First Impressions Matter

I started a company once with some awesome people who had lots of virtues.  But … at one point early on, one of them introduced me to an outsider as “the developer”.  Those of you who know me from the real world (hi Ed!), can imagine how I reacted to that.  Why is an introduction like that a problem?  After all, I was the developer. It’s a problem because for that particular outsider, I am now, and forever “the developer”.  Not CTO … “developer”.  I won’t get that intro back.  It made me feel bad.

despicable-me-2-gru-minions-pp33118_zpsdcda23f2My feelings, of course, don’t matter much because a lot more than my feelings were going to be hurt by the time that ride was over. There’s nothing anyone could do about that.  And you can’t be super-sensitive in this business blah, blah, blah.  But there are good reasons for even a heartless CEO who disdains, even hates his subordinates to be careful about intros – good self-serving reasons.

I worked for a guy once who consistently put his people down when introducing them to outsiders.  His Director of Engineering became “the software guy”, his Project Manager became “my assistant”, his CFO became “the accountant”.  He did it, I’m certain, because he was deeply insecure about his own chops and didn’t trust us not to show him up with outsiders.  So in any meeting, right from the intros, he was “The CEO” and the rest of us were minions.

I remember watching people’s faces as he did this, and I could see their loyalty to this guy draining away.  It was sad.  Nobody wanted to travel with him.  In meetings we all sat there quietly, having been appropriately down-titled during the introductions.   We felt bad, but those are just feelings which don’t count, right?  They did count because when hard times hit, they hit us hard, and it all came back to him.  He’d throw something out in a meeting and be met by dead silence.  He’d look around the room and say “doesn’t anybody have anything?”.  And nobody did.  After all, we were just minions.

rumbleOn the flip side, I worked for another guy who consistently oversold his team, myself included.  When he introduced me to outsiders I was not just whatever title I had at the time, I was also a genius, rockstar, ninja – any of the ridiculous things Silicon Valley CEOs call their tech guys.  I actually asked him at one point to tone it down – I’m nobody’s idea of a rock star and it was a little unnerving.  But he was more right than wrong in doing that.

The basketball analogy I used back here works well for this.  The overselling CEO was actually “making space for himself”.   He could say objectively-stupid shit and get away with it because he had peers who could laugh and correct him.  By working introductions the way he did, he put the rest of his team in the game.  Any one of us could jump in if he got in trouble.  And because he was surrounded with ninjas and rock-stars he got called on stupid shit much less than he would have otherwise.  After all, if I were actually a ninja I might jump in and kick your ass if you put my CEO in a bad spot.  I could see people thinking about that when Mr. Uptitler went off the rails in a meeting.

That didn’t sound right. Should I jump on it? Or do his guys know more than I do and they’re just sitting there waiting for me to stick my neck out … Meh, it’s not that important, I’ll let it run and see where this all leads.

Imagine this scenario. You’re meeting with a VC and you’ve introduced your CFO as “the accountant”. You’ve started the meeting by insulting her, or worse, refighting a battle you already lost about her title.  Is she going to be willing to jump into the conversation and help you past a rough spot?  Will anyone even listen if she does? Or will she be dismissed out of hand?  And this is not even addressing the question of why you would bring an “accountant”, “developer” or “assistant” to an important meeting.  When Mr. Uptitler said something stupid, we fixed it and moved on.  All it meant was that he’d misspoke.  When Mr. Downtitler said something stupid, it meant the company was stupid because no one on his side had the juice to fix it.  “Accountants”, “assistants” and “developers” don’t correct the CEO in a meeting. They don’t even speak.

Next post, we’ll tackle the sensitive topic of startup titles from the CEO’s perspective, and everyone else’s.

Rodley’s Law of Negotiation

My post about technical co-founders handing over contacts from their network for business development generated a fair amount of offline pushback, most of it being some variation of “well you obviously didn’t have a trusting relationship with your CEOs”. All of which put me in mind of Godwin’s Law.

Godwin’s law states that as an online discussion continues, the probability of someone introducing a Nazi analogy approaches 1. This is usually extended to mean that the first person to introduce a Nazi analogy has lost the argument and the Nazi analogy is an acknowledgement of that loss.

I’m here today to not-so-humbly introduce Rodley’s Law of Negotiation which states:

As a negotiation continues, the probability that one side will use the word “trust” approaches 1 and the first person to use the word “trust” has lost the argument if not the negotiation.

Hypothetical example 1 – you’re a technical co-founder negotiating an agreement to join a venture that’s already incorporated:

YOU: I need a clause that exempts vested stock from penny-per-share buyback on voluntary departure.

CEO: Why would you need that?

YOU: Because it could happen.

CEO: We’re friends. We’d talk about it and come to some reasonable arrangement.

YOU: I want it in writing.

CEO: Why would you need it in writing – don’t you trust me?

ingodwetrustAhhh .. the T word. Now, you’re close to a deal (be honest, you’re probably already working with them gratis) and you want to join this outfit but your prospective partner just played the trust card. Rodley’s Law says that you’re screwed here and that it’s pretty much guaranteed that your prospective CEO will buyback all your stock for a penny a share if you leave for any reason.

The example clawback-clause negotiating point here is not hypothetical at all. Read this to see how Skype did exactly this and turned a bunch of people who should be startup-fucking-rich to older-but-wiser-poor.

But there’s an important thing to realize about our example. If you’re dumb enough to “trust” this guy, and you do get into a voluntary departure situation, it’s his job to screw you in that situation. A CEO’s responsibility is to the corporation, not to YOU. And the bigger the stakes, the more obligated he is to screw you.

Now I’m not saying to never trust anyone. What I’m saying is that you’re worrying about the wrong guy. As a techie negotiating a co-founder agreement the person you really can’t trust is yourself. You don’t negotiate stuff for a living, legalese is harder to understand than bad Objective-C, and you really, really, really just want this agreement to be done so you can go back to writing the damned code. You know this and it’s scary. You need help. What do rich people do when they need help? They hire it.

The real problem is not that suits are untrustworthy. It’s that guys like me are too lazy to find a decent lawyer and too cheap to pay him. Which leads us to Rodley’s Second Law of Negotiation:

If you’re struggling with a founders agreement, shut up about the shady suits, find a fucking lawyer and pay him his fucking money or go be a W2 slave like everyone else.

Once you engage that help, it turns the issue from an emotional issue of who to trust and how much, to a technical execution issue of finding the right lawyer and paying him his fucking money. And if there’s one thing us code monkeys are good at, it’s execution.