Endeavor is pleased to make public the following transcript and video from a presentation at the 2011 Endeavor Entrepreneur Summit in San Francisco. The event, which assembled over 450 entrepreneurs and global business leaders, featured dozens of entrepreneurship-related presentations by top CEOs and industry experts.
Overview: Bing Gordon, a partner at Kleiner Perkins Caufield & Byers spoke about why being a web 2.0 CEO is different than being a traditional chief executive. In his presentation, drawing from the experiences of Jeff Bezos, founder, president and CEO of Amazon.com and Zynga CEO Mark Pincus, he articulated how the new kind of CEO must be visionary, customer focused, a coach rather than a dictator, and committed to a fast pace. He also included other tips on the best ways a web 2.0-era CEO can build a support system and adopt specific strategies to be especially effective.
Bio: Bing Gordon joined Kleiner Perkins Caufield & Byers as a partner in 2008. He leads on the sFund, the investment initiative to fund and build applications and services that deliver on the promise of the social web. The sFund, launched in 2010 with strategic partners Amazon.com, Facebook, Zynga, Comcast, Liberty Media and Allen & Co., has made 16 investments to date, including four seeds. Bing serves on the board of directors of sFund companies Klout and Lockerz; sFund strategics Amazon and Zynga; as well as MEVIO and Zazzle. He was also a founding director at Katango (acquired by Google 2011), ngmoco (acquired by DeNA 2010) and Audible (acquired by Amazon in 2008).
Before joining KPCB, Bing had been a long-time executive at Electronic Arts, beginning with EA’s founding in 1982 with initial funding from Kleiner Perkins. He was chief creative officer at EA from 1998 to 2008 and previously headed EA marketing and product development. Bing drove EA’s branding strategy with EA Sports, developed EA’s pricing strategy for package goods and online games, created EA’s studio organization, and contributed to the design and marketing of many EA franchises, including John Madden Football, The Sims, Sim City, Need for Speed, Tiger Woods Golf, Club Pogo and Command and Conquer.
Bing was awarded the Academy of Interactive Arts & Sciences’ Lifetime Achievement Award in 2011, and he held the game industry’s first endowed chair in game design at The University of Southern California’s School of Cinematic Arts. He earned an M.B.A. from Stanford University and his B.A. degree from Yale University, where he serves on the President’s Council. Bing’s favorite games of all time are World of Warcraft, the Sims, Diablo, Pogo, Civilization, Columns, Freecell, Farmville and Cityville.
I want to talk to you today and share what I’ve learned about how to be a CEO in the era of consumer Internet. I’m on the boards of Zynga and Amazon and there are two great CEOs.
I’ve done lecturing for universities and what I’ve learned for motivated students and what I’ve learned from game designers (I’ve been making video games since 1982—video games) is no matter how long I spend with them, they can only take away one and a half actionable ideas unless they take notes. So if your ambition is to have more than one and a half ideas out of the next 20 minutes, take notes [Editor’s note: done!] or have a really smart friend next to you.
Intro: Why Web 2.0 is different
Web 2.0 is different. The Web 2.0 CEO is different. There are a couple things that are truisms of Silicon Valley.
More jobs than people:
If you have children, advise them to go into a business where there are more jobs than people as compared to the old glamour businesses where there are more people than jobs.
“Design by Darwin”:
Google is a good example of “Design by Darwin” – launch minimum viable product, learn like crazy. This the era where CEOs who are not curious and not data-driven are bound for failure no matter how tall and good looking you are.
-Build for Speed:
– We’re in the fruit fly era.
– Gamification, mobile, social
These are three themes you CEOs (especially gamers) need to master.
Part I. Personal role
Think about yourself as a productive asset. What I’ve found again and again is that people, when they reach a certain level of maturity in their careers, realize they are a productive asset just like a factory or a thoroughbred horse. Your job is to be productive. And in your personal role other than your company, your job as a CEO has a couple of aspects. The first is the role of visionary. You’re the spokesperson in chief, the communicator in chief; you have to lead by communication. It’s always a good test of potentially scaling CEOs whether they can communicate clearly.
Strategy that fits on a poster
The first trick I’ve learned from both Jeff Bezos and Mark Pincus is in their office, they have one slide or one back of an envelope or a poster on which is the whole company strategy. For Bezos, it’s a flywheel of selection, availability and price, and for Pincus it’s the three stair steps of the emerging social web.
Missionary, no mercenary
From Bill Campbell and John Doerr, I’ve learned that it’s important to build a company that’s missionary, not mercenary. If you want a company built to last, you can do it – like a company like Oracle does, where everybody’s grinding for pennies everyday. But your job to build a cohesive, lasting organization is basically to create and sell the vision.
II. The coach, not the dictator
The second lesson in a world where there are more jobs than people: give up the idea of the CEO as command and control. Your job is to be a coach, define objectives, and then be around to help. But the objectives are the boss, not you.
I believe in something called OKRs, which came out of Intel Objectives and Key Results; everybody in the company up to the CEO has three objectives and each objective has three results. At Intel the goal is to achieve about 70% success because if you get to 100% it’s not ambitious enough.
“You killed it”
We really like this concept of “you killed it!” — that everybody in the company ought to understand what overachieving is. If you have any employees in your company who aren’t trying to overachieve, my advice is get rid of ’em.
Inputs vs. Outcomes
Bezos is really interesting: he doesn’t measure people on outputs. It’s all about inputs—i.e., what’s under your control, what you add to the system, on what date and in what quality. He cares less about revenue than whether Diego Piacentini launches new categories in particular geographies on a particular day and does it well with a certain amount of inventory coverage.
III. Set the pace
The next lesson as a CEO is that everyone shadows the leader. The whole organization follows your bio rhythms, so your job is to be fast—the fastest in the company. I realized, teaching college students, that no matter how big of an assignment you give them, they only work on it for a week.
Weekly, not quarterly
Scope all assignments to be a week at a time. What I’ve found is that high potential college students get into a company and what used to take a week takes two weeks – one week to do the work, and one week to wonder if your boss is going to like it! Then you get promoted to be a manager and it takes a month, and then you get promoted to vice president and it takes 90 days.
Again: one week to do the work and the rest of the time to make sure you don’t look foolish. So get rid of all that “don’t look foolish” time. Take it down to a week.
Personal time and management
The second big idea here is personal time management. Have an assistant, keep track of how you spend your hours, then match your hours per week or per month—literally the amount of time you spend on work—to your stated objectives and key results. There are very few people I’ve met in life for whom those match.
One of the truisms about managers is that managers tend to manage last in, first out. If you have a messy desk, managers love to do what’s on the top of the stack as opposed to prioritizing. So you have to be the dictator of prioritization. And the first place to check for prioritization is in your calendar. I’ve also found that if you want to change strategy, you have not changed strategy until everyone has changed their calendar in the next seven days. So it’s a good check. If you think you’ve set a new strategy – oh Mr., Miss CEO – that you can ask everybody around the room, what are you doing differently in the next week. Let’s get out our calendars and show me on yours what’s different; if the answer’s nothing, you have not set a new strategy.
Abolish one-on-ones; have no meetings with your direct reports one-on-one. Bezos, a contrarian, says if people meet with me one-on-one, I’ll give them 30 seconds and after that they’re just whining. Do it with a group. You’re in a hurry; don’t start the telephone game.
IV. Other lessons
A great exec assistant…or two
Every CEO should have a great executive assistant.
I believe there are parts of a business that can be perfected: Finance can be perfected. Operations can be perfected. So your job if you’re in a scalable company is to make sure that the perfectible is perfected. With an exec assistant, my rule is one mistake per 90 days and no more than one big mistake per year. And that’s the same thing we think about in game design. Once I was clear about those rules, I’ve now had three years of exec assistants with zero mistakes. And they get paid a lot and they have high self respect. David Ogilvy, my business hero, says great people want a lot demanded of them. So if you’re not demanding a lot of people, you’re basically telling them you don’t think they’re great.
Put your office in the middle and move regularly
And don’t take a corner office: put your office in the middle. Again, you are a figurehead.
Part II: Board of Directors:
I. Maximize Value
Make board meetings interesting and insightful
How should you build a Board of Directors? Most rookies build a board of directors and want the board to be their grown-ups—their principal in school. Change your board meetings. Your board meetings should be inspiring for everybody there. They should not be your worst day in the month or in the quarter, but your best day.
These are the people that you’ve chosen to inspire you and be a sounding board; remember that they want to be inspired too. If you’ve got bored directors in your board, do everything you can do get rid of them. Many of you will have taken money from people who demand to show up who add no value. It’s really hard to tell them you want them to get off, especially when they have rights to come to your board meetings. And if that’s the case, make your board meetings last a half hour and set up a separate shadow advisory.
Energize your board, assign roles, feedback & fun
Your job as a CEO is to set expectations for all the board members: what you want them to do. Bezos told me what he wanted me to do was to not be the marketing expert but to be the person that always asks the un-askable questions – and I thought, I can do that!
II. Governance not pre-money
Build your board so that you maintain governance rather than maximize your valuation. Also, when it comes to picking who should be on your board, this is as important as picking your founders. Only pick people you’d pay money to have dinner with. Because you are.
Part III. Building a scalable organization
I. Hire HR early
I’m a believer in a ministry where there are more jobs than people. Hire a great head of HR early. This is somebody for culture and also recruiting. Get the person you can find who can recruit like a bat out of hell and buys into the values that you want to create. I’d say if you have 50 employees and you don’t have a vice president of HR or a chief people officer, you’re probably already falling behind.
II. Golden People
I have a concept called “Golden People”: Your job as a CEO is to make sure you always have three people reporting to you who are dominating their job. Bezos says six people whose judgment he trusts completely. But get to three people, and if you’re starting to notice that the third person isn’t quite keeping up – if you’re growing, that’s to be expected — your job is to plan capacity of your exec team like you’d plan server ops and overinvest a little bit ahead of scale to make sure you’re ready.
III. Onboarding is crucial
For all new employees, make sure by Friday they know what “killing it” is in their job.
Focus on the newbies
One of the things that American universities have learned in the last 15 years is don’t allow freshman to go astray. (I’ve heard one wag say that America has the best high school education in the world; unfortunately you have to go to college to get it.)
Bing’s rule of 7/10
I have a rule of 7/10: I ask people how productive they are on a scale of 1-10.
“10” is you’re in college, you stayed up all night, you did an A+ paper at the last minute. You blew yourself away, you wrote a 40-page paper in eight hours and everybody loved it and you put it on the Internet and it got 10,000 links to it.
“1” is like what all of you fear that today might be like. For me in high school it was staring out the window and time literally stood still.
“7”: for kids especially, 7 means they’ve got a little bit of spare capacity. What I tell kids is, when you think you’re at a 10, usually you’re breaking stuff. It feels exciting to you and everybody around you is going, “this person’s taking too many risks!” A 7 is a marathon where you can sprint. If you’re a Tour de France fan, it means you’re in the Peloton at 7, working hard, taking your turn at the front. But if you get attacked, you can attack back. So you can go to moments of 9, but a 7 is a real good sustainable place.
First quarter: Probation – are they a fit?
With everybody, after 90 days, you decide whether they’re a fit or not and go through a real crisp process.
IV. Promoting from within
At Zynga, we set a goal as we grew to 2,000 people that 15% of employees who started the quarter, by the end of the quarter had been raised or promoted. We called it “Level Up.” And again, the people who are leveling up are “killing it.” So with great people, if you can tell them what “killing it” is, you’d be surprised at how many times they do it.
I think I’ve only met two people in life who don’t have fallow periods, who are constantly ambitious on behalf of their company and themselves and their people. Even most of you, unless you’re absolutely super-human, are going to have days where you’re not setting the pace of aggressiveness for your company, and that’s where the three people who are dominating their jobs will inspire you.
Job challenges, not performance reviews
Something I learned from Bezos: he does not believe in written performance reviews. He says that doesn’t help anybody to improve. What helps people to improve is to have somebody reach in and say, “You’re awesome: I want to put you in a horizontal job that you’re not prepared for” or “I want to take you up a level and give you a job assignment that scares the crap out of you.” Scaring the crap out of your best people on a regular basis is a good idea.
I have another approach – when I have a high potential person working for me. Tell them your job is to spend a silver bullet on a regular basis. If you aren’t taking a risk about every 90 days – but at whatever pace you want to challenge them to – or they aren’t trying hard enough. Most organizations have the worst people taking risks because you think they can afford it. Don’t have the big risk taken by your worst people.
IV. Entrepreneurs AND managers
In a growth company there’s a characteristic of entrepreneurs who break things, who don’t manage process, who do the impossible and think of everything as changeable. And then there’s managers that do the best with who they have.
I’ve found that once you build that language into the organization – “Hey, you’re being an entrepreneur. Be a little more manager. Hey, you’re being a manager,” it helps. Better yet, build teams where there isn’t enough entrepreneurship and enough management. My experience with high potential people is the hardest thing to learn is people skills. If you think about college, everything you do in college is either solo or in groups of about three. Colleges don’t have team work rooms. So you can expect your young people to be incompetent in smaller groups, but they can invent all kinds of stuff. Entrepreneurship is not correlated with age and management is.
V. Golden Processes:
I also believe in a thing called Golden Processes. In a growth company my challenge to the CEO is to come up with three golden processes at all times. That the whole becomes a famous platform for the company – everybody talks about it. When you have these, it gives people confidence.
Again, your job as the CEO is to give everybody confidence that things are going to be ok. In my experience in start-ups, the hardest thing is the start-up part when you wake up every day and you don’t know what the future holds. That’s exciting, but there’s plenty of proof that people become less creative as they lose confidence.
VI. Focusing on Culture
Values on the wall
A couple things that I’ve seen work: one is that every room has got the company values on it and people believe in it, and you can ask your employees – especially your good young ones – if we’re acting the values. If you’re a parent, you know that your kids expect you to walk the walk and not just talk the talk.
Merit not politics
Building a meritocracy is extraordinarily hard. In the world of consumer Internet where everything is measureable, there’s an extra tool for building a meritocratic company.
Two things to look at for meritocracy. One: are there people in the executive suite who are too young to be there but are so good they have to be there? If not, my advice is, don’t try to hire anybody in their 20s if they don’t have a chance to be in the executive suite, or on the executive team. Two: in most companies, seniority matters in the exec ranks. The first place where meritocracy dies in a company is at the exec team, and that’s all CEO. If you aren’t as hard on yourself as you are on 22-year-olds, you’re probably killing your company.
VII. Ambitious Infrastructure Goals
The companies in Silicon Valley are all starting out on Amazon AWS with S3, and this should be perfectible. Data warehousing should be perfectible. I’m a believer in early product P&L’s although Finance hates it because it looks like more work. But if you want all your employees to act with ownership, they’ve got to have the data. And any company that isn’t doing about 100 A/B tests per week is probably failing. So your job also is as you’re growing to be CEO, do one other job and exactly one other job, not two other jobs. The most valuable other job is the Chief Product Officer in a consumer Internet company. In old commerce companies it could be the head of sales, or the CTO.
Part IV. CEO of Gameification
– We can all be heroes
Make your users feel like heroes. I’ve seen again and again this is a +25% engagement or monetization. Badges in Pogo: people who spend one minute trying to get a weekly badge spend twice as many hours per week as anybody else. I’ve seen it again and again that virtual badges and any kind of acknowledgement changes behavior.
– Focus on interface
We learned this in games, but it applies to anybody doing a website. The way that today’s consumers understand your positioning is by your interface – and a touchable, clickable, animated interface is better.
– Retain them; make them feel proud
If you can get people to believe in a virtual asset they’ve earned – a customer longevity award, an “AmEx member since 1978” – we’ve seen people be retained for three times as long. This will work for employees as well. And the easiest thing of all to do is a simple career score, because it’s easy engineering.
Part V. CEO of Social
The new meme of social is the newsfeed. Understand how the newsfeed works. It’s the new newspaper. It’s the new CNN crawl. The different channels: Apple, Twitter, Facebook, have new communication channels so you know that all your teenage customers live on text, but the shape of these communications channels is shaping what’s possible. Relevance, findings and likes are important, and what you can give people and what’s defined in social networks are privileges and privacy. If you want to convince people that what you’re doing is social, including maybe your website, you have to show profile pictures.
This notion of social obligations – for those of you who are married, you understand the concept of social obligations! – you tend to do things you wouldn’t otherwise do if you make a commitment to someone.
Part VI. Key Techniques
– Gifting, not competition
The most powerful thing in gaming is not competition but helping. The only people who really prefer competition to helping are boys 15-25 years old and other people who think they are.
There’s harvest mechanics: get somebody to invest now to come back at a particular time.
There’s this notion of virality: if you haven’t figured out how to take what used to be word of mouth and turn it into viral engineering starting with product design, you’re missing a big win.
Part VII. CEO of Mobile
New use cases:
– The stoplight
I find useful in all product design to play act it. So here’s the play (if you’re building an app): you’re walking down the street, you get a ‘don’t walk,’ you can’t cross the street – and so what you do is you take out your cellphone and the app has to provide value before the street light changes.
– The “new compass”-connected GPS
This is people walking down the street – and many of you live in big cities – with their phone out as their new heads up display.
– Shopper’s friend
The third new meme is walking into a store with their phone out. Ten years ago, if you had your phone out in a store, the store manager would escort you out of the store if it looked like you were taking pictures – and now of course everybody does it.
– SMS without parents
It’s always useful to pay attention to what the younger generation is doing because they’re the people who want to prove they’re better than you. So they’re texting, not emailing and not doing voice. So figure out a way to capture their text.
Part VIII. Evaluate your own performance (metrics)
Find an effective way to evaluate your own performance. Do this with your Board at least once a year and have them tell you how they think you’re doing.
– Current quarter x2
In the current time period, what are your metrics? For instance, revenue, earnings, traffic, retention.
– Next quarter
This period has to do with growth. Before this period starts, make a commitment of what the growth forecast is going to be at the end of the period and then see how you’re doing. If you’re trying to be a 15% growth company, at the end of the period, see if you have a 15% forecast going forward.
– IP Value
The third is IP value. Aim to be good judges of what the value of your own IP is: your brands, your tech, and what it’s trading for on the market. Your job is to make this become more valuable.
The fourth one: technology, innovation. Nowadays, it’s really hard to be a consumer Internet company if you don’t have innovative engineering at the core. So if your engineers don’t have swagger as well as patents and algorithms and secret sauce, you’re probably being a bad CEO.
And then operations. The companies are also valued in the consumer Internet at somewhere around $250,000 per seat per employee and a million dollars per engineer. So if you can build a coherent team who’s been through some wars together, your job is to make them worth more than $250,000 per person.