For the last decade, I have been “up close and personal” with the subject of founding CEOs getting fired.  As interim CEO at a half dozen companies I bridged the gap after a founding CEO was let go by his investors.  And as interim COO at another half dozen companies I helped the founding CEO endure the pressures of their job.  (As one founding CEO said when he called asking for help, “Des, I’m one Board meeting away from getting fired.  Can you give me a hand?”)

In last year’s unConference session, people had many reasons why founding CEOs get fired “early and often.”  The reasons that resonated with me are:

Focus ADD:  Though I’ve seen that a lack of focus is the #1 reason why companies fail, I’d not previously heard the term “Focus ADD.”  It’s when the CEO in fact does laser-focuses on one area; but only for today!  Tomorrow the “Focus ADD CEO” laser-focuses on a different area.  And the next day, he focuses on yet a different area.  The “Focus ADD CEO” drives their staff nuts, pulling them in different directions day after day.  Yes, I’ve seen this.  And I’ve seen how the inefficiency caused to the organization can be crippling.

Lack of Empowerment:  One not-yet-successful founding CEO in the unConference session said he had no trouble empowering his team to make decisions noting, “I empower my people. I only step in when people make a decision I disagree with.”  My response: “You can only say you are empowering your people when you let stand those decisions you disagree with.” I have also seen that, when you empower good people, they will give you their best effort.  But when people know you are going to change / adjust their work, they don’t put in the extra time to make it their best; they know you won’t consider their best to be good enough anyway, so why bother!

Micromanagement:  Going hand-in-hand with a lack of empowerment is a CEO who micromanages.  To move from visionary to leader, the founding CEO can no longer micromanage; they must let go.  In my work I have found that many founding CEOs find this difficult; few who find it difficult survive.

Common Symptoms:  All three conditions – Focus ADD, Lack of Empowerment, and Micromanagement – have common symptoms.  Often other members of the founding team abandon ship early.  Or there has been a revolving door of early workers.  Sadly, the founding CEO usually convinces himself – and his Board – that each person left for a perfectly good and logical reason; the CEO rarely recognizes that these people left due to faults in the CEO’s behavior.

Lack of Life Experiences:  Another problem I’ve seen is the limited life experiences of many young founding CEOs.  On occasion this lack of life experience gets the founder into trouble but the CEO still survives and excels; case in point, Mark Zuckerberg.  But most founding CEOs are not Mark Zuckerberg; most founding CEOs learn that the mistakes they make due to a lack of life experiences cause them to be fired sooner rather than later.

Solutions.  Many solutions were offered in the unConference session.  Fundamental to the solutions is the fact that the CEO job is a lonely one; therefore founding CEOs need mentors.  Mentoring might come from a paid “coach” who comes in, say, 10 hours a week and provides consistent advise and counsel.  Mentoring might come from an organization like The High Growth CEO Forum run by Bouzha Cookman, where CEOs from multiple, non-competing companies can provide each other with advice.  Or mentoring might come from a full or part time interim COO whose job remit includes both advising the young CEO and having his back.   (Aside, at the early stage of a start up, hiring a permanent COO is often risky; if the business pivots, that COO may no longer be a good match for the post-pivot company.)

Eric and Katie ran a great session.  MassTLC and Bill Warner will assure that this year’s sessions will be as good.

RelayRides is an innovative twist on the traditional carsharing model, ala Zipcar.  I believe our business model will have an important impact on the young and rapidly growing $12.5B global carsharing industry. Adding neighbor-to-neighbor carsharing to a community with traditional carsharing is one of those instances when one plus one equals more than two, as detailed here.

RelayRides is a perfect example of Collaborative Consumption. Rather than putting new cars on the road like other carsharing services, RelayRides goes the eco-friendly route by leveraging existing, often idle autos.  Neighbors help each other.  Car owners recover some of the costs of owning an expensive asset while they simultaneously provide a new, convenient transportation option for their neighbors in need of a car.

After operating in Cambridge for six months, Tuesday we launched our second city, San Francisco, generating a slew of great press.

When Shelby Clark, [founding CEO of neighbor-to-neighbor carsharing company RelayRides] headed back to his table after being presented his check for $50,000, I was standing next to Scott Griffith, the CEO of [traditional carsharing company] Zipcar, who is preparing to take his Cambridge company public.  Clark looked over to Griffith and caught his eye.  That’s the kind of Massachusetts I want to live in: one that is building industry leaders like Zipcar, and also cultivating the next wave of innovators, too, to keep them on their toes.

Coexistence: I too liked this exchange of Clark and Griffith because it’s my belief that — because of the dramatically different economic model underpinning neighbor-to-neighbor carsharing — RelayRides (where I am interim COO) can peacefully coexist with traditional carsharing companies like Zipcar.  Neighbor-to-neighbor carsharing is a perfect complement to traditional carsharing in a number of ways.  Moreover, I believe that the efforts of RelayRides will actually result in increasing the total “carsharing pie” in a way that the classic line, “a rising tide carries all boats” will apply.  Let me elaborate.

Different Economic Model: Neighbor-to-neighbor fills a number of gaps left by traditional carsharing companies. These gaps can only be filled with the very different economic model that underpins neighbor-to-neighbor carsharing.  The fundamental economic difference vis-à-vis traditional carsharing is that, when cars are added to a neighbor-to-neighbor “fleet”, no new cars are actually manufactured or purchased.  Each RelayRides car already exists; it’s owned by a neighbor of yours who cares for it deeply, but who uses it less than an hour a day.  The rest of the day, your neighbor wants to share their car with you, via RelayRides.

Lower Utilization Percentage: The economic benefit of not having to manufacture and purchase a new car means that the only capital expense that needs to be covered is the cost of the in-car device; there is no need to cover the cost of a new car.  The result is that the neighbor-to-neighbor economic model requires a utilization percentage far lower than is required in the traditional carsharing model.

Result: Filling The Gaps: It’s this fact that lets neighbor-to-neighbor carsharing “fill the gaps” and coexist with traditional carshare companies like Zipcar.  For example, neighbor-to-neighbor carsharing fills the “availability” gaps when traditional carsharing cars might not be available at peak times.  People who can’t find availability of a traditional carsharing vehicle can turn to one of their neighbors’ vehicles.  Second, neighbor-to-neighbor fills the “geographic” gap in neighborhoods where traditional carsharing cars are not available close to the homes of folks who do not live near a commercial carsharing lot.

Introducing New People to Carsharing: Finally, it’s our belief that by bringing carsharing right into the neighborhoods of potential users, RelayRides will introduce carsharing to many people for the first time.  When these people travel away from their neighborhood they will utilize traditional carsharing services, like Zipcar.

Bottom line: adding neighbor-to-neighbor car sharing to a community with traditional carsharing is one of those instances when one plus one equals more than two.

I advise young founding CEOs, either in my role as interim COO or as a “CEO Coach.”  A common issue they raise is their frustration with an employee who does not work incredibly long hours.  I struggled with this until I recalled that, when I was their age, I felt the same way!  I’ve been managing since I was 23 and, for about a decade, I too was impressed with an employee who worked the longest hours.

But then I hired Chris Pooley and he taught me that efficiency was more important than hours.  Chris was upfront with his intention to focus on efficiency, not time.  And he was right; Chris was a star performer and he went on to a very successful career.

Since then, I’ve focused on teaching young people how to be more efficient with their time; how to develop techniques and processes that allow them to get more work done in less time.  And I encourage them to spend those extra few hours enjoying a life outside of work.

Yes, I agree that in a startup everyone needs to work long hours.  But I encourage founding CEOs to appreciate an employee who gets more work done in less time vs. an employee who works long hours, but isn’t efficient.

Am I always able to convince the founding CEO of my view? Usually.  But I have my work cut out for me when the CEO himself is a “long hours but inefficient” person!

Late on Tuesday, the founder, Shelby Clark said, “Instead of just advising me, why don’t you just join us to accelerate our growth?” After a handshake agreement, I started that day as part-time interim COO.  By 9 PM I was reminded that what it takes to turn a great idea into a successful company is people with three characteristics you’ll not likely find on their resume.

Intellect: Whether fresh college grads or people who’ve been around the block a few times, I go with intellect over specific experience any time. I don’t want people who simply execute things the way they did when they were, say, VP of Sales at Lotus.  I want people who are smart enough to figure out the right way to execute this idea in this market.

Energy: A startup is a ton of work, requiring people with high energy.  But don’t equate “age” with energy; some of the most energetic people at Boston area start ups have themselves been around the block a few times.  Energy’s about inherent drive; whatever their age, find out if the person has this drive.

Caring: Yes, caring about the company is important, but caring about the customers – and the quality of their total experience – is critical.  At RelayRides we have two sets of customers – the car owners and the car borrowers – and our challenge is to walk the fine line that assures both sets of customers have a great experience!

Returning home after my first few hours at RelayRides, my wife asked, “Are you still as excited about the idea?”  My response, “Yes.  But what I’m even more excited about is that Shelby has pulled together a team of great people to execute the idea. This will be a success.”

For more on the subject of Collaborative Consumption, check out  Rachel Botsman, co-author of the forthcoming book, “What’s Mine Is Yours: The Rise of Collaborative Consumption.”

BTW, RelayRides is located at the Polaris Venture Partners great incubator, Dogpatch Labs.

I’ve seen the hard work – and focused energy — of prior grads from this NU program, such as Jason Evanish, who started Greenhorn Connect and who is an early team member of Laura Fitton’s Twitter startup, oneforty.  This year, I’ve met more folks from the program in my role as mentor to one of the NU teams, NueBuild, whose founding members Ben Youtz and Peter Wiederspahn developed a patented, energy efficient, modular, low cost, home construction system.  I am providing hands-on mentoring to the founding team, as well as helping their efforts to enter their first target market, China.

Seeing ten Northeastern teams up close this week, I am left with the view that they might just be more practical, more hands-on, and more interdisciplinary-aware than the typical grads from those other business schools.  What’s your view?

Little did I know that -– before the last clean mug was in the strainer -– word traveled to the company’s remote offices in London, Dubai, and Perth that there was a new kid on the block and he was taking no prisoners.  Unknown to me at the time, the foundation for a rapid turnaround was in place.

Arriving 45 minutes early that first day -– it’s amazing what you find out about a company arriving 45 minutes early on the first day –- the only employees in the office were four individual contributors having coffee in the company kitchen; a ridiculously extravagant kitchen any TopChef chef would die for.

I was told that the only available coffee cups were in the pile that filled the sink -– a pile of dirty dishes, it was noted, that was indicative of two of the company’s problems. First, that management was unable to make tough decisions.  And second that people who had once cared deeply for the company had grown discouraged and didn’t give a damn about even the smallest things any more.

When the board told management to cut the payroll, management decided to fire the lowest paid person in the company -– the cleaning lady -– rather than some high-priced-but-ineffective VP.  And employees who once cared enough about the company to pitch in and help had long ago thrown in the towel and given up working very hard.

At that moment, something inside me said, “Take off of your jacket and tie, roll up your sleeves, and clean the kitchen.”  Two of the four workers quickly exited –- I now realize to spread the word about the new, crazed COO -– while the other two pitched in and helped me clean up.

The time cleaning was well spent.  These two were a wealth of information about what the company’s problems really were vs. the conflicting views I obtained from various board members.  And I loved the look on the CEO’s face when he walked in just as we were nearly finished, shook his head, turned, and headed towards his office: He clearly understood that things were going to change at the company he had founded!

When nearly done with the dishes, I asked for a couple of favors:  Could they ask HR to see if the cleaning lady was willing to come back to work starting today.  And could they spread the word that the next person I caught leaving a mess for their fellow employees to clean up –- be it a dirty cup, some sloppy code, or an inaccurate sales forecast –- would be shown the door.

Turns out I never had to show anyone the door.

This ended up being one of the easiest turnarounds.  The ‘hangers on’ who were just there to collect a paycheck -– including two of the VPs –- quickly realized that the best course of action was to find the exit door on their own.  And those key individual contributors — the most important ingredient for a rapid turnaround — rose to the occasion, allowing us to reach sustainable profitability within the first quarter.

Oh, and yes; you could walk into the kitchen at any time and it was clean; just like the code in the next release of software and just like the sale forecasts for the next quarter!

And to think it all started with a pile of dirty dishes!

I’ve listed them below, but first three other key points from the report:

1. Interim CEOs are not consultants; rather, they are hands-on workers.
2. Interim CEOs are not potential employees; the good ones do interim work as a way of life (and not as a “filler” until a poor economy improves.)
3. Interim CEOs can be taken into the confidence of a board (as an interim person has the advantage of impartiality.)

The report also talks about why younger and younger executives are turning to interim management as a way to achieve a more flexible and rewarding career.  While delivering significant benefits to the client, interim managers provide themselves with a satisfying work / life balance.  Good ones often say, “I never want to be in salaried employment again” as they have “been there, done that” and it no longer appeals.

Eight Cases:

1. Plugging a gap created by a sudden departure (whether or not that departure is initiated by the board.)
2. Managing an acquisition.
3. Managing a project.
4. Effecting cultural change.
5. Setting up a new business (or closing one down.)
6. Mentoring a young team.
7. Managing a crisis.
8. Turning around an ailing business.

I’ve completed 10 interim assignments in 10 years (4 in the States, and 6 in Europe) and the cases I’ve most often come across are cultural change, new business, young team, crisis management, and turn around.

The Economist postulates that “interim executives may be the wave of the future in all rich countries, as these countries evolve from what Peter Drucker called a ‘society of organizations’ into a ‘society of networks.’”

Why Companies Do It

The article details three reasons why a company might choose to hire an interim boss:

1. Speed: Companies usually employ interim executives to cope with an immediate crisis; while traditional search firms can take six months or more to fill a sudden vacancy, an interim CEO can be in place in a matter of days.
2. Expense: Interim CEOs can tackle a short-term problem without acquiring a long-term obligation to an expensive executive.
3. Efficiency: The traditional “market” for CEOs is so inefficient that 20% of CEOs hired depart within 18 months; use of an interim CEO allows companies to “try before they buy.”

Why Executives Do It

The article also details three reasons why CEOs accept interim positions rather than holding out for permanent ones:

1. Selectivity: CEOs can, in effect, pick and choose the jobs that appeal most to them.
2. Flexibility: Interim CEO jobs allow executives to control when and how much they work.
3. Efficiency: Because the market for CEOs is one of the oddest and least efficient, interim CEO work allows the executive to also “try before they buy!”

Temp to Perm

My experience completing 10 interim assignments in the last 10 years at companies like Eink, Ember, and MIT Media Lab for venture capital firms like Atlas, Polaris, and Venrock closely parallels what The Economist describes, with one exception; while The Economist notes that 25% of interim executives are offered permanent positions, I’ve found the percentage over 75%.  In nearly all of my assignments, somewhere around day ten the ‘powers to be’ have asked me to switch the role from interim to permanent. Read this post to see why they ask and why, to date, I’ve always declined.

Full Text

For the full article – titled, “Talent on Tap: The fashion for hiring temps has reached the executive suite” – check out the 10 December 2009 print edition of The Economist.

Tom taught me four lessons — about hiring, making unpopular decisions, buying a cottage (in Maine!), and taking vacations — that have had an immeasurable impact on my life and, by association, the lives of many around me.  Each lesson has its own story which, this Thanksgiving, I share.

Cottage First, House Second

We own a cottage on a lake in Maine.  This summer will be out 25^th there.  It is really more ‘home’ to us than our house in Lexington.  When we lived in Ireland for four years, the cottage in Maine kept us grounded to the States.

We own the cottage because of Tom.  Often when we are there, friends ask, “How did you come to buy this place so long ago?” I answer by telling them about Tom, by telling them about the day I told Tom I was contemplating buying a house and he said, “Des, buying a house is important, but before you do, buy yourself a cottage on a lake.  There is a limited supply of lakefront property.  And if you buy a cottage first, you’ll still figure out a way to afford a house later.  But if you buy your house first, you’ll not likely ever get the cottage.”

Tom was right.  Though my boys have heard my telling the story too many times, they never seem to tire of it; rather they smile slightly as they hear, once again, about this guy they never met named Tom and how his advice resulted in their having a cottage that they enjoy so much.

Decisions That Are Right, Not Popular

I was lucky to become a manager at Burroughs at a very young age.  The company was growing like crazy in the early computer days and there were plenty of opportunities for young people like me that Burroughs hired right out college.

A key lesson from that time was when Tom told me of some decsion he was going to announce, which, though clearly right, was sure to be unpopular.  (I’ve long since forgotten what the decsion was even about.)  Sitting in his tiny windowless office in Manchester, New Hampshire I said, “But Tom, people will not like you if you make that decision.”  To which Tom replied, “Des, my goal as a manager is not to make decisions because they will make me popular; my goal is to make decisions because they will be considered best for all of us.”

Again, Tom was right.  To this day, whenever some young manager – or one of my boys – questions a decsion I’ve made with, “But people will not like you” I tell them about Tom.  I tell them about how the people who I thought would not like Tom’s decsion are the ones who came to realize that Tom’s decision was right; the ones who came to respect Tom for making that tough decision; the ones who, over the years, stayed in touch with Tom and who are, I’m sure, thankful for what Tom taught them.

Vacation Time is Sacred Time

One year (long before email and cell phones) Tom was heading off for his annual two-week family vacation at his lakefront home in Greenville, Maine and he put me in charge of the office.  I said, “Tom, things are so busy right now, you’d better give me your cottage phone number in case there is something important enough for me to call.”  I was flabbergasted when Tom said, “Des you’ll just have to get by on your own without calling me.  We have no phone at the cottage.”

When I protested, “But suppose I need to call you for something really important?” Tom said, “Well the only way I can be reached is for the Maine State Police to hike into my cottage from the main road.  So you, Des, will have to decide that the situation is important enough that you are willing to call the Maine State Police.  Then the Maine State Police will have to decide that the situation is important enough to send a trooper to hike in and get me.”  At that moment I thought Tom incredibly irresponsible.

But, once again, Tom was right; and it wasn’t too many years before I matured enough to realize this.  To this day, I consider vacation time sacred time.  However important my job might be, I am simply not that important; while I might be president of a company, I’m not the president of the United States!  While I’m away for a long weekend or for a couple of weeks the people back at the office can make the important decisions without me.  So whenever someone – whether a subordinate or a Board member – says, “How can we reach you over your vacation?”  I tell them, “You can’t.”  And when they protest, I then tell them the story about Tom and the Maine State troopers.

Hire The Very Best

Tom taught me that, if you surround yourself with great people, you’ll succeed.  Because Burroughs was the only computer company hiring right out of college, we were able to interview the “cream of the crop” at local universities.  My first year as manager, we interviewed dozens of candidates for one opening.  When I told Tom that my choice was a kid named Steve Lilly, he said, “Fill out the paperwork and bring it to my office.”  Later, as he was about to sign he hesitated and, without looking up, quietly asked, “Is he better than you?”

I was surprised by the question and didn’t immediately answer.  He looked up and repeated it a bit louder, “Des, is Steve better than you?”  When I said, “Yes” Tom smiled slightly, looked down, and signed the papers.  As he handed them to me Tom said, “Good.  If the first person you hire is better than you – and if every person you hire after that is better than the last – you’ll succeed.  Some people are threatened by surrounding themselves with great people.  Don’t be threatened.  The great people you surround yourself with are not a threat; rather they are the means by which you will excel.”

Steve turned out to be a star, as did so many of the people we hired right out of college.  Many of them eventually ran significant companies.  It was enjoyable to read the comments of so many of these guys on Tom’s memorial site.

One man.  Four lessons.  An immeasurable impact.  If only I could be so good.