The Jerk-to-Bully Metamorphosis: The VC Dilemma
When the brash confidence required to launch a startup morphs into arrogant jerk you start to have serious problems. Just ask Uber.
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Here's a classic Silicon Valley contradiction.
Virtually every CEO we've worked with has read every Steve Jobs biography and has misguidedly concluded the path to early success is to model Jobs' personality and behavior.
At the same time, VCs will tell you that they've begun to adopt a "no jerks" rule (they actually call it the "no assholes rule" but we're writing for a professional business website) in their decision process. The behavior of folks like former Uber CEO Travis Kalanick (and our own experiences) say that this rule is certainly not hard and fast.
The bottom line is that most, if not all, startup founders have a little jerk in them. They have to, given how crowded their market is, how stacked the odds are against them, and their need to hold their own with another group that has a bit of "jerk" in its DNA: venture capitalists.
The key, both for the founders themselves and the VCs who are guiding them, is to preserve that little bit of jerk behavior without letting it metastasize into a business killer: the CEO bully. How do you stop the jerk-to-bully metamorphosis? Three ways:
1. Don't hire any more jerks.
In a 2014 interview with a British publication, The Register, Suresh Vasudevan, the CEO of our former client Nimble Storage, was asked about hiring practices. His response: "First, we do not hire jerks. If I can choose between an arrogant rocket scientist and an agreeable guy that I love to work with - that isn't quite as talented yet, I choose the latter."
Related: Uber Needs to Recreate its Company Culture. Here's What You Can Learn From Its Mistakes.
2. Hire more women.
According to Harvard Business Review, studies show that men are consistently more arrogant, manipulative and risk-prone than women. Other studies show that hiring women into leadership roles, and investing in a diverse team helps foster more collaboration, creative solutions and a positive culture of calculated risk taking. And, let's be honest: a lot of startup CEO are nerds at the core, and nerds are often uncomfortable with women. Which means the jerk CEO might cut back on his jerk behavior if there are women in the company.
Related: Warren Buffett's 3 Top Pieces of Advice for Entrepreneurs
3. Nip your founder's bullying behavior in in the bud.
This is the VC's job, and it's a critical one. It's normal, in the early days of a startup, for the CEO to wear multiple hats -- coder, early sales, marketing. But as the company grows, the CEO has to not only learn to delegate, he has to learn to manage. That's where the VC comes in. If they see the CEO start to micromanage or bully his employees, they need to roll up their managerial newspaper and snap him on his snout. Because, in today's marketplace, employees have an abundance of opportunities. They'll walk the first time they see the CEO pulling the peacock routine.
Being a jerk is certainly not a requirement for being a successful startup CEO. But, because it's part of the Valley's DNA, in many ways it helps. The key is to utilize the "good jerk' in the early stages of the company, then put a cap on it. Because, left unchecked, it will cripple the company and turn the CEO into an ex-CEO.