Founders at Work.pdf

306 Founders at Work
Winblad: Oh yeah. Because you see examples all the time. I do personal references
myself. Whenever I’m going to join a board, I will ask people for personal
references. Your friends, your business colleagues, whatever. I’ll address these
references as these are not going to make or break this deal, but I want to
understand this person. How do they work, how do they think? How do they
get themselves in corners? Or twitterpated? What do they need to be surrounded
by to be successful?
You do learn that people get to be fully formed adults fairly early and it’s
hard to change people’s behavior, although it is easy to cushion how they behave
with people that buffer their weaknesses. As you go along, you get more microscopic
in understanding people before you invest in them if you are going to sit
on the board specifically. You can’t fully trust your judgment because some
people are good actors, but it’s always interesting talking to people’s personal
references.
Livingston: What kind of mistakes do you see new entrepreneurs make?
Winblad: One of the big mistakes is that, when you form a company, there’s a
difference between being an inventor and being entrepreneurial to leading a
company—being the CEO or, especially, the leader. You’re not fending for
yourself anymore. You’re actually fending for shareholders.
They can’t be fending for their salary; they can’t be fending for their net
worth. They have to really focus on building value in the company for all shareholders.
That sounds very sort of lawyerish, but it’s true. Some never can make
that jump fully. So engagement is never on building the company while someone
is watching to help them along. Just like George Ryan, at CADO, which I
mentioned earlier—he needed my company to be successful in order for all the
software to work for his resellers. He needed me to be successful because I was
a core component of the company. So he was not just looking out for me, he was
looking out for my company as well and making sure I learned how to look out
for my company. And that jump to “It’s not about you; it’s really about a broader
thing, the company, which broadly is the shareholders, which broadly is the
customers, which broadly is the employees, which broadly is your mission,
which broadly is the values you bring into the company.” There are some entrepreneurs
that never really fully get out of the “me” thing. And that changes
them from being the “inventor” entrepreneur to being the business leader
entrepreneur.
Livingston: Are you able to predict this better now that you have had so much
experience as an investor?
Winblad: Well, if there was a perfect lens on this, it would be easier. Most companies
do not fail because some competitor crushed them. There’s a small
amount of failures where the competition was underestimated. There’s a small
amount in the software category where the technical achievement needed to
bring a high-value product could never be reached. But the majority of companies
fail by self-inflicted wounds by the leadership team. That stuff is all under
your control. We have the biggest challenge in software companies: the core
value is the intellectual capital. It’s everything. And when there are big flaws in