How much should the CEO of a start-up be open to your staff?

The transparent management of CEO--under the modern enterprise system, this may sound indisputable. But should the CEO disclose everything to his employees? Or, how far should it be revealed?

Transparency, in fact, is a difficult topic to write. Even now, full transparency has become almost a consensus in the entrepreneurial circle. But at this point, I disagree.

Before I go into the discussion, let me make one point: I use the term "CEO" as a synonym for the founder's community, representing several co-founders or just the boss of the company.

First of all, entrepreneurs have "three fears."

Since you took the risk of starting a business and quitting full-time work, it seems that the decision itself is like a cliff. The business itself is more exciting than most people think, and it makes you thin and fearful.

Why is it scary to start a business? Because for a moment you will understand that you must begin to face the judgments of the people.

First, you may be afraid to "explain why" to others. Do your parents want to know what you've done and quit Google's job? Isn't this job priceless?

-"Yes, mom." But the place I was in was a big team, and they were thinking about how to make the search algorithm a little bit more of a development. Good work, I understand, but now it's time for me to try something more in need of ambition. ”

--"Well, okay, boy." But aren't you going to get married next year?

And your peers will be jealous of what you end up doing, because that's what they've always wanted to do but didn't do. After all, they found it too difficult to throw away the golden and predictable future. They don't have the patience to listen to your grand idea. "What?" you leave our team to make that idea happen? A convenient tool to help you find a bar and a restaurant? There are thousands of these. Yes. But I'm different. I finally achieved a breakthrough. ”

Second, you will also be afraid of money problems. Your VCS may have encouraged you early, and they said to you, "brother, I'd be happy to give you 250,000 dollars for the first time." Call me when you want to leave. "However, once you start a business-they will sigh deeply when they hear you are really starting to do it," he said. "Lad, you have such a project as we saw last year there was a company. We lost one in 2005. I'm sorry. ”

If you don't get an investment, you work like a slave. The 40,000 dollars saved for the future will be reduced gradually in the teeth.

Well, it's not a big deal for you to start a business.

Later on, you convince your peers to quit their enviable job and join your camp. You begin to persuade your good friends to support you with the savings they have saved as Angel money.

Now you pull up a basic forming team, and the technical team members work at night and on weekends to save money. You scrape together a round of angel investment, but not enough to send yourself a real salary. You have a long way to go, nine months is like a lifetime, but considering how long it takes you to launch your V1 (5 months), how long it takes you to raise your first round of investment (3-4 months), that's not the time. At this point, you start the third fear: how can you make the products that have just been launched attract popularity?

Entrepreneurship Psychology: CEO to absorb the pressure of the team

So as CEO of a start-up, you have to stop doubting often. Or as I said to the novice entrepreneur, you must be blind to the path of success. If you can't afford to be "careful", you're going to get nowhere.

A careful person will not persuade people to leave Twitter on the eve of the Twitter IPO, shouting "Join our cause" slogan. A careful person will not stand in front of a large audience and say she will change the world, but secretly wonder when her damned team fixes a product leak so that it can actually go public. "We are dealing with a global market worth 1 trillion of dollars! That's too inefficient. We have a breakthrough technology. To change the world, we only need your 500,000 dollars!!!

The CEO responsibility of a start-up is to absorb the pressure so that the team does not have to face the pressure. It's like her job is to "show up every day" even though her boyfriend just broke up with her.

Entrepreneurs must be optimists, because no rational person really believes in you, you can put the taxi application Uber into today's amazing scale. A rational person would think that taxi organization and regulations would make that impossible.

I have written several articles about emotional management. Many people's emotions do not tell others honestly, and even incredible internal pressure can not only depress people, but sometimes make people make extreme moves like "The Entrepreneur of suicide". Often the best and strongest entrepreneurs can overcome all kinds of pressure and move forward with optimism. It may be "naïve optimism"-but in fact it is the best result.

Unlike most people, the entrepreneurial mind is often extremely excited, and they are more capable of accepting ambiguity and taking risks. They are not afraid of personal failure, not so afraid of losing face as everyone else.

As an entrepreneur, you need to acknowledge that you are desperate to understand the full level of your data and knowledge reserves, and most people (such as your employees) do not.

The relationship between entrepreneurs and employees is a bit like a public security analyst in a terrorist environment. The public mentality is that we may not want to know all the things they have mastered, and it is enough that they work hard to protect our safety.

How transparent should you be to your employees?

Of course, the CEO of a start-up company must have a bit of quality: openness. I believe in the value of transparency just like everyone else. But full transparency is what most people think they want, not what they really need.

I'd like to offer you a few examples of nuances:

1. Financing and mergers and acquisitions

In the start-up phase of the enterprise, if you can succeed in early product promotion, fundraising, and public relations, you are likely to spark "intrinsic interest" in potential buyers. It is difficult to analyze the true interests of those who are merely tempted or knowledgeable. You try to call politely and act honestly--most of us like to hear flattery, don't you? Maybe it's a real financial treasure.

However, on the other side of your mind you are a realist. You know it's impossible to achieve anything, and frankly, you're not quitting your job and chasing your dream of selling as an entrepreneur in the hiring business 12 months later.

You organize your employees to meet again and again, but in the end you don't really implement it. You know, employees can't draw blueprints in their minds-they only see dollar signs (paychecks) and victories (to fix any sort of financing merger). They do not understand the liquidation priority or multiple return expectations of venture capital. They don't support you when you're pitching to the wind, and in that case, nine months ago you looked at them and said, "I see only one result, and we want to create something really great." This project is my life dream. ”

Read a real story: I worked with a start-up CEO who was planning to sell his company. I was not supported at the time, but the CEO decided that you were right to support him. So he went around and negotiated with a lot of buyers. He told the whole team about the progress. There was a clear excitement in the office. The company was very popular at the time, and he estimated that the price of "a full 75 million dollars" could be achieved.

But that's not the way it turned out. Good media and industry luck are not enough to raise the company's financial targets when the company was valued at $ more than 10 million trillion.

I was not surprised, we decided not to sell, our friendly relations also interrupted. But this is where the trouble is. His entire team was aware of the progress and knew we were not selling, so the technical team left for the next big plan to make a fortune.

If they stay, I believe we can achieve our goals together. At that time, the company's business philosophy is very correct, we only need to make some adjustments according to market changes, we only require patience and resilience.

So let me be straightforward: when you have the idea of mergers and acquisitions, you can't be honest with most of your employees.

2. The flow of cash

An employee found me and said, "Mark, I'm thinking about buying a house." Is it a good time to buy a house? I need your letter of recommendation to help me with my mortgage. ”

"Buy a house?" We only have enough cash in the bank for five months! It is 2003 and VCs are not ready to invest in start-ups. Of course, our income is growing, but is that enough for a round of internal financing? Yes, I know our VCs say that if we don't get the money out of the house, they're in charge of a round of internal financing, but you know, they're going to put us in a desperate situation to invest in us, and we'll have only three weeks of cash left in the bank, right? Of course you can't buy a damn house. When did you find out I was buying a house!!!

--Wait a minute, the picture above is my imagination.

I would say, "Well, you know, we're doing a start-up, which is a lot more risky than working at Barclays Bank." Our VCs are very supportive and I am confident about the future. Of course, you know I never say for sure that they're going to invest in us next. I personally do not tend to buy a house in this environment, but if you really want to buy, I will be happy to write a letter of recommendation for you. ”

I think that's transparent. This is just not completely transparent. This is not relentless transparency.

Believe me, I have enough direct experience to understand what people want to know is the highest level "is it going to take care of everything?" or are we going to face a desperate situation? No one really wants to know the process, the details, they want the end result.

Believe me, I tell you 90% of people can't stand waking up every day with uncertainty and insecurity, and that's what entrepreneurs have to face.

Most employees need cruising altitude, while most entrepreneurs live in Take-off mode.

3. Dilution/valuation of equity

I loathe the company's excessive disclosure of all priority shares, the value of the company, and the dilution of each round of financing.

This is not a desire to hide or cheat.

This is because when you share too much of this information with your employees, you develop a "subscription culture" that I find unhealthy. If you find that employees make spreadsheets and spend time researching the current market and what they can get, you know that your company has a "subscription fan".

Of course, as an entrepreneur and CEO you know that you value 80 million dollars for a 18% stake in a company worth more than 30 million dollars for 26% of the company, but I can tell you that really smart and educated employees are also grappling with the difference.

"I was promised a 0.75% per cent stake in the company, but now I only have 0.49%--I feel I'm losing it," he said. I didn't expect so much dilution to appear so soon. ”

Yes, that's the real conversation, I've been running and even going on. I have been encouraging transparency in remuneration, but only in another way. Except when we first started and were naïve (for example, bragging to employees, "how much will your stock be worth when we get 3 billion dollars in our IPO" ...), and my usual rhetoric is this:

(Coming--)

Join our company because we are doing exciting things.

Join us because you will be more responsible when you are young than in a big company. Join us because we are an elite team and we are promoting success rather than being complacent.

Join us because you can say at the end of each year that your resume is heavier than it was a year ago. Join us because as we continue to succeed, we will have more resources to reward you.

(Against the word--)

If you are looking for an opportunity to erupt, please do not join us. We're not that kind of company and we're giving you less money than you do in other companies. We have to. All I ask is every year to contribute to your career-if at the end you don't grow in skill and level, if at the end you feel like you no longer enjoy the journey, if at the end you don't think your resume looks better than it was a year ago.

It would be icing on the cake if we could get the money through the subscription right at the end of our entrepreneurial journey. ”

You see that? These are two types of transparency.

Yes the reality is brutal but you have to do it

Discussions on transparency in management and I can go on talking about it all day and night. For example, there are many long and sensitive topics around team member KPIs, such as merger discussions, board discussions, product flaws, loss of revenue, and so on.

I believe in maintaining openness and direct value, and I believe that people will understand the general business performance and the value of the difficulties faced by certain stages of the company.

I believe that the company's financial indicators are publicized, but also can promote the development of the company, the value of creating a unified goal.

However, as the CEO of a start-up, you have to develop your own metrics to understand what to share and who to share. Our extraordinary excitement allows us to accept uncertainty, risk and stress. Remember, too, that the reason why most people are not startup CEOs is that, deep down, they may not want a job like yours, and most of them don't really want to face the lifestyle and stress that accompanies your work.

For your team, it is your job to properly withstand the risks they may face.