Published in the San Diego Union-Tribune, April 26, 2021
We all know that the quality of the team is a critical component to startup success. And I have written frequently about how to think about building a team, but today, let’s spend a minute on a twist that recently came up with one of my peers. Here is his dilemma.
The company is big and successful, revenue north of $80 million. Over the last few years, a small skunk-work team inside the big company has created some powerful software, and that skunk now generates approximately 23 percent of the total revenue of the company. The genius who developed the software comes to the CEO, and like Oliver Twist, says, “Please, sir, I want some more.” I am not so sure about the please in this case, but “more” is an interesting word.
Does it mean money, power, authority, freedom, ownership, what is the underlying issue? And here is the next fishhook, “If I don’t get what I want I am going to take my banjo picks and jump to another company.” That might be an idle threat, but you do not want to find out. And by the same token, I would encourage the genius to play that card very late in the game and not at the outset.
Let’s agree at this point that the solution to this puzzle will not be found in any lawyer’s office. Do not pull out the confidentiality agreement or the employment agreement or the invention assignment agreement. You need to think like an entrepreneur, not a litigator.
It turns out that what the genius wants is freedom to build it even bigger, within the company, with a chance to have a stake, some stock, in its success. Like many geniuses, he can be cantankerous but he is also not self-destructive. The parent provides a nice home and pays the mortgage. He just needs his own bedroom.
I have danced with a large number of geniuses. I love them, and I find that what they want most is the autonomy to create. I suggested to my friend that the answer for this company is do a “spin-in” inside the big company. It still needs the parent, but it wants to spread its wings. Give that team space and they will dazzle. Give them a structure that provides upside, irrespective of the parent’s profit and loss. And if the skunk grows into an elephant, then it can truly be spun out and sold for a lot of money. The parent profits, as well as the “founders” who ran the spin out.
One more nuance. In many companies, there is intellectual property and there are also trade secrets. How you manage them is important. You cannot have only one point of failure, meaning multiple people need to know which way to turn the knob, otherwise you will be unpleasantly leveraged by the only guy in the room who has the combination wrench. Plan carefully, and as you build fabulous stuff, be sure to create a mesh network, where the work gets done directly and dynamically, and not in a hierarchy. Everyone needs a wrench.
And no surprise here, it is the hierarchy that makes many creative types bristle. This issue is easy to identify, but hard to manage. A CEO wants to delegate, but he also wants to make sure he is not blindsided. Not an easy dance.
Finally, a note of caution. The pandemic has given rise to an overwhelming demand for professional counseling, and slickly marketed companies are promising “therapy” services they cannot provide. In the past I have periodically poked fun at my shrink, but I am seeing that having a safe place to talk is more critical today than ever.
I know I sound like your mother, but I sense an important current human need that is potentially being co-opted by charlatans. I know the issues that confront people are real and can be dramatic and frightening. My concern is for you to find professional-quality guidance through the fog of chatbots and mood trackers.
Maybe artificial intelligence works but for the hard stuff, I am not advocating any artificial anything. If you are going to the App store, pick carefully and understand that answers to issues are never as simple as just add water and stir.
Rule No. 664
How much more is the question.