The R word

I consider myself extremely lucky.

I’ve gotten the opportunity to work with three CEO/founders who, despite their relative youth, are already enshrined in the pantheon of great CEOs — Larry Page at Google, Mark Zuckerberg at Facebook, and Jack Dorsey at Square.

I get asked quite a bit how Jack, Mark and Larry are similar to (and different from!) each other. I could write a separate post about this, and I probably should at some point. But this post is about a very specific behavior that I have observed all three CEOs exhibit.

In short, they completely* avoid saying a certain word.

In every interaction, every meeting I’ve had with them, either alone or as part of a group or even at an all-hands, I’ve never heard any of them use this specific word.

Quite frankly, it’s incredible that they avoid using it, because they are CEOs of public companies, and as a company grows bigger or goes public, people tend to use this word more frequently, not less. What’s more, I’ve heard every single other person at each company — engineers, product managers, sales people, other executives — using it. But not the CEO.

So what is this Voldemort-like word that I have never heard Larry, Mark or Jack say?

Revenue**.

Yup, revenue. A fundamental metric used by employees, investors, media, analysts and the general public to gauge how a company is doing. One of the core measures of performance and growth for a company.

So what do they talk about instead with various internal and external constituents, if not revenue?

They create compelling narratives. They articulate the company’s purpose and strategy, as well as how it will win a market. They obsess over customers and products.

You’re probably asking the inevitable follow-up question — how do they frame winning, if not through a lens of revenue? How do they motivate people and drive performance, if not through the motivational power of revenue? How do they set company-wide growth goals, if revenue is not one of these goals?

• They frame winning in terms of market share — specifically, what percentage of all target customers in their geographic footprint are using their service.
• They motivate people by being compelling storytellers and starting with the “Why”. They drive performance by pushing teams to think deeply about customer needs and to build remarkable, differentiated products that serve these customers better than anyone else does.
• They set growth goals based on users, advertisers and/or other customer segments, versus those based on revenue and dollars.

All three implicitly understood this fundamental truth from Day 1 of founding their respective companies: revenue is a lagging indicator. Revenue is a natural outgrowth of doing the right things on every other dimension that matters. Purpose. Strategy. Customers. Products. Employees.

They also understood that a CEO who frames goals, performance or winning based on revenue than on customers, products or purpose, sets the wrong tone. It leads to everyone thinking too much about revenue, which takes focus away from doing the things that matter, the things that lead to revenue. Here are three tangible examples:

• Larry at a Google ads review, circa 2006: “These ads are terrible and not relevant at all. Make them better”. Making ads more relevant would generate a lot of revenue.
• Mark at a Facebook all-hands, circa 2011: “Our company goal is to get to 1 Billion Monthly Active Users.” Building a service with 1B MAUs would generate a lot of revenue.
• Jack at a Square offsite, circa 2013: “Every seller has two fundamental needs — capital and customers. How can we help them with either of these?” Square’s business lending product would launch and grow to over $1B in funding to sellers while generating a lot of revenue.

So, for those among you who want to become legendary leaders, stop saying “revenue” in public and private forums. Delete it from your lexicon when it comes to your interactions with your employees, investors and other stakeholders.

It won’t be easy. In fact, it’s going to be extremely hard. Revenue is a crutch. Talking about revenue is a shortcut for discussing the things that truly matter. Don’t take the easy way out. Frame goals in terms of the things that matter, the leading indicators of revenue. Purpose. Strategy. Customers. Products. Market share.

There are plenty of people within a company who will think about revenue, talk about it, obsess over it. As CEO, your goal is to keep the company and your team focused on an enduring purpose, a clear and compelling strategy, and on serving your customers better than anyone else can.

That’s how you motivate people and drive execution.

And that is ultimately how you build great companies.

Take it from someone who’s closely observed three all-time great CEOs.

Addendum: There has been some confusion about what this post actually says. Note that this post is not titled: “The one word great CEOs don’t think about.” Great CEOs absolutely THINK about their company’s business model and revenue. In fact, they understand the leading indicators of revenue better than anyone else, which helps them figure out what metrics to focus on that ultimately drive revenue. They just don’t talk about revenue in public with their teams — they don’t use revenue to motivate their teams, drive company performance or set company goals.

*I am sure some Googlers/Facebookers/Squares will point out that Larry/Mark/Jack used the word at one point or other, but (a) I don’t remember it, and (b) I’m using “completely” and “never” in a hyperbolic sense, to make my point.

**This excludes public company earnings calls, where the CEO script includes talking about revenue.