Being a CEO of a company is, as one CEO recently told me with a certain amount of exasperation and exhaustion, “a 24-hour-a-day, 7 days-a-week job.” It’s all-consuming, all-encompassing, and in many ways when it comes to the success or failure of a company, all-important. But despite the high-stakes involved in being a CEO, it’s a position that all-too-often only receives rigorous feedback and a thorough performance review when things goes desperately awry. And even then, the measurement of “a good CEO” is often merely just a reflection of “good financials.” But surely there’s more to it. Sponsor Ben Horowitz recently posted a blog post on how Andreessen Horowitz evaluates CEOs. Although he admits, in writing it, it’s also a post that explains what Horowitz himself thinks is important in evaluating (and performing) the job of CEO. Horowitz says he looks at three key areas when evaluating CEOs: 1. Does the CEO know what to do? 2. Can the CEO get the company to do what she knows? 3. Can the CEO achieve the desire results against an appropriate set of objectives? Horowitz divides the first question into two parts: strategy and decision making. In other words, does the CEO know where the company is headed? Horowitz calls this the company’s “story” and contends that while the CEO need not be the person responsible for creating that story, “she must be the keeper of the vision and the story. As such, the CEO ensures that the company story is clear and compelling.” This story will give meaning to the work that staff do but will also align these motivations with key decisions that must be made for the company’s direction. And it’s these decisions Horowitz contends are particularly important: “a CEO can most accurately be measured by the speed and quality of those decisions. Great decisions come from CEOs who display an elite combination of intelligence, logic, and courage. Courage is particularly important, because every decision that a CEO makes is based on incomplete information.” But making a decision only gets you so far, as a CEO must be able to get her company to actually follow through on the decision. Horowitz points to the leadership skills that compel and guide others to accomplish these things as being a fundamental part of what makes a good CEO. In other words, a CEO must build a strong team of capable, motivated individuals. But the CEO must also make sure that those individuals can focus on their work – and on the company’s mission – and not on bureaucracy or politics. Of course, it’s easy to be a rockstar CEO – if you set your standards low enough. And Horowitz notes that there’s a danger for CEOs “succeed” by setting objectives too low, but also a danger of “failing” by setting objectives too high. Horowitz closes by stating that “CEO evaluation need not be a byzantine, unstated art. All people, including CEOs, will perform better on a test if they know the questions ahead of time.” What other criteria would you add to a CEO’s evaluation? Discuss
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The CEO Performance Review
VoltDB Launches Open-Source "Next Generation" Database Management System
VoltDB , an open-source “next generation” database, graduated from beta last week. The company, under the leadership of Postgres and Ingres co-founder Mike Stonebraker, claims its product is extremely scalable and 45-times faster than traditional database products. VoltDB is targeting enterprises such as software-as-a-service providers, financial traders, online businesses or any organization that requires “systems with large, fast-growing transaction volumes.” VoltDB is one of many projects trying to re-invent the database. Sponsor After over 30 years of dominance, the traditional relational DB model is being challenged by several companies. Charles Babcock, writing for Information Week , compares VoltDB to Cassandra , CouchDB and
Is The Path Between VCs and Entrepreneurs A One-Way Street?
Over the weekend, Frist Round Capital Entrepreneur in Residence Charlie O’Donnell wrote an interesting blog post that is making its way around the venture capital and startup communities and drawing a variety of responses. O’Donnell suggests that while some VCs began their careers as entrepreneurs, most native venture capitalists have trouble making the switch the other way. His reason behind this is that VCs operate with different goals, methods and mindsets which make the transition from VC to entrepreneur is an uphill climb. Sponsor O’Donnell speaks from his own personal experiences as a VC who tried to start his own company, Path 101, which ultimately failed. “I learned a ton about what it really takes to drive a successful business forward–skills and a mindset that doesn’t necessarily square with the way venture investors think of the world,” he says. One of the differences between VCs and entrepreneurs he points out is the type of employees each values. O’Donnell says VCs tend to look at the leadership and the entrepreneurs as the top priority employees, while entrepreneurs will tend to place higher importance on the people “in the trenches,” doing the programming and development. “Not many VCs really know how to evaluate team talent if they haven’t run a company before–and that’s a critical skill as an entrepreneur,” he says. Another wedge between these two types of businessmen that he notes is that entrepreneurs focus much more about what they can do with the resources they have, while VCs are constantly looking at what a company needs. O’Donnell says switching these mindsets can be difficult and that he spent too much time thinking of creating the “next big thing,” rather than focusing on short-term goals and creating a solid foundation upon which to build. Of course, as he points out, there are exceptions to the notion that a VC can’t become a successful entrepreneur. As a commenter on O’Donnell’s post points out, Hunch co-founder Chris Dixon began as an investor at Arbitrade and Bessemer Venture Partners before starting his own companies. Another commenter argues that its hard to make assumptions about this topic when the sample size of VCs trying to become entrepreneurs is relatively small. Whether O’Donnell’s suggestion has validity or not is certainly an interesting discussion, but the real lesson to learn from his post comes from his personal experiences in failure. One of the reasons O’Donnell doesn’t think VCs make good entrepreneurs is that they may be prone to approaching the situation with advice for how to succeed permeating their brains. The trick is, success can be the product of any of a million different variables, and there is no single proven path to success. Instead, the best way to get there is to avoid failures. Focus on the errors that most unsuccessful startups make and go out of your way to avoid them; more often than not you will find yourself inching closer and closer towards your goal this way. Just remember that errors and failures are not always things that were done that went wrong, they are sometimes things that were never done in the first place. The question of whether VCs have a difficult time become entrepreneurs has drawn a mixed response so far from O’Donnell’s blog, so what do you think? Is the road between them marked by a one-way street? Or is one side just paved a little more smoothly? Let us know what you think in the comments below. Discuss
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