The Mythical World-Class Manager

If I had a dollar for every time a venture capitalist said “world-class,” I could start my own venture fund.

But rather than dismissing world-class as a tired cliché, in this post I’ll spend a few minutes trying to understand what VCs mean when they say world-class and why they say it so often.  As always, I’ll add my personal take on the issue along the way.

First, let’s start with a definition:  world-class, quite literally, means among the best in the world.

World-class chess players come from all over the world to play each other at events like the World Chess Championship.  World-class tennis players come from all over the world to play each other at events like the US Open.  Once in a while someone who’s very, very good — but not quite world-class — gets into a world-class competition and receives a quick reminder about what world-class really means.  Think: yesterday’s 6-0, 6-0 routing of amateur teenager Beatrice Capra, ranked 371st in the world, by Maria Sharapova.

So how does world-class apply to Silicon Valley managers?

  • There are world-class companies at which one may have been formerly employed.  Oracle in enterprise software, Google in Internet search, SAP in enterprise applications, PayPal in Internet services, IBM in databases, VMware in virtualization, Salesforce in SaaS-delivered CRM,  or — let’s not forget — BusinessObjects in BI.
  • There are world-class universities from which one may have graduated.  Favorites in Silicon Valley including Stanford, MIT, Berkeley, Carnegie Mellon, and Harvard.
  • There are world-class exits. VCs are in the business of generating returns for their limited partners.  Operational managers are in the business of building companies.  Often, these two goals are aligned; sometimes, they are not.  I world argue, for example, that YouTube at $1.7B and Bebo at $850M were world-class exits.   I don’t believe either were world-class companies.  Google is still struggling to make an operating profit off YouTube, let alone get an return on the $1.7B invested.  AOL shut down Bebo just two years after buying it.

I believe that when VCs say world-class they mean primarily two things:

  • Fits the part.  You can think of Silicon Valley recruiting agencies as central casting:  “somebody call central casting and get two Nerds and a  Bimbo.”  Think:  “somebody call Heidrick and get two sales RVPs and a marketing guy.”  Fitting the part often entails having attended the right universities and worked at the right companies.  For certain jobs, it entails personality traits — the room should hush when the world-class sales VP enters.  The world-class corporate development VP should be as inscrutable as destiny.  I’d dare say it might also tacitly include being the right age or gender, which I believe is one major problem in the Silicon Valley system that I otherwise admire.
  • Has been part of a team that delivered a world-class (or at least regional-class) exit.  That is, someone who’s made somebody — preferably me — some money.

I believe that as a result you end up with two types of “world-class” managers:  drivers and passengers.  To get into the club, you need to have attended great school X, worked at great company Y, and been on a team that delivered great results Z.  But, once in the club, you find two types of people:  those who were key to driving those great results and those who — despite being very good in many respects — were just along for the ride.

This is not lost on all VCs.  I remember when interviewing at MarkLogic that a well known and very smart VC kept probing me in certain areas during the interview.  The prodding continued to the point where I exclaimed:  “oh, you’re trying to figure out if I was a driver or a passenger on the BusinessObjects bus!”  While purely spontaneous, the exclamation was probably worth its weight in gold.  Mere awareness of the dividing line is a good indicator as to which side of it you’re on.

Strategically and operationally, I think there is a huge difference between drivers and passengers that comes out when they are placed in a new situation.  When placed in their next company:

  • Drivers assess the situation and develop strategies and tactics appropriate for the new reality.
  • Passengers do what worked last time.

Due to some smart choices (Berkeley), some work (an MBA), and some luck (a battlefield promotion at Versant), I have been an e-staff level executive in enterprise software since 1993.  In those 17 years, I have seen a lot of world-class managers come and go.  And I am repeatedly stunned by the number of otherwise very intelligent people who show up and do what worked last time.  Often with the very same cohort / entourage with whom they did it.

Now, for passengers, to the extent that this-time is situationally similar to last-time, things are actually quite good.  However, disaster strikes when it is not.

I’d say there are three key traits for recognizing passengers:

  • Ego.  Ironically, drivers tend to be more humble about their past successes than passengers.  Drivers understand that role that teamwork and luck (i.e., right place at the right time) played in their success.  Passengers, on the other hand, tend to give themselves undue credit for just about everything, ignoring the possibility of Fooled by Randomness effects.
  • Showing up with all the answers.  When you ask drivers “what are you going to do?” at new company X, they will say something like:  “I have no idea.  I need a few months to assess the situation and then make a plan.”  Passengers, on the other hand, will quickly bark off a list of 10 things that need to happen in the first 100 days.
  • Job hopping.  I think passengers end up job hopping as a result of their desire to repeat the formula.  When it works, they stay and often succeed.  When it does not, they bail.  In fact, quick bailing is a key success strategy for passengers:  you can/want to do X, so go find situations where X is what’s indicated.  Drivers will tend to do longer gigs with different strategies and tactics.  Passengers will tend to do in-and-outs repeating the same strategies and tactics.

I think for some VCs the world-class manager is actually a form of hope, a silver bullet in which they want to believe:  “if we could just get someone world-class in here, then everything would be better.”  I’m sure that sometimes works out, but I wonder if it wouldn’t work out just as well substituting the word “competent” for “world-class.”  As in:  “if we could just get someone competent in here, then everything would be better.”

In my 17 years watching lots of e-staff-level execs come and go — all of them “world-class” on their start dates — I have to say I’m a skeptic.  I’ll go for people who are drivers, people who reason, and people with low egos any day over the alternative.

That’s not to say that I don’t believe in excellence:  Steve Jobs is world-class.  Larry Ellison is world-class.  Hewlett and Packard were world-class.  Marc Benioff is world-class.  Tom Siebel is world-class.  Bernard Liautaud, while lesser known, is also world-class.  World-class does exist. But just as Maria Sharapova doesn’t give tennis lessons, none of the aforementioned proven world-class managers is going to work at a startup.

I suppose you could introduce a concept like weight-class, as a surrogate for corporate size, to the equation in order to add a dimension:  she’s a world-class, welter-weight marketing VP or he’s a world-class, bantam-weight CFO.  While there is certainly some truth to the idea that different executives prefer different size ranges, this just piles subjectivity on subjectivity.

That’s what I think about world-class.  What do you think?

(Revised 9/7/10.)

9 responses to “The Mythical World-Class Manager

  1. I think Bob Sutton would point out that world-class is almost always about teams, not individuals.

    I’d add Reed Hastings and the executive team at Netflix to that list. Many of them worked together at Pure Software (Purify). You might not think that would transfer to a media business, but look at the results.

  2. I think you nailed this 100% correctly, both with respect to the refrain and with respect to the passenger/driver divide. There is no replacement for a team member – at any level, but especially in management – with raw smarts and useful experience who first listens, then diagnoses, and then invites challenges to their diagnosis before actually acting. Sometimes the hardest decision to make is to spend more time learning before taking control of the wheel and starting to issue commands.

  3. Walter — great point about teams vs. individuals. Evokes some of the moneyball-esque arguments as well as the All-Star game arguments.

    While I’ve not met Reed, I’d surely agree with you and am somewhat amazed to learn that the Netflix team shared leadership with Pure Software, as in Purify? Wow.

    Talk about situational adaption.

  4. Ian — thanks. What’s the saying? diagnose, then prescribe?

    Sometimes you hear the the story of a patient going to a doctor and without asking a single question the doctor makes a prescription. “No, don’t say anything, nope.” I have divined that you need amoxycillin.

    Who’s going to that doctor twice?

  5. Competence is underrated. As a word, it’s a victim of semantic inflation. Too much hot air about “excellence”, which as a concept implies an already-existing model and standard. What’s that saying from boxing? You don’t box to some abstract standard of perfection, but to the situation at hand i.e. the next guy you’re facing.

  6. Netflix really is a software operation. It’s odd that people think of Amazon as a software-based company, but not Netflix.

    I wonder how much of this is skill at learning. If you can learn just a little bit faster than your competitors, maybe figuring it out one example earlier, that is a real advantage. Maybe one aspect of driver/passenger is learner/non-learner.

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  9. I have not been able to come up with something as succinct as drivers Vs passengers. As with so many things you post, the reason they are so insightful is because they highlight what we should do not what people do. I can’t tell you the number of times that I have said during an interview process, “Well if there was only one answer to that you could Google it and not need me” or been asked for a 30/60/90 that when I shared that the majority was discovery not a task list, that was clearly not what people want to hear. Trying to find people that are prepared to hire drivers is perhaps more of a challenge than finding drivers. I will use this going forward as I think the analogy summarises what we need to look for in a start-up, and simply hiring someone that may have started when the company was 50M, and left running 1Bn revenue line, doesn’t mean they were inquisitive about what was happening around them as it grew.

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