Rutan: Super dangerous. Yeah. And to your point, it is something that I think happens over time and it happens relatively slowly and we don't feel it certainly there are things that accelerate it, taking on funding would be a good example where all of a sudden, you know, we, we go on hiring frenzies or marketing spending frenzies. But for the most part companies and for most companies, because that's just the way it works who aren't funded, just normal growth still yields this, but it yields it so slowly. We don't feel it. It's not like we, you know, went to the office or didn't go to the office yesterday wearing our hoodie and our chucks. And then today I wake up and I'm wearing a polo shirt and I look down and there's a tag that says manager on it. I'm like, what, what happened? Because that's what it feels like. Right? When you have that realization, all of a sudden you've gone from leading to managing, that's sort of how it, how it works in my mind is that we've gone from leadership and driving external outcomes to managing internal for lack of a better term bullshit. Right. Again, some of it's necessary. It just, none of it feels critical. It all feels like it has to get done, but it just never feels that important.

Wil Schroter: Well, I think the danger is we lose sight of the fact that once we move into defense mode where let's talk about a spectrum on either end of the spectrum is offense to defense. Offense is creating sales, marketing, shipping product, talking to customers, that's offense that is growing the business outwardly. Defense and I'm not diminishing defense. We have to play defense. Well, defense is creating policies, hiring people maybe finding office space, creating infrastructure, et cetera. That's defense. Now, the problem is as we start to grow, our focus goes away from offense and it starts to shift to defense and, and we start to believe that we can win games with defense. So we start to think, wow, we just hired 50 people. That's the win. No, it's not hiring people isn't the win. It's hard to do and it's valuable. Don't get me wrong. That's where you want to play good defense. But if at some point you start to believe that finding office space in hiring people is the same as selling customers and growing this business. No lack of businesses have proven that is not true. You know what I mean?

Ryan Rutan: Yeah. Yeah, I, I think it's interesting because I think one of the catalysts for that is that good offense necessitates defense. Right, at some point when we do a great job of growing the company, we're adding more customers. Therefore, we need to add more staff, therefore, we're eventually gonna need to add a policy, right? So I think that by, by virtue of that growth, there is some necessitous defense that has to be played, but it sort of gets forced by the good offense. Here's why we don't transition back into offense mode. No amount of awesome policies are gonna force you to go and play better offense. No amount of great policies is gonna say like, hey, based on that new hr rule, I'm gonna go sell more next month. It doesn't happen. And so we just end up in this complacent state where it's like we just become defense,

Wil Schroter: I think for the leadership again, this isn't just the founder but the whole leadership team, a lot of this is just a sanity check to remind ourselves that while we do need to go back out and play some, some defense, we do, let's not do that for, for too long. But more importantly, more importantly, this isn't just about staffing or anything else like that. It's when the focus becomes what's happening internally. So, so I'll give you some examples when the focus becomes more about Ryan and I each having our own Fife and who has more people and who has more responsibility when our focus becomes pleasing our boss versus pleasing our customer. This is where organizations start to calcify and become shitty companies. Whereas before we had no choice but to be outwardly focused, we had no choice but to try to drive revenue and ship products because it was survival. Now, you know, if we don't focus on that stuff too much, but we make sure that our own world is taken care of. We'll be ok. That's a dangerous mentality

Ryan Rutan: for sure, for sure. What do you think drives that again? Like we talked about, there's a few things that can kind of catalyze that. But what is it that shifts us into that defensive mode? Why do we feel comfortable staying there? Is it a rest break? Right. Is it like God, we work so hard on the offensive side of this and we, we ground and we ground and we ground. Does defense just feel safer? Does it feel more, more linear? What is it? Why do we stay

Wil Schroter: there? It's a couple of things. The first is we're bringing on a whole bunch of people that have never worked together before. So there's just inherently a lot of friction there. I can't just do the no look pass like I can do to you every day now, Ryan, because we've been working on this for 10 years together. I don't have to wonder what you're gonna do next, et cetera. Like I'm not sizing you up because, like, I know exactly what you're capable of and vice versa. But if we just both got to a random company five seconds ago, that's a whole lot of relationship, trust, a lot of things to build that are kind of built it like on a defensive level. Now, that's just one piece. The other piece is, I'm an employee 100 and five in Newco. I'm more focused on making sure that my career is good at Newco. Then I am making sure that customers are as happy as they can possibly be. We get to a threshold, especially with sides with the company where we create a certain amount of dysfunction where people can start to just focus on their lives and their world internally and not really give a shit about anything else. That's a dangerous spot.

Ryan Rutan: Yeah. And from a leadership perspective too, it becomes harder and harder to see that happening right at the early stage. If you've got one person in marketing and marketing is not going well, you know why, right when you've got 40 people in marketing and some aspect of marketing is not going well, it may be a lot harder to suss that out, right? It may be that one individual who, as you said is really just more concerned with fitting in and figuring out the political environment of the company, the cultural environment of the company and just, you know, trying to get by and stick around, not trying to really make anything happen. Because while the company is already moving, there's already a fair amount of momentum. If I'm a little bit of drag doesn't really cause any trouble. Let

Wil Schroter: me build on that because I think it's a great point. Let's say that you've got 40 people in marketing, which would be a massive marketing staff, right? You've got 40 people in marketing. And now if something goes wrong, holistically within marketing, right, traffic is down, sales leads are down. What have you now, instead of any one person being consequential or to blame for that. Now, it's more about as long as I'm not to blame or as

Ryan Rutan: long as the perception is that I'm not to blame. Right. Right. Right. The finger pointing begins very quickly.

Wil Schroter: Exactly, because the company is big enough at this point that me being right or wrong isn't necessarily going to change the trajectory of the company in my mind. But me being wrong in the eyes of my boss gets me fired. So my incentives all of a sudden change from how do I make things better externally to how do I make sure my ass is covered. Yeah, exactly. That is a very different place. And an organization can take that turn and become that organization in five seconds flat. Yeah, it doesn't take long. Yeah. The, for the founders who have never been through this catharsis, been through this process before, they don't even see it coming. They don't even see it coming. They go into this thinking, well, I was externally focused on getting customers and, and making sure product ships, I guess that's the way everybody else will think too. Not true.

Ryan Rutan: Yeah, it's, it's tough when you are externally focused. And I guess this is, this is part of the danger. This is where this becomes such a balancing act and the need to shift focus, external, internal, external, internal at the leadership level is really there because if you stay externally focused, it doesn't mean that everybody else does, particularly if you're externally focused, you may miss the fact that everybody else is actually facing the other damn direction, right? Because I'm looking this way. Uh I didn't notice that the rest of you were actually about faced. So it is tough. And I think that one of the one of the things that helps us a lot, like we've, we've talked about this before internally. Um I've talked to founders about this all the time when they ask like, you know, things about like measurement of performance becomes really important here, right? Because then you start to have some understanding for, you know, is everybody doing what they're supposed to be doing, are they focused on the right things? Are they just all internally focused? Right? If somebody's written 15 great reports in the last month, but not brought in a single new lead, you know, 15 marketing reports but not brought in a single new lead. Was that good work? Well, they're great reports. But is that what we needed right now? Important, maybe even interesting, maybe helpful but not critical, right? And so things like O K R K P I s become really, really great tools here because it allows us to keep focus and to allow people to see their impact because I think that's something else that happens, especially if you're employee one oh five, it may be really hard for you to tell which of the ripples in the pond you're causing, right? Am I actually having an impact? I'm doing what I'm told maybe or maybe not or maybe I don't really understand what I'm supposed to be doing, but I don't really understand what the holistic impact of that is on the organization. I think the better visibility we can give people on the impact they have when they focus externally, the more likely they are to stay focused externally. But if they believe that all of their incentives lie inside the company and keeping other stakeholders happy, of course, that's where they're gonna focus, right? We're, we're all, you know, self preserved at some point, right. Preservationists made up a word,

Wil Schroter: you know, something that's really funny about everything we talk about here is that none of it is new. Everything you're dealing with right now has been done 1000 times before you, which means the answer already exists. You may just not know it, but that's ok. That's kind of what we're here to do. We talk about this stuff on the show, but we actually solve these problems all day long at groups dot startups dot com. So if any of this sounds so much, stop guessing about what to do. Let us just give you the answers to the test and be done with it. I think when you hit a certain size, you're gonna see all this stuff. I'll give you an example. I'll never forget this. And one of the companies I was running early on company is getting pretty good size and we had a Christmas party and this is in the Midwest in Columbus, Ohio. But we had some people that come in from uh that we'd hired from New York. Their Christmas parties were a little bit more raucous than our midwestern Christmas parties were. And we had somebody come in and show up in an outfit that was exponentially not appropriate, right? I mean, on a scale of 1 to 10, right? 10 being like just naked, it was way up there, right? And, and needless to say like the midwesterner who, you know, weren't taking it the same way they probably did in New York and this person didn't know not their fault, etcetera, you know, no mall in. But next thing I know Monday morning we're having an emergency board meeting about dress code at company events. And I'm thinking to myself, man, this is how we're spending our time now and again, it, it wasn't, you know, it was something that needed to be addressed, right? I get that and then fast forward over the next few years as the company gets bigger and bigger and bigger, I find myself getting scheduled for meetings about upcoming meetings. Yes, those

Ryan Rutan: are fantastic.

Wil Schroter: How the hell are we going to grow and maintain a business if I'm busy in meetings about meetings? I also hated my job at that point. I loved the company, but I hated my job because I was like, this isn't what I signed up for. Right.

Ryan Rutan: Yeah, I switched over to like pure management science at that point, which

Wil Schroter: is, I wanted to build stuff. I wanted to sell stuff. I wanted to, you know, go grow a company. And again, you can say, well, ok, we have, you know, other folks that are do, do that. It's r coo is things that's not my point. My point was that just in the natural growth of our business, we had allowed ourselves to be so distracted and so kind of pulled in, by the torrent that is internal focus and politics and policies, et cetera that it became ok and maybe even preferred to not be externally focused anymore. And that is a dangerous spot. It's why big companies aren't good at doing what they do because they solved their problems so long ago, somebody's smart and, you know, crafty figured out how to sell that product and get it out there and now it's just a bunch of clock punching automatons that just kind of keep keep the thing alive. They're not

Ryan Rutan: your job to not let it die.

Wil Schroter: Right? And so I guess my point is it's a dangerous spot as founders to look around and say to ourselves, I guess we're just not externally focused anymore and be OK with that. That's the beginning of the end. Yeah, I, I

Ryan Rutan: don't know, I feel like most of the founders that I talk to when they realize they're in this position, they do want to change it. I think the you, you hit on it really early on which is that it happens so slowly you don't realize it's happening as it's happening at some point. It gets to be enough of it where it's like, oh my God, you know, we haven't done anything new innovative. We haven't pushed new sales, we haven't moved the meter in any way other than, you know, our policy documentation stack has gotten deeper in years. And I think most of them kind of like you were doing at that time, you rage against it, right? Because it's not what we set out to do, it's not what we want to do again. Some of it is absolutely necessary. And sometimes this is why we see founders step aside as CEO S because they no longer want to do the work that's now required at the organization of the size that it is. They're like, I just want to build things and like, well, we've already built most of what needs building. So the reality is sometimes you do get to the point where there is a lot more defense to be played. And that's where these, these really strange decisions around. Well, how do I still fit into this, uh, matrix become a topic? But before we get to that point, right, when we're still at that stage where we do need to be externally focused and there is still a lot to be accomplished. I think, you know, one of the challenges becomes leadership providing the, the correct incentives. I talked about this a little bit earlier but making sure that the incentives aren't such that people get, you know, promoted or they get accolades for what essentially amounts to pandering to leadership, right? Because all that's internal, right? Rather than showing up with big wins, it's just, you know, I did the thing that I knew would make them happy as opposed to the thing I knew would actually benefit the company. And I think that's super dangerous and there's probably a really interesting inflection point in which that occurs. And I would argue it's around like that 25 to 50 people when you grow to that size, where you no longer have the same level of intimacy with each and every one of the staff and you lose sight of what they actually are capable of. You said earlier, you and I have the benefit of having been doing this for 10 years together. We know where, where our capabilities start, stop and overlap and we know where we can just like, you know, toss something to the side like will's gonna catch and he's gonna run with it. I know I don't have to like lean over shoulder and see like is this, you know, what I needed or what I wanted and vice versa. But at that early stage, especially when you're like going on this hiring frenzies, you don't necessarily have that sense. And so it becomes quite easy for the staff to just say I'm gonna be internally focused. I'm going to focus on what I know will, will get nods and smiles and meetings, potentially at the expense of actually growing the business and it can be so hard for the founders to see.

Wil Schroter: Well, let's talk about how we did avoid it because we avoided it at startups dot com and not out of nowhere. It, it didn't just happen to happen. It was very, very, very intentional. Here's how it worked. We, we had two things that we kind of abided by since day one, from 0 to 200 people. Number one was, we don't hire middle managers, we just don't hire them. And the second is what we said is every general carries a gun, which means every single person. Me, Ryan, everybody, everybody on our team. Uh No matter what your sea level title is, you are in the mix, right?

Ryan Rutan: If you don't believe this, if you don't believe this this morning, I did keyword research and then I handed it to Will and he wrote an article, right? We are in the trenches, we are

Wil Schroter: writing, we're writing keyword content that you will never read. I mean like, yes, you

Ryan Rutan: will Google will ensure that you find

Wil Schroter: it. But here's what we say. We don't want to be in any position where any person in the company doesn't either ship products get customers or help customers. That's it. And we mean very specifically when we say help customers, we don't mean like amorphously. We mean you are on the phone or on zoom with customers fixing stuff. There is nobody here that just kind of hangs back and pushes papers and creates reports and does 3 60 degree reviews that actually doesn't exist here.

Ryan Rutan: It has been a long time since I've seen a good Ven diagram. Well, maybe we should hire somebody.

Wil Schroter: No man. Like, and, and it has been invaluable to us as a company, invaluable because what it does is a few things. Number one, it's easy to be less motivated when you think there's some fat cat above you who is just kind of sitting around sitting on all your work. But when the ceo CMO C O et cetera are sitting right next to you doing the same work that you are even as a big company, right? It's hard to look at that and go, well, I guess I can't work as hard when the people that are above you theoretically, right? An org chart and ours is as flat as it gets, are working just as hard as you on the same work. It's really hard to not say damn dude. I kind of kind of, you know, gotta get my groove on in order to like be able to run at that level. Yeah. Well, that's

Ryan Rutan: that distinction I draw between leadership and management, right? That's leadership, right? You're doing the things they're doing, you're in front of them showing an example of here's what needs to get done, here's how to do it and I'm willing to do it. Right. Management says here's what you need to do, here's how to go about doing it and I'm gonna watch to make sure you do, right? We don't need

Wil Schroter: that. Well, the other side of it is, I think it creates a liability in a good way. On the part of leadership us to be able to say, I'm not gonna ask you to do anything I wouldn't do myself or I'm not doing right now. Right. I'm not gonna ask you to call on a customer unless I'm calling on a customer. I'm not gonna ask you to, to ship products unless I'm shipping product. It's really hard for managers, you know, people who, who do have responsibility for other people to stay in the mix, like stay in. Do I see this in tech all the time? The way to grow in almost every company is to become a manager? And the irony is developers are typically shitty managers. Engineers are shitty managers, not all of them, some of them are great, right? But often they're not great yet. The only way they feel they can grow is taking a job in a career path management. That wasn't really what they were really well built for. And again, this isn't a knock toward engineers. I feel the same way about creatives, right? Having run a big agency, it always felt like the people that moved up weren't necessarily the best creatives. They were just kind of the best managers or they actually were the best creatives and now they're not doing creative anymore, right? Yeah, I

Ryan Rutan: mean, it's the Peter principle in in action, right? You get promoted to your highest level of inefficiency and you were a great designer, you're a great developer. So let's let you manage other people. Turns out your development skills and management skills are totally unrelated,

Wil Schroter: right? 100%. And again, you see this within founders, you mentioned this a moment ago where the founders were really good at being founders, kind of like taking that chaos and making it something. And now they kind of just need to be managers right now. Again, you can make all kinds of arguments where people have turned that corner current times, you may question Mark Zuckerberg or Elon Musk's, you know, leadership abilities given where those businesses are going, right? But you can't doubt that they took those organizations very far. They made the, you know, the transition from crappy founder to competent leader at some level, even if somebody else had to take over the job from there, I don't think at Apple for a second, you could have taken Tim Cook in a garage and created what Steve jobs and Wozniak did, right. But at his level, at the way he's managing, he's a phenomenal manager, Tim Cook right? At the level that he's at point being, I don't want to torture Steve jobs into being Tim Cook or vice versa. I want to find the right person for the right job. And so when we look at our own organization, what we say is, look, we want people that can not only manage and we all have teams that we manage, but can also do, can contribute can ship, can sell and actually do the work. That's how we stay very, you know, externally focused. So in addition to all the stuff related to founder groups, you've also got full access to everything on startups dot com. That includes all of our education tracks, which will be funding customer acquisition, even how to manage your monthly finances. They're so much stuff in there. All of our software including BIZ plan for putting together detailed business plans and financials launch rock for attracting early customers and of course, fund for attracting investment capital. When you log into the startups dot com site, you'll find all of these resources available.

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