Tag: VentureCapital

3 Rules for Tech CEOs

3 Rules for Tech CEOs

1.) Be Bold:

  • Similar to VCs, public investors want to invest in a bold vision. (See Tesla). Why does TSLA enjoy a premium valuation to other Auto OEMs? Answer: Musk’s vision and spin.

2.) Don’t Be Bullied by Investors  Dictate Your Story:

  • Tell the Street you plan to take margins down temporarily to pursue “X” initiative. Investors will cut you slack so long as you explain the rationale, the execution and the intended outcome.

3.) Balance Execution Today with Investment for Tomorrow:

  • Don’t fall into the short-term EPS growth trap at the expense of new product development, keeping your products fresh and building a culture of innovation.
  • If you pursue the short-term – investors will love you in the short-term (fleeting). The key is to build long-term value over years and decades (see AMZN, CSGP and SSNC as examples of the latter).

Senior Leadership Teams Influence A Company’s Success (or lackthereof) More Than Any Other Variable

 

Andy-Grove

For those whom don’t know, the photo is of late/great Intel early employee (technically not a co-founder) and former CEO Andy Grove.

What is the most important factor in identifying companies that will be successful over time? Answer: the senior leadership team.

Quality leaders should be offended when they are referred to as “managers”.  Effective senior leadership teams don’t “manage” – they “lead”.

Quality senior leadership teams have a greater influence on a given company’s success (however you want to define it) than any other one variable.

End market you say? Quality teams will capitalize on strong end-markets and have the courage to exit weak end-markets even when it may be politically difficult to do so.

Quality teams set the culture. Quality teams insist on hiring quality people and won’t sacrifice quality to satisfy a growth expectation.

Quality teams will push back on board members who have overly aggressive growth expectations that may jeopardize the company’s foundational core.

Quality leadership teams will pursue new, exciting product initiatives that have promise – even when data points and milestones are few during the early days of that product’s life cycle. Even when doing so may mean cannibalizing the core and pissing off investors.

Nobody said it was easy.