Lately the topic of leadership & teams has been coming up a lot in my daily life. Some investors are team focused, others market focused, others seems to look for product / market fit. I’m in the team centric sphere so every investment decision I make first & foremost centers on this plane. Only then can I even care about product, market or their nebulous “fit.”

It’s my belief that through exceptional leadership you attract great teams that do more than the sum of the parts. Nearly every company faces its crisis moments and only through the inspiration, focus and dedication of the leadership can you motivate teams to dig in deep and come out the other side stronger.

ON LEADERSHIP
I made an investment in a company with deep domain knowledge. Collectively (the founders & investors) agreed that it would be sensible to recruit a CEO to lead the next phase of the company so that the main founder could stay focused on the product where he excels and is passionate. Initially the conversation initiated by the founder focused around the need to have somebody with deep domain knowledge. I argued for the opposite.

“What I care about first and foremost is a great leader. I want somebody who can inspire you to produce great products but not know your trade better than you do. I’m looking for somebody who can sell, but not better than our head of sales. I’m looking for somebody who is good at planning but doesn’t try to do the work of the VP Finance.

I want somebody that sets a stretch plan we can achieve, gets consensus amongst the team to shoot for certain goals and the path to achieve success. I want somebody that can deal with partners, interest future investors and keep everybody calm in moments of set-backs. If they’re from the industry — that’s a nice to have. But I want to be sure they’re not stuck with legacy thinking.”

He is still not sure. His body language says, “how can somebody who hasn’t done what I do at the level I have be my leader?”

“Imagine you were a Phd wireless chip designer out of UCSD and then Qualcomm. You do a startup and decide you want somebody to step in and run the company so you can focus on technical excellence.

You want somebody who can do handset deals in the US, Europe & Asia. You want somebody who can raise $15 million to build out your R&D, business development and sales organizations. You want somebody who can lead teams on three continents. Are you looking for a Phd wireless chip designer?”

Leaders are intelligent, for sure. They often are very good at getting information out of people, helping create a framework for making decisions and pushing for support amongst the organization from those that back the decision and those that do not. So yes, I want to hire somebody with really high IQ and EQ but not somebody who is more knowledgeable at your specific skill set than you are.

ON TEAMS
What prepares us to become great leaders? Is it book smarts? Nah, of course not. It’s street smarts. And experience. This has been a much debated topic in the public recently. Amy Chua, a Yale professor, wrote a book about raising children the “Chinese Mother” way. She was strict & focused. Her words on things her daughters were never allowed to do:

“attend a sleepover, have a playdate, be in a school play, watch TV or play computer games, choose their own extracurricular activities, get any grade less than an A, not be the No. 1 student in every subject except gym and drama, play any instrument other than the piano or violin, not play the piano or violin.”

I suspect it was a self-fulfilling prophecy because with a militant mom like that I suppose not too many other mothers were exactly clamoring to have sleep overs.

The big irony is that my wife is out this evening with her girlfriend. Her two boys are having a sleep over with my two boys. I’m alone to run the sleep-over MANCAVE!!! We built a fort, played Wii, ate pizza, wrestled and now they’re watching “Despicable Me” for 90 minutes while I’m typing this. Bad, bad Mark. I must be churning out Neanderthals.

Oh, and my second-grade son decided to try out for the school basketball team this year. His choice. I blew out of work early today to be there to root him on.

Afterward I took him for Pinkberry frozen yogurt with chocolate crisps on top both to be able to hang out with him before he’s too old and thinks I’m a dork (Unfortunately, it’s already starting to come out). We ordered a mini size because it was 4pm and I didn’t want him to ruin his appetite … too much. And I made him promise not to tell him mom that we had a sneeky Pinkberry. (Sorry, Tania!)

I value rule breaking. It’s part of my ethos. I grew up adopting the motto “question authority.” I debated everybody, I made teachers prove their claims, I talked smack to bullies. Somehow I always learned how far to push things with teachers, bullies and parents to have them love me and be frustrated with me. I would talk smack but if I thought I was about to get punched I would defuse the situation — sometimes with humor.

I learned that I wasn’t the strongest kid in class but wasn’t a wimp either. I figured out the pecking order and I found ways to build allies with other strong people. I only got my ass kicked twice in front of others. Once was in a stadium with the whole school watching but my best friend ran out of the crowd and beat the guy back. It was magic. I had some loyal friends. I later took a beating defending him.

Where am I going with all this?

I am a strong believer that leadership and team development comes from these daily interactions. As a child you push boundaries and figure out right from wrong. Sometimes you get smacked. You learn that people form factions and rivalries. The toughest or coolest kids in class often like somebody who is willing to stand up to them — but not cross them. Important to learn this from a young age.

I’m a big believer that these skills are the more valuable ones you learn in life. I honestly believe I learned more by rising up the ranks and becoming the president of my fraternity than I did in the class room reading about supply & demand curves in economics. I’ll write that post one day — it is a very interesting story.

What I learned was how to work with teams. I learned how to recruit people to join us and not another group, to build consensus amongst a group of strong personalities, to empower others, to get people to take action, to quash those that needlessly work against you and to build partnerships with other Greek organizations. It was an extension of my previous 19 years of learning.

And that is what I think Amy Chua doesn’t understand.

If you click on no other links in this blog please read this one by David Brooks about why Amy Chua is a wimp and not a hard ass mom. I’ll give you the slightly shortened money quotes:

“I believe she’s coddling her children. She’s protecting them from the most intellectually demanding activities

Practicing a piece of music for four hours requires focused attention, but it is nowhere near as cognitively demanding as a sleepover with 14-year-old girls. Managing status rivalries, negotiating group dynamics, understanding social norms, navigating the distinction between self and group — these and other social tests impose cognitive demands that blow away any intense tutoring session.

Yet mastering these arduous skills is at the very essence of achievement. Most people work in groups. We do this because groups are much more efficient at solving problems than individuals.

Researchers at MIT and Carnegie Mellon found that groups have a high collective intelligence when members of a group are good at reading each others’ emotions — when they take turns speaking, when the inputs from each member are managed fluidly

Participating in a well-functioning group is really hard. It requires the ability to trust people outside your kinship circle, read intonations and moods, understand how the psychological pieces each person brings to the room can and cannot fit together.

This skill set is not taught formally, but it is imparted through arduous experiences. These are exactly the kinds of difficult experiences Chua shelters her children from by making them rush home to hit the homework table”

Bingo. These are the skills I look for in entrepreneurs and leaders. It is the very fabric of what I believe forms the entrepreneur DNA.

ON SUCCESS
How do we measure success? What results must you have in order to raise venture capital or garner good press coverage that helps drive customer acquisition (and also more funding!)?

I meet entrepreneurs all the time who tell me one of the following things:

• “I’ve had trouble raising money. Investors want to see more traction. This frustrates me. I thought you were supposed to be VCs? You know, ‘venture’ capitalists? How come you guys only invest when you have proof of success?” or;
• “I don’t have enough money to hire my team yet. They’re waiting on the sidelines, ready to join as soon as I raise some money. We’re not moving fast enough. I can’t get traction with people and I can’t get people without money and I can’t get money without traction. It’s one big cluster fuck of a recursive loop!”

OK, they don’t say it in those words. That’s my cheeky Friday night spin. But it’s essentially what they mean.

But here’s the thing. VCs fund people all the time with no traction. They fund people with no customers. They even fund people with no product. They just aren’t funding you. Dig deeper. Understand why. Be reflective. Be honest.

So here was my conversation this week. It was a hard one to have because it’s a founder that I really want to see succeed and I know has the magic dust to succeed. But not without a team.

Me: “I love your market. I loved it 18 months ago. I love the design of your product. I wasn’t convinced about your go-to-market strategy back then, your new one is much better. Not perfect, but much better. You’ve tried to raise money for a long time. Why do you think you haven’t succeeded?”

Founder: “I just didn’t have the right product focus. Now I do.”

Me: “Well you’ve met with other VCs recently. What are they telling you?”

Founder: “That they love my idea but they just need to see us get a little bit more traction. We need to sign up a few more customers and prove we can make money.”

Me: “And do you believe that?”

Founder: “Yes. They seemed to really like us. We just haven’t proven enough.”

Me: “Really? I funded a team with a product concept but no live product. It was called Pose. They now have $1.6 million, a live product that was featured in iTunes and has gotten rave reviews. But I met them with a prototype only. And I’m not the only one who is wiling to fund at an earlier stage than you. You have been around nearly 2 years. You have beautifully executed software. I think you’re missing something.

We’ve met three times over 18 months and you still have no team. You have a part-time lead architect, a part-time developer and a part-time community manager. You need to attend meetings with somebody else on your team. I think you’re wonderful at product & marketing — you’ve proven that. But I don’t believe you’re the complete package on your own. In fact, the fact that you don’t have a team suggests to me that you have some deficiencies we need to address. A partner might really help you get through that.”

Founder: “Wait a second. How can I hire a team without any money? That’s my problem. I need somebody to support me and I know the rest will happen.”

Me: “The fact that you haven’t brought on a team IS the problem. You have no “mo.” Founders don’t like it when I say this but it’s a frequent conversation. For every person who comes in here talking about the team they’re going to hire, there are 3 others out there that DID hire people. They didn’t have money. They had inspiration. They had Chutzpah. They had the blind confidence that everything was just going to work out and the leadership to convince others of that fact.

Hiring a team is a data point. Even investors who don’t internalize this I’m certain it is baked into their decision making. Real entrepreneurs are able to attract others to their calling. They can get people who want to work with them — work FOR them. Sometimes they even bring on people that are above them. Some real entrepreneurs recognize their own limitations as CEO. There are multiple answers and I don’t know which is for you. But I do know that until you prove you can do that it’s going to be awfully tough to raise money.”

I had this conversation with Scot Richardson, the founder of LaughStub, 2 years ago. He took this as a challenge and had a CTO in one week. One. He had funding in 4–6 weeks and raised a large round a year later. I wrote him a check personally (not from the fund). I backed him because he showed me he had what it took to make it happen and I give big respect to that. He signed up the two biggest comedy clubs in the US and is on a tear. He’s a star. I wasn’t sure whether he was an entrepreneur. Now I am.

ON HAPPINESS
And finally I couldn’t close without talking about happiness.

I’m a group person. I’m needy that way. I’ve always been part of teams. Where they don’t exist I create them. It’s for me. It’s the place to get my group energy. And there is scientific evidence that being part of a group increases happiness and well being.

Again, from my favorite OpEd columnist David Brooks in a wonderful piece about happiness:

“Over the past few decades, teams of researchers have been studying happiness. One of the key findings is that worldly success has shallow roots while interpersonal bonds permeate through and through.

the relationship between happiness and income is complicated, and after a point, tenuous. Winning the lottery doesn’t seem to produce lasting gains in well-being. People aren’t happiest during the years when they are winning the most promotions.

The daily activities most associated with happiness are sex, socializing after work and having dinner with others.

Joining a group that meets even just once a month produces the same happiness gain as doubling your income.

Economic and professional success exists on the surface of life, and that they emerge out of interpersonal relationships, which are much deeper and more important.”

You see? Now you can feel better about the entrepreneur’s salary — at least you’re part of a deeply bonded group! ;-)