Guest post by David Friel, Managing Director of the Entrepreneur Handbook.
Three years ago I started my media company. A year ago I had reached a point where revenue was heavily positive, we’d gained two serious investors and the team was expanding quickly.
Everything at the time seemed like we were in the midst of fantastic growth and we’re poised to take a considerable third investment round. I was at a juncture where I considered myself an impeccable leader, was very confident in my skills and that I had effective control of the business.
Fast forward 6 months from that point and we had scaled the team to 24 and the business was experiencing serious internal problems and financial trouble.
So what lead to that? Many things but here are the key problems and lessons I learned that almost brought the company to ruin.
Scale & Systems
At the time I had been running the company with a small dedicated team on loosely defined and managed systems, formal processes were not in place and it worked on a small scale.
When we started scaling the team, projects and business, chaos ensued. The lack of systems and procedures meant it was impossible to effectively manage people and the business, it created a culture of no accountability.
The key learning from this is that loose and undefined systems will work only at a small scale. When you really start to scale you must have robust systems, projects, documentation and training in place to avoid chaos we experienced.
Family Vs Colleagues
Like many founders I’ve always seen my team as family, unfortunately for my disposition at the time that meant I made personal allowances for colleagues not doing their work, not committing to goals and no real accountability for management of their.
Over the last few months drastically changing my management style and business relationships to a focus on performance coupled with accountability, has brought back respect, order and has greatly improved our culture and performance. The simple answer is this, in a startup your team generally are your family but you have to have accountability and clear business relationship in place to achieve an effective family!
Less Execution, More Leadership
When we were a small, managing the company and team was pretty straightforward and I could focus my time on a lot of executional work in marketing, data and technology, all areas I loved and was good at.
As we scaled I applied the same methodology, this was a bad idea. As your company grows your role as MD will drastically change to managing the company full time, you need to understand when this is and that it’s a serious responsibility/role to aspire to, it’s now your job, you won’t have time for this role if your still doing huge amounts of executional work!
Hire slow, fire fast
I was extremely fast to hire people without proper interviews, processes and references. I hired on talent and ambition, this lead to hiring people with the wrong attitudes and values for our company. Don’t do this! Hire slowly, have a clear process and make sure you thoroughly assess each candidate.
I was also slow to fire bad performers, mainly because I didn’t carry out proper performance reviews and when goals weren’t hit I didn’t hold people that accountable. I could always make a business or personal excuse for not firing someone. Now I keep strict performance reviews, meetings and tracking with the team, it allows us to easily identify good performers, support those who need help and in a drastic situation fire someone.
I cannot iterate enough how important it is to have a clear, followed and good process here, if you don’t it will cost you huge sums of money and time.
Go to your browser now, click through to Netflix presentation, consider it now mecca for hiring, firing and HR practises, applied in your own unique situation. If you don’t it will likely cost you serious amounts of time, money and resources.
Team Player Vs Genius
As mentioned earlier I used to hire purely on talent, this was a huge mistake. We ended up with many talented people who lacked professionalism, accountability to deadlines and ability to manage their own projects/areas. I now look for core competencies that match our performance/ accountability driven culture coupled with genius but any day of the week I would take an average performer with an ethos that matches our culture. Hire purely on talent at your own risk, it likely will cost you.
Put short I got to a point where I stopped actively learning new things, for some reason I felt at X number of people all my key learning would now be tacit and on the job. When I stopped doing this the level of innovation, systems and changes in strategy I made dropped hugely and I stopped pushing the business forward in a meaningful way. I’m now actively back to reading, writing, taking courses and watching too many random YouTube videos, the result on our traction and revenue from this has been substantial and continues to grow. Never stop learning!
Arrogance and not being an idiot
A lot of this article has focused on the smaller but important problems in hiring, learning, management and more, at core though these were the symptoms of one major problem, arrogance.
That is arrogance in my abilities and skillset, I had reached a point where because of favourable environmental conditions I felt I was a terrific CEO.
Put simply as you can probably see from the above I was not a terrific CEO and in my blindness to this I nearly killed my company, lost all my team and very nearly drove myself crazy.
6 months on from starting to see the error of my ways and making some changes to myself as a CEO and the company:
- Our company is a performance driven, efficient, accountable and a happy place to work.
- We’re seeing revenue increase to highest level it’s ever been, clients are jumping on-board as we expand and deliver beyond expectations consistently.
- It’s likely we’re spinning out one of our data products into a subsidiary and there’s substantial interest from large American investors.
- Our team is cohesive and has built strong professional relationships, leading to productivity and happiness far higher than we were at 24 people.
- Perhaps most important to me of all is that I am now actively working at doing my job as CEO properly, being humble, constantly learning, iterating and managing the overall business and strategy.
Pride often comes before a fall. Hope this post helps you avoid some of the mistakes I made but I often find no matter what you’re told or read, sometimes to understand you have to learn the hard way, just don’t kill your company in the process!
On final note I do often get asked why I’m so candid when I write publicly, the answer is simple, there is too much dishonest bullshit and terrible advice online to add to it.