#24 Yogurt is a culture

Here's a story: CEO/founder brings in his best friend as a cofounder. A pretty classic scenario (and a reasonable one, because build mode requires someone you can trust.)

Over time, the company gets big. Like really big. Like revenue, media, fan boys—every metric big. But it turns out the cofounder isn't really very good at anything.

The company outgrows him, but the New York Times and TechCrunch don't know that. So he’s still cool in public, and to top it off the CEO refuses to fire his friend. They've shared too much. And, he's a really nice guy! 

Path of least resistance: put this fella in charge of “culture.” The participation ribbon of C-level jobs. Now, most low-level employees at the company really like him, but he’s not really very good at that job either. And since the news keeps telling him he’s brilliant, he won’t stop meddling in work of the real executives.

Hard conversations, mediators…nothing works. He won’t stop effing stuff up.

Why?? Think about his options: 

A) He can believe the very public narrative that says he’s a visionary and meaningful cofounder of an amazing company.

Or,

B) He could admit that’s all a complete fiction, and in reality he’s just a personally likable but otherwise failure-prone shell of ego and general incompetence.

Given such options, who among us would ever choose B? 

So the board and the C-somethings finally just start to hire around him. The company had a nice IPO to justify bringing in Presidents, COO's, CRO's, CHRO's, and more.

The problem is for all the same reasons he wont stop meddling where he shouldn’t, slowing progress and causing real damage with valuable employees, no one has told him he needs to resign. The damage gets worse as they grow.

So the C-somethings who are driving the business start to protest. There's just too much on the line. The costs are real, the obstacles are annoying, and if the cofounder can't quit, then they will. Which is what they do, one by one. 

The CEO still refuses to fire his friend. Admirable personal loyalty, but the epilogue isn’t good.

With every exec departure, the stock tanks. More. Wall Street can see what’s up: the C-somethings drove the business—not the CEO or his cofounder. 

Eventually, in personal net worth alone, the CEO's loyalty to his friend has directly cost him over 20 billion dollars in evaporated value. This doesn’t include the opportunity cost of what the company could have been.

Today it’s worth only a little more than its Series B round years before its heyday. The company? You’ve heard of it. You probably used to love it, but you’ve definitely forgotten it.

The lesson from this tale is you have a choice: BE that cofounder, or DON'T be that CEO.

Last week I wrote about how the most successful virus on earth is the one that doesn’t kill its host. That virus is this cofounder.

He made a few billion schmeckels, got laid, gets deal flow as a VC now, has a great reputation—with no other skill than hanging on for dear ego. And he did this all at the enormous expense of his own best friend and every investor who believed in them.

Side lesson: one good way to sleep at night is total lack of self-awareness.

Second side lesson: one great way to destroy value for others is total lack of self-awareness.

Carl Icahn has famously described a similar condition as corporate anti-Darwinism. It’s the phenomenon where the most competent executives often get sidelined in favor of more likable, less capable ones.

With a strong enough CEO, this is all well and good until those likable duds get promoted. Steve Balmer is a famous example. Frank Yeary is a board member, not a CEO, but he’s probably erased more shareholder value than any self-deluded smart guy in history. (For now)

I’ve met both of them. You know what? They’re really cool! Fun to talk to. They’re so likable, in fact, it makes ME feel bad pointing out how objectively bad they did at what they think they’re good at. (I also partied with Dick Cheney once and highly recommend it.)

The reason for this is in MOST company cultures, it's not performance that gives you power— it’s being likable enough to control the narrative of your performance.  

Carl Icahn calls these kinds of people “fraternity presidents,” and it’s a decent analogy if you think about anyone who’s ever told you their college drinking clique gave them “leadership skills.”

It has all kinds of negative effects, especially on succession planning. And not all organizational cultures bend to this inherent gravity, but they will if you’re not attentive to it.

Otherwise, the best thing you can do is to create a company culture that encourages high-performing leaders to do what’s best even when it’s unpopular. And all you have to do for that is be really clear about it, then live up to it.

I once saw an intern crash a core product on his first week and get hated by everyone—until he was openly praised by the CEO for pushing code. The open praise is what mattered. (It’s a trillion-dollar company now.)

But what if you can’t control your culture? Maybe it’s too big, or too established.

What if you’re just in it, and whatever the reason, you just need to win it?

As I mentioned, no matter what your company culture, you will still have politics. All groups of people do.

I wrote about this a little in Issue #15, which has surprisingly been one of the most popular so far. I’ll share a link below if you want to re-read.

In any case, whether you’re shaping the culture of your company, or whether it’s already shaped and set for you, the secret to navigating it is NOT to avoid politics.

Some people think just being great at your work is enough. And I’ll admit, as someone who is much more competent than he is likable, this is a seductive idea.

But the fact is you have to do both. Be increasingly good at what you do, AND become more likable. Because the secret to success is to outplay the people who ONLY play politics.  

This is hard mode, btw. Easy mode is the parasite cofounder I described above. Which is awesome, if you’re the parasite. But it also means my greatest fear for you is actually MEDIOCRE mode.

So if you want to avoid living or working in a Mediocracy, here are few uncomfortable opinions I have for you. 

1. Whenever you find yourself being politically outmaneuvered despite delivering real value, consider this: The best players don’t stay at a rigged table.

2. But before you quit, also consider this: when you're at a casino playing poker, no matter if the table is rigged or not, the true winner is always going to be the casino.

So if you're really playing to win, you always need to think MUCH bigger than whatever fight you're in. You have a casino to buy.

3. Hire for discomfort: theirs and yours. I used to work for a guy who would only hire triathletes and marathon runners. It's a stupid-sounding bias, but it worked. And he didn't apologize: "people need high pain tolerance, long endurance, and strong will if they're going to enjoy working for me." 

(Somehow I made the cut? I’ve run a few marathons "off-the-couch", but I wouldn’t even run from a bear now.)

4. One of the challenges I see in companies run by young people that I do not see in companies run by old people is young people still care about what other people think of them.

There's no set age for getting past this, but you can see the obvious handicap. Make peace with being unpopular. Counterintuitively, it’s how you become more self-aware.

5. That Spiderman quote, "with great power comes great responsibility" is pure comic book fantasy.

In reality, the opposite is almost always more true: with great responsibility comes great power. And people who define their responsibility by their title ought to be at home playing with Spiderman toys. 

You earn responsibility, and that is what awards you power. Not titles, and not anything else.

6.  Patience is more than a virtue, it’s part of any winning strategy. Renowned chess coach Bruce Pandolfini writes in one of the more useful books on strategy: “Trying to win a game in the fewest number of moves means hoping that your opponent is incompetent. I don’t teach students to base their play on hope. I teach them to play for control.”

Translation: you don’t need to think through every possible move, you simply need to think as clearly as possible about the next 3. And that takes time.

Finally, by the way, whether your opponent is a person or an entire market, this is where product development and communication diverge.

In one, impatience is a fantastic way to build, grow, and go to market. In the comms, it’s just the fastest way to lose chess.

Checkmate,
Jesse

PS: Linkz!

• Carl Icahn at talking at Yale about corporate succession back in '08. He actually did some of this bit at Carolines on Broadway a few years before. Love or hate Icahn, you do have to respect a guy so desperate to share his hatred of mediocrity he'll take the stage at A COMEDY CLUB.

• Issue 15 of this newsletter was popular, and might be helpful in your March-May throatcutting season.

• Bruce Pandolfini’s book for getting better at chess from any level. Chess is the perpetual analogy for comms strategy, but I’m not sure it always holds up. Great book though.

• Not an ad: a friend recently got me into Jitterliss Coffee, which is just really good coffee, but like choose-your-own-caffeine-level. I work a lot at 10pm, and highly recommend it. I think there's some fancy science in the roasting, but I don't care. It's good.

• Song of the week: all of this obnoxious talk about politics has serious Office Space vibes. Enjoy some pure 90’s nostalgia with that.

PSS: Share this one with your CEO friend whose leadership team is a bunch of sycophants.