Top 8 Lessons from the Best CEOs in Tech
Key takeaways from our Spero Ventures CEO Summit
Spero Ventures recently hosted our inaugural CEO Summit, bringing in some of the best CEOs in tech to share their key lessons and insights with our founders. Here are the lessons that emerged:
LESSON #1: THE BEST FOUNDERS ARE VISIONARIES
One big theme was the need for visionary founders, especially at a tumultuous time for the tech industry. “The world is in need of entrepreneurs who want to make the world better”, Spero Ventures partner Shripriya Mahesh said. Here was the collective advice from summit speakers on solving the world’s thorniest, most pressing problems:
Eliminate the wrong answers to get product-mission fit. Tesla cofounder Marc Tarpenning, who chose the mission of eliminating the use of oil, didn’t start out knowing they’d build the now-legendary Roadster. Instead, Tarpenning and cofounder Martin Eberhard first wanted to find the biggest culprit in oil consumption. They verified that it was cars. That still didn’t guarantee an electric vehicle (EV) was the right answer, though. Marc and Martin rigorously studied both the science and the market, ruling out alternatives like hydrogen fuel cells and ethanol. They were able to conclude with a fair amount of certainty that “customers would respond to an EV if it was the right EV.”
Breakout founders get the importance of personal growth. Founder-led companies are highly correlated to breakout success, said Andreessen partner Jeff Jordan. Having worked with founders like Pinterest’s Ben Silbermann and Airbnb’s Brian Chesky, the two key traits Jordan’s seen in great founders are perseverance and an absolutely relentless desire for self-improvement. That can mean everything from hiring a CEO coach — which Jordan himself did when he led OpenTable — to reading the top two books in every management category on Amazon — which Dropbox founder Drew Houston did — to having “off the charts” perseverance like Airbnb’s founders, who at one point sold novelty cereal boxes to keep the company alive.
A strong vision is also a critical recruiting tool. Your startup is not capable of outspending Google or Facebook. You need another draw. Finding people who resonate with Skillshare’s mission of helping others learn keeps the company’s retention high, CEO Matt Cooper says.
“We’re optimistic for the role of tech in building a better world.” — Shripriya Mahesh, Partner, Spero Ventures
LESSON #2: TOP CEOS ARE POWERFUL DECISION-MAKERS
Don’t kill your company searching for a silver bullet. Smart people have a tendency to want to solve the hard problem that’s out of reach, rather than the easy problem that’s right in front of them, Cooper said. One small tweak on the checkout page at Skillshare boosted conversion 10%. Cooper and his team previously spent six months on difficult, slow to pay off long-term projects.
Don’t overthink it. Clover cofounder Leonard Speiser’s past failures came from overthinking his business, rather than solving known problems one by one and as fast as possible. Be willing to let go of your original plans. The answer is often right in front of you, he said.“My startups that were miserable failures were because I overthought it. I wrote my business plans and overthought it like crazy. Usually the answer is right there in your face. The problem is, how long does it take the team to get there?”
Your startup is not a democracy. It’s a benevolent dictatorship, according to Cooper. Sometimes you need to drive consensus, other times you have to make a call. It can be very contentious and split 50–50. Make the call anyway.
Make fast decisions. Venture capitalists aren’t here to put money into something that takes 20 years to figure out. Learn and just cut, even if it means cutting from 30 people to six, Speiser has learned. If you have to cut, it’s critical you do them all one go, Cooper says. One huge layoff is far better than three small ones.
Always have enough cash to pay yourself. The panic of being cash-short affects your ability to make good decisions, Speiser said.
“Be really clear on how you’ll make the call. Then make the call.” — Christa Quarles, CEO, OpenTable
LESSON #3: RIGOROUS BUSINESS MODEL FRAMEWORKS WILL GIVE YOU LIFTOFF
If you can’t clear these three hurdles, it’s time to pivot. Speiser blew up his startup Clover three times because they couldn’t pass the following checkpoints — the company actually started out as an ad network before a successful pivot to a cloud-based point of sale platform! He puts businesses through three tests before proceeding further:
- Checkpoint #1: Customers are receptive to the concept. They’re discussing their problem with you. They’re seeing how your product fits with their problem. You’re having conversations.
- Checkpoint #2: Your product is easy to buy and use. How easy is it for the user to implement it and move onto the next step? How quickly will it take to get feedback?
- Checkpoint #3: Your unit economics work. It might be bad in the beginning and that’s ok, but you have to get there. Model a funnel where you achieve happy customers. What’s the cost of making it all happen? Are you able to tweak the unit economics in a positive way?
Your business model is more important than your team. ‘B’ players in an A+ business model will beat an A+ player in a B business model every time, Cooper said. In an earlier startup, he had great team that worked super hard, but it was just a tough business. They were never going to be able to be successful because of foundational problems with the space.
Think beyond product-market fit. Entrepreneurs spend a lot of time working to achieve this, but your original product-market fit won’t take you the distance. When growth slows, ask if you’ve sized the market correctly, says Christa Quarles, OpenTable CEO. Assessment of TAM is often the most critical piece. When growth slows, ask if you sized the market correctly? When growth slowed at OpenTable, Quarles and her team examined the data. It led them to reimagine their TAM beyond just reservation-accepting fine dining restaurants to popular casual dining spots like Chili’s and P.F. Chang’s that accepted waitlists.
“You can’t polish a turd. There are just certain businesses that have good bones, and when you find it, you’ll know it.” — Matt Cooper, CEO, Skillshare
LESSON #4: CHOOSE YOUR INVESTORS — AND YOUR ACTIONS — WITH GREAT THOUGHT AND CARE.
CEO stands for Cash Extraction Officer. This is your job #1. Around 25% of Turo CEO Andre Haddad’s time is focused on investor relationships. Always be talking to future investors. Build a roadmap not only for hiring and products, but for funding.
Accepting VC investment means you just hired your new boss. Most founders underestimate what it means to take money from a venture firm. Board members can hire and fire CEOs, but you don’t get a chance to fire your investors. Be thoughtful about who you choose to collaborate with because that relationship may last a decade or more.
You must have a theory on defensibility. You’ll be seriously dinged if you can’t answer that in a pitch. How will you make money at the end of the day if you’re not differentiated? OpenTable had amazing network effects which is part of why Jordan joined as CEO.
Know the market dynamics for startups. Companies are staying private longer. Be prepared to talk about that part of your story. Seed rounds are exploding while A rounds are holding steady. Getting to your A is much more challenging now; in fact, expectations for progress at every funding stage are now higher.
Do not BS. ‘You can’t storytell your way into a C round,’ Andreessen’s Jordan says. Each round requires more tangible traction, so no matter how persuasive or charming you are, you have to show revenue and results. Overstating your pitch breaks trust with the VC and casts doubt over your entire deck.
LESSON #5: THINGS BREAK. HOW YOU HANDLE IT CHARTS THE COURSE FOR YOUR WHOLE COMPANY.
Find the breaks. Quarles used to wait for things to not go well; things will inevitably break if you’re growing. You should be actively searching for the breaks. When are things falling apart? Ask how you’ll post-mortem these events. Have a plan. If something hasn’t broken already, it’s about to break.”
Seek out your biggest truth-tellers. This point was reiterated several times. Everyone lies to you when you’re the CEO. Quarles noticed this difference when she went from CFO to CEO. She skips several levels down from her direct reports to find honest opinions. Find a way to let truth-tellers speak up. You’ll be in much better shape to grow your startup if you do.
Finders are not always fixers. Quarles’s horizontal reports were really good at finding breaks. But be clear: They’re usually not the person who fixes the problem. “Make sure you’re not telling people they can’t bring problems to you unless they have solutions. Tell them to bring their problems. Then you’ll be in a position for fixing them.”
“Like a snake shedding its skin, you have to break in order to grow.” — Christa Quarles, CEO, OpenTable
LESSON #6: CULTURE IS A FORCE MULTIPLIER
Be the steward for your startup’s culture. What you reward sets the culture. Ask what’s safe and not safe in your organization, and remember that culture tries to preserve itself. “It’s not free lunch and foosball tables. It’s how people make decisions when you are not in the room,” Quarles says.
Your culture is what you tolerate, not what you put on your website. according to Cooper. When the company isn’t being run how it should be, “Make the hard decision. Be magnanimous when you send them off, but send them off.”
LESSON #7: SURROUND YOURSELF WITH GREAT PEOPLE
If you’re lonely at the top, you’re not doing it right. You should have a great board, a great network of advisors, mentors, folks who serve as sounding boards, your executive board and other team members.
Sometimes you just need to stand still. There are times the best thing you can do for your company is to stop rowing and hold the boat steady. “There’s an urge to grab the oar and row like crazy, particularly when things aren’t going well. Sometimes the best thing you can do is to keep your oars in the water and let everybody else pull. You’ll make things a lot worse if you get in there and start thrashing around,” Cooper says.
Beware of adding too much value. Smart people, particularly managers, have a tendency to grab onto another person’s idea and start offering suggestions. When are you actually making the idea better to offset the degradation of execution that comes from it being their idea instead of yours? Consider shutting up and instead saying, “Sounds great. Go get’em. Look forward to seeing the results,” Cooper says.
“Your job is to surround yourself with the right people so it’s never lonely [at the top] and you’ve always got the backup you need.” — Matt Cooper, CEO, Skillshare
LESSON #8: THE BEST LEADERS UNDERSTAND EFFECTIVE GOAL-SETTING
These are the principles and tactical tips that Quarles uses to set goals for her business:
Set just 3–5 goals. Ask yourself how many people are focused on each goal. Be clear on this.
Protect your horizon. Your company has multiple horizons. Horizons 2 and 3 may be your additional TAM accelerators. They’re your investments. But also know your near-term goals — your horizon 1s. If you don’t define and keep an eye on all of your horizons, “it will eat you alive.”
Institute tight, measurable KPIs. People should know what they need to do and the metric that’s going to measure their performance.
You won’t always hit your goals. Set a culture that being wrong is OK. But people must know what the hypothesis was. When the numbers show how you were completely wrong, have a process to for iteration. Be expeditious.
BONUS: SPEAKER-SUGGESTED RESOURCES
- Jeff’s blog post Leaving It All On the Field
- Christa practices and recommends Kim Scott’s book Radical Candor.
- Matt recommends the book The First 90 Days.
- Video’s of the talks from our CEO Summit on our YouTube Channel:
“The Founding of Tesla”, Marc Tarpenning, co-founder, Tesla
“You weren’t born knowing how to be a CEO”, Matt Cooper, CEO, Skillshare
“How startups survive their breaking points”, Christa Quarles, CEO, OpenTable
“Managing & leveraging your board”, Andre Haddad, CEO, Turo
“Early stage company scaling”, Leonard Speiser, CEO, Markov