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Wednesday, September 23, 2009
Born in the Recession
4 first-time CEOs hold their role from startup to growth firm
By Galen Moore
Following the Clean Energy Council Fellows
MHT's Michelle Lang: Local tech execs tackle the Boston Marathon
Flash Slideshow: Mass High Tech All-Stars Thought Leadership Roundtable
Venture capital investors are notorious for investing in a startup, then replacing its founder with a more-seasoned CEO from their network. But that’s not always the case. We spoke with four CEOs who have taken their tech company from zero to fast-paced growth as a first-timer in the corner office — and are still at the helm.
Stephen Randall
Company: LocaModa Inc.
Location: Cambridge
Web: http://locamoda.com
Business: Mobile-to-mass-media communication software
Traction: Founded 2005; hopes to have screens in 50,000 public locations by year’s end
What have you personally found difficult as CEO?
In the U.S., there’s much more of a can-do attitude. And if the CEO says something, it’s taken as an order. Sometimes I say something as a devil’s advocate, expecting people to defend their position. Sometimes I say, ‘I’m the CEO, but in this meeting, I am a colleague and I want you to challenge me.’ In that respect, the CEO is a more lonely post that it might be in Europe.
What’s the first advice you’d give a new startup CEO?
You have to be somewhat fearless, almost to the point of being reckless. I’ve often been at a junction where you can take the safe route and grow organically or you can bet the company and get to the next tier, maybe 10X. I think you should always take the more audacious path. Don’t play it safe. Go for stretch goals, and go for as long as possible without funding.
Gail Goodman
Company: Constant Contact Inc.
Location: Waltham
Web: http://constantcontact.com
Business: Small-business e-mail marketing platform
Traction: Founded 1998; $108 million IPO in 2007; $87.3 million revenue in 2008, growing 73 percent over 2007
How is CEO different from other executive positions?
At the early stage, the buck stops with you. There’s just nothing that doesn’t end up in your bailiwick. But many first-time CEOs don’t scale, because at every stage in growth your role has to change. I have needed to go from manager to leader, and from leader to coach. In the world we’re in now, I don’t — and I shouldn’t — own any operations responsibility. People think, you’re CEO: you say it, it happens. But you can’t do that, because if you do then you never develop strong leaders under you.
What have you personally found difficult as CEO?
The biggest challenge for me was learning how to navigate the world of venture capital. As an entrepreneur, you don’t even understand the implications of the terms you negotiate. You negotiate three times in the life of a company — they do it five times a week. There’s an incredible imbalance of power. My early rookie mistake was not realizing how valuable my lawyer’s experience can be at that stage, because they do see multiple term sheets a week.
You don’t know Gail Goodman like Margaret Olson knows her
“Gail was a spreadsheet maniac. She’s very data-driven — seeing these little things and acting on them, and realizing that it does matter and making it happen in a very cost-effective way. I remember interviewing her. She was very fact-oriented. She wanted to know how we did things. She always challenges you. Sometimes I joke to friends that I went to the Gail Goodman school of business. My background is in technology. Working for Gail made me a much better executive.”
— Margaret Olson, founding CTO of Constant Contact, now founder of Plum.com
Jeremy Allaire
Company: Brightcove Inc.
Location: Cambridge
Web: http://brightcove.com
Business: Online video publishing platform
Traction: Founded 2005; profitable since June 2009; high-profile customers include AOL, Comcast and Fox.
How is CEO different from other executive positions?
When we started Allaire Corp. (where he was CTO), I was in my early 20s and had no experience. We realized early on that to achieve our vision for Allaire we needed partners and senior managers with experience building software businesses. Many young founders should take this path, but the critical lesson is this: You have to find partners whom you deeply trust, and who really are different from you in terms of what they bring to the table.
What have you personally found difficult as CEO?
When I started Brightcove, I had thought initially that I would need a partner in the business, but learned within a year or two that what I really needed was to keep surrounding myself with truly great executives and leaders. I’ve gotten great feedback from my team and my board, and that has given me faith and motivation to keep taking things to the next level.
You don’t know Jeremy Allaire like David Orfao knows him
“Early on, Jeremy’s ideas were so big you had to get it down into a product. But he learned quickly. Allaire was the first job he had out of college. A lot of tech visionaries, they don’t have the curiosity to even learn about business. He did a very good job connecting himself to the business side — to salespeople and customers. You know when you start getting e-mails from the sales force saying, “I want Jeremy on this call with me,” you know this young gentleman has a talent for taking a complex technological concept and explaining to a customer what it means to their business.”
— David Orfao, former CEO of Allaire Corp., and a partner at VC firm General Catalyst Partners
Steve Hafner
Company: Kayak.com
Location: Norwalk, CT
Web: http://kayak.com
Business: Travel search aggregation
Traction: Founded 2004; 45 million users; profitable since Q3 2007
What have you personally found difficult as CEO?
The hardest part isn’t so much the hiring. It’s the firing. If they don’t meet expectations, a lot of people shirk firing them. That’s not something we do at Kayak. It’s not a role I relish, but it’s essential to keep our innovation velocity.
What’s the first advice you’d give to a new startup CEO?
The flavor of the moment from your investors isn’t necessarily the right thing to do. In 2004, when we launched, offshore development was all the rage. We set up a team in Bangalore for $13,000 per developer. It was a complete failure, and we knew it in four weeks. The learning isn’t so much ‘don’t trust your board,’ but trust your gut. If something doesn’t feel right, don’t postpone making a decision. If something doesn’t feel right, investigate more, not less.
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