From a venture investor’s diary #2: On leaders and leadership

By ssyc1
June 8, 2022
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Leadership is something that the pattern recognition machine that is me think a lot about, have a lot to say about, and don’t know when I will ever stop thinking about (probably never). These last few weeks have not been unusual in that I had been interacting with 2 CEOs who have similar challenges.

“Oh”: some young founder-CEOs enjoy the title of “CEO” a little too much! The job of being a company’s leader involves a set of skills and qualities just like any other job, in other words, some young founder-CEOs have some “missed” thinking in terms of a need to assess themselves as to where their strengths are and to work on developing skills that are critical to the job and for which they don’t possess. It is, as one of my investors told me years ago, an apprenticeship, or, as I like to put it, I am taking a bet on you the first-time CEO that you are able to learn on the job, and learn fast. Learning on the job is an excellent skill, while training and mentoring can often help hone that skill and unleash the full potential. For me, it is also exhilarating to see first-time CEOs on their fast ramp-up journey!

“Oh again”: some young founder-CEOs need to see that the main qualification they have for the title of CEO was that they have been or are the founder. All CEOs have been first-time CEOs, but most have been appointed based on their track record and at least some assessment of their skills (and can more readily be removed too). Great founders may not make great CEOs.

Reminder to myself: skills aside, I’m always looking for two personal qualities for good leadership, and they are humility and self-awareness.

Humility (the Steve Jobs quote is always handy!): the main aspect of humility that comes with leadership is knowing and admitting that you don’t know everything. Or, put in layman’s terms, “get over yourself”. You don’t have all the answers. None other than Steve Jobs was very keen to put this point across:

“It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.”

Self-awareness: well, self-knowledge helps leaders to better compensate for their natural tendencies and abilities as they make decisions in the workplace, i.e. self-aware leaders make better decisions and have better judgments. I think of this as awareness of both one’s strengths and one’s weaknesses:

Strengths: understanding one’s strengths in both skills and knowledge as well as personal characteristics allows a leader to better perform his or her responsibilities within his or her company;
Weaknesses: knowing one’s weaknesses means one is more likely to invite outsider’s views to “compensate” for one’s weak areas, thus again improving decisions.

More pattern recognition: we need confidence in leaders, and we often find it OK to have some over-confidence, but strong over-confidence (founders tend to be a self-select bunch, for good reasons) especially when coupled with one other strong weakness is very dangerous. Or as the veteran venture investor Vinod Khosla puts it,

“Your strengths seldom kill you … many people fail not because of what they know they don’t know, but from what they don’t know they don’t know.”

There’s then the third part to this “trinity”: honesty. Not an issue with these two particular founder-CEOs, though the lack of self-awareness can sometimes come across as honesty-challenged and the two qualities are indeed quite related.

We are in the people business (my “daily bread”?)! I am not a recruiter, but I am thinking people quality (as well as team dynamics) often and these 3 personal qualities I am thinking of are fundamental. Of course, leadership qualities and founding team qualities differ somewhat with some overlaps. For founders, resilience, “adversity quotient”, commitment and passion probably have more weight – see “Great founding teams”. Good founder-CEOs will have most of these qualities.