The Oft-Maligned Operating Partner and the Use of Tension Questions in Market Research

This post is going to get a little weird because it’s going to do two things at once.

  • Discuss an interesting, if dated, survey [1] I found on the sometimes tense relationship between CEOs and PE operating partners (and other senior advisors like executives in residence) [2].
  • Demonstrate how it makes great use of tension questions to make the report more interesting and reveal the drama in what could be an otherwise dry subject.

The former should interest executives of VC/PE-backed companies who want to work better with their advisors and, of course, to such advisors themselves. The latter should interest all marketers, but particularly those responsible for the periodic PR market studies [2] that many companies produce (e.g., Collibra’s Data Intelligence Index, Atomico’s State of European Tech, or Pigment’s Office of the CFO Report).

I love these studies because you can get not a two-fer, but a three-fer, in terms of benefits:

  • Thought leadership, via leading discussion of emerging ideas (e.g., ask CFOs about their AI strategy)
  • Increased market awareness, via promotion of the survey report
  • Stronger positioning. For example, Collibra’s index supports their migration from data governance (their historical roots) to a broader and more modern positioning in data intelligence.

And that’s not to mention the MQLs if you use your report as gated asset. Or any proprietary insights you gather from questions where you don’t publish the answers. Goosebumps. I love these things.

This report starts with some gem quotes that cut to the heart of the problem:

Most CEOs have little/no prior experience with this type of relationship. At the extreme, there can be mistrust, miscommunication, competitiveness, and misalignment — all of which distract from the value creation agenda.

Friction between CEOs and operating partners might be an unavoidable human condition. This relationship is unlike any other in the business world. It would be interesting to ask CEOs to draw where the operating partner fits within the context of their organization chart. We all know they are likely to draw the Board above them and all employees below them. But where would they draw the operating partner …As a sub-component of the Board above them? As a peer? As an independent advisor working for them?

But the real strength of this report is its use of tension questions, where you ask two groups about the same issue and then spotlight tensions between them. We don’t have to go far to find one:

They asked both CEOs and operating partners about operating partner NPS. They then compared CEO actuals with operating partner expectations and, bang, right at the outset, we have a gap you could drive a truck through. 39% of CEOs are detractors whereas operating partners expected only 3% detractors. Operating partners think they have a respectable NPS of 41, whereas CEOs report a dismal, actual NPS of -3.

Conclusion: operating partners have no idea what CEOs think of them. That’s a tension question at work.

But we’ve only just started the bus. Let’s back it up over the operating partners by looking at value added.

About 70% of operating partners think they add “significant value” through their work, while only 20% of CEOs do. Zero percent of operating partners think they add only “little value,” but nearly 30% of CEOs do. Brutal as this survey is, they forgot a category that might have made it worse: negative value-add. The minimum value-add from a helper isn’t zero. It’s negative. Some would-be help actually slows you down.

Note that these tension questions are not manipulative or loaded. They’re fair questions that simply shine a bright light on an actual tension. That’s what makes them great.

Now, let’s twist the knife by looking at the cost/benefit of operating partners.

Around half of CEOs think that operating partners don’t bring enough value to offset their perceived cost.  Ten times more operating partners than CEOs think that operating partners bring 10x+ their cost in value.

I’m ready to re-title this report: The Blissful Ignorance of Operating Partners.

They then move on to open-ended questions and verbatim responses. These are an important part of all surveys, but particularly so with tension surveys. We’ve identifed one or more massive gaps. Now, what do we want to do about them?

Here, they ask the CEOs:

What one suggestion would you make to operating partners/senior advisors to help them be more effective in creating value for your business?

And we get some great answers:

Focus on building a relationship of trust with the CEO, not dispensing advice being the deal partner’s operations spy.

Prioritize what actually creates value and listen to what management wants your help with.

They should be a resource to the CEO, not the board.

As someone who works as an advisor, I’d note that you don’t always get a choice in deciding whether the CEO or the board is your customer. For example, in my work with Balderton, I position myself as “a free service brought to you by Balderton Capital,” hopefully clearly communicating that while Balderton is paying me, I am working for you. That said, Balderton is paying me, so if you tell me you plan to destroy the company I may need to mention that to them.

These relationships can be inherently complex. They are simpler on the control-oriented PE side [4], where it’s not, “I work for one of the many investors,” but instead, “I work for the owners.” If you want to eliminate this complexity entirely, you can hire advisors directly, which many early-stage VC companies do [5]. That said, VC/PE advisors are often high caliber, fully booked, and expensive, so working through your investors may be the only way to access the ones you want.

Back to the survey, they then took some verbatims from companies with a good relationships between the CEO and the operating partner. Quotes:

Trust is essential. There are no “go arounds,” no undermining the leadership team.

Operating partners and the CEO talk candidly about the rules of engagement and communication protocols — including what not to do.

Every conversation is confidential and to be kept between the CEO and the operating partner (not shared with the Board or the management team).

Finally, they give the operating partners a chance to tell their side of the working-better-together story. Quotes:

Work collaboratively with the operating partners. [Theres is] zero payback in defending that you are already doing it right.

That we are there to help create equity value, which is in all our interests, and therefore a partnership approach is key — on both sides.

Trust us to have the discretion to keep certain conversations and information privileged.

As an advisor, I think the last point is key and if a CEO is concerned, an explicit conversation can usually help.

As a marketer, I loved this survey. It picked a great topic and executed against it well, with some awesome tension question and well-chosen verbatims. I can only guess why they didn’t run it annually and I personally wish they did — half the fun with this type of survey is watching how things change over time.

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[1] This thing is not easy to find online. You can find some old references to it, but Blue Ridge Partners seems to have archived it off their website. Perhaps they felt it was outdated, or maybe they stirred the pot too hard. Since there is no copyright notice of any kind in the report, I’ve uploaded it here (highlighting mine), so you can see it.

[2] It’s dated (2018) but my hunch is the core issues haven’t changed that much.

[3] I don’t know what else to call them. They are definitionally market research, but they aren’t run with the primary intent of learning more about the market. They are typically run by PR/comms for purely marketing reasons. New insights can be a by-product, but they’re not the primary point.

[4] The side of PE where they buy a controlling stake of the company and which, I believe, is the primary focus of this report.

[5] Often done with equity compensation via a YC FAST advisor agreement to simplify the process.

Some Marketers Use Data to End Conversations; Others Use Data to Start Them

Be the second kind.

The other day I was meeting with an advisory client [1], talking with the CMO and a handful of go-to-market team members. We started to discuss marketing, topics like product positioning and the website. So I asked for some feedback.

I displayed the company’s website alongside a competitor’s and asked, “which do you like better? And why?”

I asked for feedback on product positioning, too. Since the company works in a somewhat ill-defined category, it can credibly position either as an XYZ or a PDQ. I noted that the competitor chose PDQ while we had chosen XYZ, and again asked for feedback.

I knew darn well that the positioning had been extensively debated at the e-team and board level. I also knew the marketing team was strongly quantitative and did a lot of testing and measurement. But I just wanted to hear what the people had to say.

Because there were potential power distance issues [2], I wanted to make everyone feel more comfortable. So I said, “I’m just looking for your opinions, there are no wrong answers.”

Turns out there were.

The CMO jumped in explaining why, despite their initial feedback, our website was better and how everything had been tested and that opinions didn’t matter, only conversion rates did.

The CMO continued, explaining why XYZ was superior to PDQ, that we’d A/B tested both, and XYZ outperformed PDQ on conversions. Opinions didn’t matter, only conversion rates did.

Just in case a dying ember of life still burned in the conversation, the CMO snuffed it out by explaining that the homepage itself didn’t matter — and therefore really wasn’t worth talking about — because most of our traffic didn’t arrive on the homepage, but on scores of landing pages customized to specific paid or organic search terms.

Silence followed.

While I certainly flubbed the pre-meeting sync-up [3], this is an example of how some marketers use data to end conversations — when I think they should use data to start them.

Ending Conversations with Data

Killing conversations with data is easy. Use the data you have (ideally, that the audience has never seen) to tell them they’re wrong. We’ve tested this. We have the data. Trust the science. You are wrong. Case closed.

Once in a while, you do need to end conversations with data. For example, at the end of a long decision-making process where you have reviewed the data, had numerous conversations about it, and need to make a final decision. That’s fine. I’m not saying to never use data to end conversations.

What I’m saying is don’t use data to stifle a conversation. To cut one short. Or to avoid one entirely. Why do some marketers do this? It certainly varies by case, but I think some of the key reasons are:

  • They forget that sales is the customer. If you view someone as your customer, you should want to listen to them any chance you get. Any time. About anything [4].
  • They want to keep control. While boxing out people is a great short-term strategy to maintain control, it’s a great long-term strategy to find yourself needing new employment.
  • They don’t want their apple cart upset. Particularly towards the end of a major project, marketers often close their ears to feedback because they get more focused on project completion than on project success. They become unveilers.
  • They get offended. Don’t you think we tested this? Don’t you think we looked at the competitor’s positioning? Basically, don’t you think we know how to do our job? I get it. But marketing is not a sport for the thin-skinned.
  • You hit a nerve. Maybe there’s baggage attached to the issue, they’re having a bad day, or they’re just tired of debate. These aren’t valid reasons to shut down conversations, but we’re all human. Marketers need to learn to manage these feelings. See note [5] for how I learned this.

I follow two principles that help me avoid these problems.

  • Always be curious. My curiosity about their opinions must trump any potential sting in their response. If forced to choose between ignorance and hurt feelings, I’ll take the hurt feelings every time.
  • Defensiveness kills communication. I know of no better way to stop all communication than to interrupt someone providing feedback with a defensive explanation. When you’re talking, you’re not listening.

Starting Conversations with Data

I like to start conversations with data. For example, on the XYZ vs. PDQ positioning question, you can run a few focus groups to discuss it [6]. You can do some market research, such as surveys [7]. You can add some keyword research. And a summary of how industry analysts and competitors position the space. Then you package that up into a short summary presentation [8] and run a series of internal meetings where you tee up discussions with the data — with both the groups you must meet (e.g., the exec staff) and with anyone willing to make the time and effort (e.g., town halls).

You’re not keeping the data under your cloak and using it as a secret weapon to silence opposition. You’re gathering the information you can afford to gather, packaging it up nicely, and having a series of open discussions about it.

That’s the way to start conversations with data. And people will love it when you do.

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[1] While my desire to tell a given story in Kellblog is sometimes triggered by a single event, in order to preserve anonymity, be able to speak more generally, and spice-up things, I quickly adapt and meld such stories with dozens of others I’ve experienced over the years. Readers sometimes tell me, “I think I was in that meeting” — and they might well have been — but please don’t be surprised if the tale I tell is not a precise recounting. My goal is not to precisely describe a single experience, but instead to take lessons from the sum-total of them.

[2] A senior advisor and a CMO have quite a bit more power in an organization than a CSM or a seller. Thus, communication transparency can suffer. How much it suffers is a function of both organizational and national culture.

[3] And I’ll own that. My bad. Improvisation, as they say, only looks easy. Good improvisation usually happens among people who play together often and have a shared understanding of the underlying context and structure. Here, I tried to improvise a feedback exercise with someone with whom I rarely play, and we ended up stepping all over each other.

[4] I say this because some people only want feedback when they’re ready for it. Think: this is not a good time in our product lifeycle or campaign development cycle. Or, I can only accept feedback right now through this channel. When it comes to customers and feedback, it should be: at any time in any place. How you action it may vary based on where you are in a lifecycle, but listen first and explain those constraints later.

[5] I once had the good fortune of starting a marketing job on the day of a QBR where I got to watch my predecessor present the marketing update to the sales leadership. The whole thing got defensive very fast, the marketer bobbing and weaving, ducking blows, and having a few deer-headlight moments. I still remember the meeting and thinking one thing to myself: I never want to be that person. (Or more specifically, since they were a fine person, I never want to be in that place, in that situation.)

[6] While you can spend a lot of money on this, you can also spend a little or even none. For example, calling a couple of Zoom meetings to discuss things with trusted customers and prospects.

[7] Again, you can spend $25K to $50K on a study or you can make your own survey and mail it out. I’m not saying the data you get will be scientifically valid, but that’s not the point here. We’re not trying to prove anything with the data or make a decision on it alone. We’re trying to bring data to the conversation so we can have a better one.

[8] Spending 10 to 15 minutes of a 60 to 90-minute session teeing up the discussion, and the rest of it asking a few well-crafted questions and listening to the answers.

Slides from Five Ways to Get Product and Marketing Working Together

Last week in London, fellow Balderton EIR David Vismans and I held a joint meeting to discuss the working relationship (or moreover, the lack thereof) between product and marketing organizations.

David is a career product leader, who worked for over 8 years leading product at  I am a former CEO and CMO who still considers himself to have 100% marketing DNA.  So, we were both well able to represent our functions.  Additionally, because I am a B2B person and David is mostly a B2C person that added another dimension of difference for us to explore.

In the session, which was held as an interactive workshop for Balderton portfolio companies, we described the problem, shared a few war stories as examples, and then discussed the five things companies can do to get their product and marketing teams working better together.

  • Foster a culture of collaboration and respect.  This begins at the top.  Do not apply the old adage that “good fences make good neighbors,” and wall the teams off from each other.  (David had a great story where security literally kept them from visiting each other’s floors.)  Instead, do what we say in point 3, below.
  • Drive together for both PMF and PCF (product-channel fit), an idea that David brought.  This means the teams should work together to build and sell a product that solves a problem for a person (i.e., my definition of PMF) in conjunction with finding a way to economically reach that person (i.e., PCF).  David provided a few examples where he believes you could get PMF fairly easily (e.g., a hotel booking site for people traveling with dogs or who need chargers for electric cars), but have a hard time economically finding customers due to the need to compete with large vendors for contested search terms in paid channels.
  • Build a high-level interaction model.  That sounds fancy but it just means make a one-page table with three rows:  lifecycle phase, product responsibilities, and marketing responsibilities.  Taking the time to make this – typically done in a few meetings of a working group — sets expectations on both sides.  It avoids the common problem of ten people bringing expectations from ten different prior employers, which usually results in everyone being disappointed all the time.
  • Adapt your model with stage and scale.  We both like the Ansoff matrix and David uses it as a framework to adapt the product/marketing collaboration model.  He argues that the more you’re in “keep on keeping on” mode (box 1), the more is known, and the higher the fence between product and marketing can be.  But in boxes 2 and 3 you are working with one unknown dimension and that requires more collaboration.  Box 4, where both product and market unknown, is basically like starting a new company and requires maximum collaboration. (I largely, but not entirely, agree. My primary argument being that in Box 1, marketing will be more focused on features to differentiate and win deals than product usually is.)
  • When it comes time for your second album, don’t forget your roots.  I think as companies grow they forget how they innovated in the past, they forget the processes they used in the early days and end up, for example, localizing a new product into 10 languages on its initial release – because that’s what we do now with all products.   

Thanks to everyone who attended the session.  I’ve embedded the slides below.  They are available in PDF here (so the links on the resources page work).  Balderton is producing a summary of the event as well, which I’ll link to once it’s up.

Do Superachievers Read Business Books?

I spoke a while back on go-to-market scaling at the 10X CEO Accelerate conference in Deer Valley to about eighty startup CEOs. I dropped a few references to popular business books into the material (e.g., Blue Ocean Strategy, Inside the Tornado, The Crux), as I often do, and discussed them quickly in passing.

This prompted a question at the end of the session that went something like this:

“You mentioned several business books in your speech.  I must admit that I don’t read a lot of business books.  I don’t have any time.  And I don’t particularly like reading.  So, my question is do superachievers actually read these books and view reading them as part of their success?”

It was a helluva good question. 

While I certainly have my own take on the answer, I must admit that I’m an information junkie who loves reading (so my view will likely be non-representative) and while I’m an achiever, I wouldn’t say I’m a superachiever. But, I thought, I know some superachievers [1] and some of them work with other superachievers [2] so I can ask for their takes and then fuse those composite opinions into a blog post [3].

Here it is.

Do Super Achievers (Actually) Read Business Books?

Before answering, let me address the fact that it’s often presented as a loaded question, where you can almost feel the word “actually” silently slipped into the phrasing. In its loaded form, the question comes implicitly packed with some of these widely-held assumptions:

  • Business books are bullshit.
  • They’re the province of professors and MBAs.
  • At best, they contain one good idea inflated into a 250-page book because you can’t sell pamphlets for $25.
  • Wannabes read business books as a way to lead their business life by proxy as opposed to putting it all on the playing field.

To the extent you can view attitudes about MBAs as representative of attitudes towards business books [4], you can feel a further lack of love.

“As much as possible, avoid hiring MBAs.  Our position is that we hire someone in spite of an MBA, not because of one.” — Elon Musk

“Never, ever hire an MBA.  They will ruin your company.” — Peter Thiel

“When it comes to success in business, the MBA degree is optional.  But a GSD, which is only earned by getting shit done, is required.” — Christine Comaford

Overall, there is a strong sentiment in Silicon Valley that the best teacher is doing.  Then again, there is also a strong sentiment that failure is a better teacher than success, yet in 35 years I have never seen a single job specification that listed any form of failure as required experience.  Strong sentiment and action are seemingly two different things.

Now, let’s directly answer the question:  do superachievers read business books?

Remembering that there is no single mold of superachiever, I think the answer is:

  • Yes, but not religiously.
  • And they really like to read broader books as well.

I think the driving philosophies behind this are:

  • The realization that most business books really are one good idea inflated to 250 pages.  So, if they can learn the basics of a good idea without having to read the full 250 pages, then all the better. Superachievers guard their time.
  • The point is to understand the core concepts in which fluency is required to function in Silicon Valley (e.g., The Chasm, The Innovator’s Dilemma, The Lean Startup).  There are probably about 20 of these in total and the important part is understanding the concepts, not reading the book.  Superachievers are often fast learners and self-taught.  Skimming the book, reading a summary [5], or watching a video is likely enough. 
  • It is foolish not to learn from the mistakes of others.  While skeptical of finding the universal keys to success in any book, they are more open to hearing concrete stories of success and failure.  Thus, they are less interested in pop business concept books [6] than reading real stories of successful and unsuccessful companies.
  • Superachievers want to be the best versions of themselves.  They are highly motivated for self improvement and if convinced that reading certain books will help improve their performance, they will find the time to read them. But books are just one way to improve. So are conversations with other founders — a key reason why organizations like YPO and 10X CEO do so well. So is execution education, like Stanford’s great programs. So are great podcasts (e.g., Acquired, Founders) on the treadmill.
  • It is important to step outside the all-consuming world of the startup to gain perspective.   That’s why reading world history, business history, military history, behavioral economics, sports, competition, and motivation are popular topics for superachievers. It is possible to spend too much time on the standard material. Reading more broadly is both energizing and helps you get outside the proverbial box.
  • Doing is the best teacher.  While reading is great, you need to do a lot and try a lot. Move fast and break things, as they say. The Silicon Valley way.

In short, on the question of business books, I’d say that superachievers are universally well informed, if not necessarily well read.

More broadly, I’d say that superchievers are generally well read. In Silicon Valley, this results from the energizing effect of reading non-business material often combined with some intellectual flex to demonstrate your polymath abilities. That’s why you’ll find almost certainly find authors like Daniel Kahneman, Robert Cialdini, or Sun Tzu — who write one level of indirection away from startups — on most reading lists, as well as others (e.g., Robert Heinlein, Ayn Rand, William Irvine), who write several levels beyond that.

If you can’t identify John Galt, recite the three primary beliefs of the Stoics, or reveal the Martian etymology of the word grok, then well, perhaps you’re an outsider on Sand Hill Road after all. Superachiever or not.

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[1] To respect privacy, I won’t do any attribution here, but simply say that I’ve spoken with successful startup founders and with deca-, centa-, and even a kilo-millionaire (aka, billionaire) about this topic. If you’re one of those people, let me thank you again for answering my questions.

[2] For example: a top-performing VC who is a superachiever in their own right and who, by virtue of their startup work, frequently engages with other achievers and superachivers.

[3] Someone could obviously do a study here — and maybe someone already has, but I couldn’t find it — and doing one on my own is well beyond the scope of a Kellblog post.

[4] After all, you certainly do read a lot of business books in b-school.

[5] For some business authors, chapter 1 of book N is an excellent summary of book N-1 (e.g., Moore, Christensen)

[6] Which tend to argue, get this one thing right and the rest takes care of itself (e.g., Storybranding, Grit, Purple Cow). This is a weakness of many pop marketing books.

Appearance on Run The Numbers Podcast: A Startup CEO’s Guide to Board Meetings

I love writing and speaking about board meetings. Why? Because:

  • They’re critically important. Board meetings can make or break careers.
  • You get little to no instruction on how to do them. Most training for CEOs and execs is of the “throw them in the deep end of the pool and see if they float” variety.
  • You don’t get much practice. At four to six times per year, board meetings are not quite frequent enough to provide sufficient reps to drive real improvement, except over long periods of time.

So, many founders and CEOs muddle along with a series of merely good-enough board meetings, and not good ones.

I’ve written a lot about startups, boards, and CEOs. For example:

Thus, I was happy when CJ Gustafson invited me for an interview on his Run the Numbers podcast for an episode entitled A Startup CEO’s Guide to Board Meetings.

A video of the episode is embedded below. You can find it on Apple or Spotify as well.

Thanks CJ for having me.