Category Archives: CEO

How to Present an Operating Plan to your Board

I’ve been CEO of two startups and on the board of about ten.  That means I’ve presented a lot of operating plans to boards.  It also means I’ve had a lot of operating plans presented to me.  Frankly, most of the time, I don’t love how they’re presented.  Common problems include:

  • Lack of strategic context: management shows up with a budget more than a plan, and without explaining the strategic thinking (one wonders, if any) behind it.  For a primer, see here.
  • Lack of organizational design: management fails to show the proposed high-level organizational structure and how it supports the strategy.  They fail to show the alternative designs considered and why they settled on the one they’re proposing.
  • A laundry list of goals. OKRs are great.  But you should have a fairly small set – no more than 5 to 7 – and, again, management needs to show how they’re linked to the strategy.

Finance types on the board might view these as simple canapes served before the meal.  I view them as critical strategic context.  But, either way, the one thing on which everyone can agree is that the numbers are always the main course. Thus, in this post, I’m going to focus on how to best present the numbers in an annual operating plan.

Context is King
Strategic context isn’t the only context that’s typically missing.  A good operating plan should present financial context as well.  Your typical VC board member might sit on 8-10 boards, a typical independent on 2 (if they’re still in an operating role), and a professional independent might sit on 3-5.  While these people are generally pretty quantitative, that’s nevertheless a lot of numbers to memorize.  So, present context.  Specifically:

  • One year of history. This year that’s 2021.
  • One year of forecast. This year that’s your 2022 forecast, which is your first through third quarter actuals combined with your fourth-quarter forecast.
  • The proposed operating plan (2023).
  • The trajectory on which the proposed operating plan puts you for the next two years after that (i.e., 2024 and 2025).

The last point is critical for several reasons:

  • The oldest trick in the book is to hit 2023 financial goals (e.g., burn) by failing to invest in the second half of 2023 for growth in 2024.
  • The best way to prevent that is to show the 2024 model teed up by the proposed 2023 plan. That model doesn’t need to be made at the same granularity (e.g., months vs. quarters) or detail (e.g., mapping to GL accounts) as the proposed plan – but it can’t be pure fiction either.  Building this basically requires dovetailing a driver-based model to your proposed operating plan.
  • Showing the model for the out years helps generate board consensus on trajectory. While technically the board is only approving the proposed 2023 operating plan, that plan has a 2024 and 2025 model attached to it.  Thus, it’s pretty hard for the board to say they’re shocked when you begin the 2024 planning discussion using the 2024 model (that’s been shown for two years) as the starting point.

Presenting the Plan in Two Slides
To steal a line from Name That Tune, I think I can present an operating plan in two slides.  Well, as they say on the show:  “Dave, then present that plan!”

  • The first slide is focused on the ARR leaky bucket, metrics derived from ARR, and ARR-related product.ivity measures
  • The second slide is focused on the P&L and related measures.

There are subjective distinctions in play here.  For example, CAC ratio (the S&M cost of a dollar of new ARR) is certainly ARR-related, but it’s also P&L-driven because the S&M cost comes from the P&L.  I did my best to split things in a way that I think is logical and, more importantly, between the two slides I include all of the major things I want to see in an operating plan presentation and, even more importantly, none of the things that I don’t.

Slide 1: The Leaky Bucket of ARR and Related Metrics

Let’s review the lines, starting with the first block, the leaky bucket itself:

  • Starting ARR is the ARR level at the start of a period. The starting water level of the bucket.
  • New ARR is the sum of new logo (aka, new customer) ARR and expansion ARR (i.e., new ARR from existing customers). That amount of “water” the company poured into the bucket.
  • Churn ARR is the sum of ARR lost due to shrinking customers (aka, downsell) and lost customers. The amount of water that leaked out of the bucket.
  • Ending ARR is starting ARR + new ARR – churn ARR. (It’s + churn ARR if you assign a negative sign to churn, which I usually do.)  The ending water level of the bucket.
  • YoY growth % is the year-over-year growth of ending ARR. How fast the water level is changing in the bucket.  If I had to value a SaaS company with only two numbers, they would be ARR and YoY ARR growth rate.  Monthly SaaS companies often have a strong focus on sequential (QoQ) growth, so you can add a row for that too, if desired.

The next block has two rows focused on change in the ARR bucket:

  • Net new ARR = new ARR – churn ARR. The change in water level of the bucket.  Note that some people use “net new” to mean “net new customer” (i.e., new logo) which I find confusing.
  • Burn ratio = cashflow from operations / net new ARR. How much cash you consume to increase the water level of the bucket by $1.  Not to be confused with cash conversion score which is defined as an inception-to-date metric, not a period metric.  This ratio is similar to the CAC ratio, but done on a net-new ARR basis and for all cash consumption, not just S&M expense.

The next block looks at new vs. churn ARR growth as well as the mix within new ARR:

  • YoY growth in new ARR. The rate of growth in water added to the bucket.
  • YoY growth in churn ARR. The rate of growth in water leaking from the bucket.  I like putting them next to each other to see if one is growing faster than the other.
  • Expansion ARR as % of new ARR. Percent of new ARR that comes from existing customers.  The simplest metric to determine if you’re putting correct focus on the existing customer base.  Too low (e.g., 10%) and you’re likely ignoring them.  Too high (e.g., 40%) and people start to wonder why you’re not acquiring more new customers. (In a small-initial-land and big-expand model, this may run much higher than 30-40%, but that also depends on the definition of land – i.e., is the “land” just the first order or the total value of subscriptions acquired in the first 6 or 12 months.)

The next block focuses on retention rates:

  • Net dollar retention = current ARR from year-ago cohort / year-ago ARR from year-ago cohort. As I predicted a few years back, NRR has largely replaced LTV/CAC, because of the flaws with lifetime value (LTV) discussed in my SaaStr 2020 talk, Churn is Dead, Long Live Net Dollar Retention.
  • Gross dollar retention = current ARR from year-ago cohort excluding expansion / year-ago ARR from year-ago cohort. Excluding the offsetting effects of expansion, how much do customer cohorts shrink over a year?
  • Churn rate (ATR-based) = churn ARR/available-to-renew ARR. Percent of ARR that churns measured against only that eligible for renewal and not the entire ARR base.  An important metric for companies that do multi-year deals as putting effectively auto-renewing customers in the denominator damps out

The next block focuses on headcount:

  • Total employees, at end of period.
  • Quota-carrying reps (QCRs) = number of quota-carrying sellers at end of period. Includes those ramping, though I’ve argued that enterprise SaaS could also use a same-store sales metric.  In deeper presentations, you should also look at QCR density.
  • Customer success managers (CSMs) = the number of account managers in customer success. These organizations can explode so I’m always watching ARR/CSM and looking out for stealth CSM-like resources (e.g., customer success architects, technical account managers) that should arguably be included here or tracked in an additional row in deeper reports.
  • Code-committing developers (CCDs) = the number of developers in the company who, as Elon Musk might say, “actually write software.” Like sales, you should watch developer density to ensure organizations don’t get an imbalanced helper/doer ratio.

The final block looks at ARR-based productivity measures:

  • New ARR/ramped rep = new ARR from ramped reps / number of ramped reps. This is roughly “same-store sales [link].”  Almost no one tracks this, but it is one of several sales productivity metrics that I like which circle terminal productivity.  The rep ramp chart’s 4Q+ productivity is another way of getting at it.
  • ARR/CSM = starting ARR/number of CSMs, which measures how much ARR each CSM is managing.  Potentially include stealth CSMs in the form of support roles like technical account manager (TAM) or customer success architects (CSAs).
  • ARR/employee = ending ARR/ending employees, a gross overall measure of employee productivity.

Slide 2: The P&L and Related Metrics

This is a pretty standard, abbreviated SaaS P&L.

The first block is revenue, optionally split by subscription vs. services.

The second block is cost of goods sold.

The third block is gross margin.  It’s important to see both subscription and overall (aka, blended) gross margin for benchmarking purposes.  Subscription gross is margin, by the way, is probably the most overlooked-yet-important SaaS metric.  Bad subscription margins can kill an investment deal faster than a high churn rate.

The fourth block is operating expense (opex) by major category, which is useful for benchmarking.  It’s also useful for what I call glideslope planning, which you can use to agree with the board on a longer-term financial model and the path to get there.

The penultimate block shows a few more SaaS metrics.

  • CAC ratio = S&M cost of a $1 in new ARR
  • CAC payback period  = months of subscription gross profit to repay customer acquisition cost
  • Rule of 40 score = revenue growth rate + free cashflow margin

The last block is just one row:  ending cash.  The oxygen level for any business.  You should let this go negative (in your financial models only!) to indicate the need for future fundraising.

Scenario Comparisons
Finally, part of the planning process is discussing multiple options, often called scenarios.

While scenarios in the strategy sense are usually driven by strategic planning assumptions (e.g., “cheap oil”), in software they are often just different version of a plan optimized for different things:

  • Baseline: the default proposal that management usually thinks best meets all of the various goals and constraints.
  • Growth: an option that optimizes growth typically at the expense or hitting cash, CAC, or S&M expense goals.
  • Profit: an option that optimizes for cash runway, often at the expense of growth, innovation, or customer satisfaction.

Whatever scenarios you pick, and your reasons for picking them, are up to you.  But I want to help you present them in a way that is easy to grasp and compare.

Here’s one way to do that:

I like this hybrid format because it’s pulling only a handful of the most important rows, but laying them out with some historical context and, for each of the three proposed scenarios, showing not only the proposed 2023 plan also the 2024 model associated with it.  This is the kind of slide I want to look at while having a discussion about the relative merits of each scenario.

What’s Missing Here?
You can’t put everything on two slides.  The most important things I’m worried about missing in this format are:

  • Segment analysis: sometimes your business is a blended average of multiple different businesses (e.g., self-serve motion, enterprise motion) and thus it’s less meaningful to analyze the average than to look at its underlying components.  You’ll need to add probably one section per segment in order to address this.
  • Strategic challenges. For example, suppose that you’ve always struggled with enterprise customer CAC.  You may need to add one section focused solely on that.  “Yes, that’s the overall plan, but it’s contingent on getting cost/oppty to $X and the win rate to Y% and here’s the plan to do that.”
  • Zero-based budgeting. In tough times, this is a valuable approach to help CEOs and CFOs squeeze cost out of the business.  It takes more time, but it properly puts focus on overall spend and not simply on year-over-year increments.  In a perfect world, the board wouldn’t need to see any artifacts from the process, but only know that the expense models are tight because every expense was scrutinized using a zero-based budgeting process.

Conclusion
Hopefully this post has given you some ideas on how to better present your next operating plan to your board.  If you have questions or feedback let me know.  And I wish everyone a happy and successful completion of planning season.

You can download the spreadsheet used in this post, here.

The Balderton Founder’s Guide to B2B Sales

Working in my capacity at as an EIR at Balderton Capital, I have recently written a new publication, The Balderton Founder’s Guide to B2B Sales, with the able support of Balderton Principal Michael Lavner and the entire Balderton Capital team.  This guide is effectively a new edition, and a new take, on the prior, excellent B2B Sales Playbook.

The guide, which is now published as a microsite, will soon be available in PDF format for downloading.

I’ll put the opening quote here that the editors omitted because it’s nearly unparseable:

“I have learned everything I need to know about sales.  Sales is saying ‘yes’ in response to every question.  So, now, when a customer asks if the product has a capability that it currently lacks, I say, ‘yes, the product can’t do that.'”

— Anonymous CS PhD founder who didn’t quite learn everything they needed to know about sales.

In short, this guide’s written for you, i.e., the product-oriented founder who thought they founded a technology business only to discover that SaaS companies, on average, spend twice as much on S&M as they do on R&D, and ergo are actually running a distribution business.

The guide has seven parts:

  • Selling: what founders need to know about sales
  • Building: how to build a sales organization
  • Managing: how to manage a sales organization
  • Renewing/expanding: teaming sales and customer success
  • Marketing: using marketing to build sales pipeline
  • Partnering: how to use partners to improve reach and win rate
  • Planning: planning and the role of key metrics and benchmarks

While there are numerous good SaaS benchmarking resources out there, the guide includes some benchmark figures from the Balderton universe (i.e., European, top-tier startups) and — hint, hint — we expect to release those benchmarks more fully and in a more interactive tool in the not-too-distant future.

The guide is also chock full of links which I will attempt to maintain as sources change over time.  But I’ve written it with both in-line links (often to Kellblog) and end-of-section links that generally point to third-party resources.

I’ve packed 30 years of enterprise software experience into this.  I come at sales from an analytical viewpoint which I think should be relatable for most product-oriented founders who, like me, get turned off by claims that sales has to be artisanal magic instead of industrial process.

I hope you enjoy the guide.  Feel free to leave comments here, DM me on Twitter, or reach me at the contact information in my FAQ.

Did Your Board Order a Proposal or a Discussion?

[Restructured.  See notes.]

I think board meetings should have more discussions and fewer proposals.  Why?

  • The hardest questions often don’t lend themselves well to proposals. Think:  global warming, cultural divisiveness.  Or, in business:  investor alignment, exit strategy, or a flawed corporate strategy.  You’re not going to solve those issues in 45 minutes by quickly reviewing three options.
  • Proposals can result in a myopic focus on approval.  Approving an operating plan can be a strategic exercise where a strategy is proposed and translated into an organizational structure and expense budget.  But it’s too often an 11th-hour exercise driven by financial constraints where everybody just wants approval.
  • Proposals usually feature limited discussion.  Both because of the format and the approval focus, discussions during proposal sessions tend to be hasty and shallow.  If everyone knows they need to leave at 5pm and that three other items are slated before the end of the meeting, you’re strongly disincenting discussion.
  • Boards know less about your business than you think. Management spends 60 hours a week at the company, while board members might spend 60 hours a year.  If you want to leverage your board’s knowledge, first spend 20 minutes simply baselining them.  It’s a great introduction to a discussion and only rarely happens in proposals.  The more they know, the more they can help.
  • Sometimes, people just need to talk.  Think of recent hard times, like the start of Covid.  Just talking about the problem with the board leveraged the knowledge of those in the room (e.g., if only to know what other companies were doing), made everyone feel better, and helped the board determine if management were taking the situation seriously and asking the right questions — even if nobody had all the answers.  The board getting together to “just talk” isn’t just a touchy-feely concept; it’s a legal one, too [1].

For clarity’s sake, I think board meeting sessions fall into one of three types:

  • A review (or, “deep dive”) where, e.g., the CRO reviews the previous quarter’s results, metrics, win/loss, lessons learned, and plans to address to key issues.  Or maybe it’s a review of the partner program.  Or the product roadmap.  The goal is deep inspection and learning.
  • A proposal, where, e.g., the CEO and CFO present next year’s operating plan, seeking board approval at the end of the session.  Or a stock option refresh.  Or executive compensation.  Management presents either one or three options and seeks an approval of their choice. Usually there is some discussion, but the goal is ultimately procedural:  getting formal approval on a proposed decision.
  • A discussion, where, e.g., the CEO leads a discussion on strategy, the CRO a discussion on sales models, or the CFO a discussion on an upcoming new financial standard.  The purpose of a discussion is educational:  to leverage the knowledge of everyone in the room so they all leave smarter on the issue than when they came in.  Discussions are also useful for consensus building.

So my advice is to look at your last few board agendas, classify the session topics by type, and analyze your mix.  Odds are, you’re having lots of reviews and proposals, but few or no discussions.  I’d say everyone would be better off if you changed that going forward.

For example, here’s a hard problem that many startups face today:

How are we going to make our cash last, while growing fast enough, so that — despite multiple compression — our next round will be an up-round?

Sure, you can run a proposal session on this topic.  You can build a spreadsheet to model a few macro scenarios (e.g., mild vs. modest recession), financing options (e.g., extension round, venture debt), and cost-cutting options (e.g., a 10% RIF).  You can make a decision on what, if anything, to do right now.  But, invariably, there will remain a ton of, “we’ll have to wait and see how things develop going forward.”

In this case, especially if no immediate actions are indicated, a discussion might be much more effective than a proposal.  I think what most boards care about right now are the answers to questions like these:

  • Is the CEO in touch or in denial when it comes to the changing business reality?
  • Does the CEO understand the new fundraising environment (e.g., multiples, constraints)?
  • Is the CEO too optimistic or pessimistic about the expected fundraising environment in 18-24 months?  What future environment assumptions are driving their point of view?
  • Is the CFO on top of cash planning and forecasting?
  • Is the CEO ready and willing to make cuts if indicated by the needs of the business?
  • Does the company have good leading indicators and are they tracking them so they can act early, if indicated?
  • What do my fellow board members think and what are they seeing in the market and with their other companies?

I think most boards would instinctively order a proposal, added to the next board meeting’s agenda.  I think smart CEOs might well convince them to order a discussion, instead.

# # #

Notes
I had planned to restructure this post in response to feedback on the draft, but failed to do so before it auto-posted earlier today.  Hence, I’ve restructured it largely in accordance with a rule from my grandmother, a high school english teacher:  most essays are improved by simply deleting the first paragraph.  I did a bit more than that, but the world’s most Irish grandmother (Margaret Mary Magadalene O’Keefe Downing Gardiner) was proven right yet again.

[1] If you ever wondered why unanimous written consent resolutions needed to be unanimous:  the idea is that if there is any dissent (i.e., if even one director opposes a motion), that the board must convene to discuss it.

The Board Boss Delusion

I talked to a founder a while back who felt like they’d lost a year or two thanks to some strategic distractions foisted upon them by a well-meaning board of directors.  While most startup boards try to follow the Hippocratic Oath, some — like well-meaning but overbearing parents — smother their founders and their companies with love.  This was, in my opinion, such a case.

It wasn’t the first time I’d heard this tale, so I thought I’d write a quick post on the topic, which serves as a follow up to my previous post, Whose Company Is It Anyway?

Most of the writing I’ve done on board relations focuses on the hired CEO for two reasons:

  • That’s the path I personally took, having been a hired CEO at two startups.  I could write about it first hand.
  • I thought it was the harder path.  Alas, the grass is always greener, so I always assumed life was easier for founders because they possessed the irrevocable moral authority of being founder and accompanying invisibility cloak [1] that shield them from the same level of termination risk as a hired CEO [2].

But some founder/CEOs — particularly younger, nicer, and/or first-time ones — suffer from a dangerous delusion that we need to challenge.  When I asked the aforementioned founder how they ended up in this situation, they said this:

“I was younger then.  I was still under the impression that the board were my bosses.”

That’s it.  The board boss delusion:  the belief that a founder/CEO should try to please the board in the same way that an employee wants to please their manager.  Why is this a delusion?

  • The board is not a person.  It’s a committee.  It’s not of one mind.  It may literally be impossible to please everyone, and often is.
  • The board does not want to be the boss.  Despite appearances otherwise, the board always wants the CEO to be boss.  Admittedly that may be more apparent with some boards than others, but even the most idea-generating, directive [3] boards do not want the CEO treating them like the boss.  They’re just adding value by providing ideas.
  • As CEO you are accountable for results, not for pleasing people.  You’re not a director executing someone else’s plan who is rated on execution and congeniality.
  • There is no get out of jail free card.  If a founder/CEO fully executes exactly what a powerful board member said and it fails, they do not get to say, “but, but we agreed that was plan.”  The invariable response if you do:  “you’re the one running the company and you decided to do it.”  It’s on you.  It’s always on you.
  • The board is usually not qualified to be boss.  How many of your board members would make the short list in a search for your replacement?  Some, maybe, even ideal in cases.  But most?  No.
  • The board doesn’t work there.  You spend 50-70 hours/week at the company.  They go to six four-hour board meetings per year and sit on 8-10 other boards.  Informed outsiders?  Yes.  But outsiders.
  • It’s your company.  As a hired CEO it’s metaphorical, as a founder/CEO, it’s literal.  Either way, you need to run it.  The board’s there to challenge you, give you ideas, pattern match, and leverage their networks.  You’re there to run the show.

If you don’t believe me, try one of these ideas:

  • Ask your board members, over a coffee (not in a board meeting), if they want to be treated like the boss.  They will say no.
  • Throw them the keys.  A few of the gutsier founders I know do this when the board gets too directive.  They literally take their car keys out of their pocket and throw them across the table:  “if it looks so easy, you can do it.”  They will throw them back.
  • Ask them to tell you a story about CEOs who got replaced.  Drill into those stories.  Find out whose plan the CEO was executing.  Ask if the board approved the plan.  Ask if the CEO failed executing an agreed-to plan, particularly if they were executing it well but it just wasn’t working, why they got replaced?  They’ll say, in the end the CEO decided to execute it, so it was their plan.

Whose company is it?  Yours.  Run it that way.

Is the board your boss?  No.  And the faster you learn that, the better.

# # #

Notes
[1]  Potentially including actual control provisions.

[2]  I am not saying this is bad, by the way.  Having “it’s my company” moral authority makes founder/CEOs less vulnerable to termination in ways that I believe are more good than bad.  Yes, in the end, if someone is continually failing they need to be replaced. But, on the flip side, if it now takes 13 years (i.e., 52 quarters) to go public, there is a virtually 100% chance of bad periods along the way and, particularly on a VC board where there are N stakeholders with potentially divergent opinions, it can be difficult to survive such downturns without either a protector (i.e., alpha) on the board or the moral authority of being a founder.

[3]  You should do this!  You should do that!

How Should CEOs Answer the Question, “What Keeps You Up at Night?”

I’ve always felt that “what keeps you up at night?” was a trick question for CEOs.

There’s one part of it I’m quite sure about.  There cannot be anything that you control that keeps you up at night.  Why?  Because you’re the CEO.  If something is keeping you up at night, well, do something about it.

Stress, as I like to say, is for VPs and CXOs.  They’re the ones that need to convince the boss about something.  They’re the ones worried about how something might look.  The CEO?  Well, you’re accountable for results.  You get to make or approve the decisions.

If you’re a founder/CEO then you shouldn’t be particularly worried about how things look to the board.  It’s your company.  You’ve got an invisibility cloak that your hired CEO counterparts lack, and which you should use when needed.  Think of founder privilege the way the kitschy Love Story described love:  it means never having to say you’re sorry.

For what it’s worth, and I won’t claim to have been God’s gift to CEOs, I lived by the control rule — that is, if I controlled it and it woke me up in the middle of the night, then I was going to do something about it.  That’s why one of the worst things I could say to one of my VPs was, “I woke up last night thinking about you.”  If that happened, and it sometimes did, then either our working relationship or their employment status was changing soon.

I put this in the same “listen to your gut” class as the I don’t want to talk to you anymore rule.  If you’re one of my VPs, then you’re running a key part of my company, then I should look forward to speaking with you each and every time.  If I don’t look forward to speaking with you, it’s a massive problem, and one I shouldn’t ignore.  After all, why wouldn’t I look forward to speaking with you?  Who don’t I like speaking to?  People who:

  • Don’t listen
  • Don’t follow through
  • Can’t keep up
  • Grinf-ck me
  • Can’t or won’t change
  • Are negative
  • Are mean

There are probably other classes, but the point is if I don’t want to talk to someone, it’s a huge signal and one I should dig into, not ignore.

Waking up in the middle of the night is an even bigger signal.  If you agree that CEOs should not wake up in the middle of the night over things they can control, then we can move onto the second category:  things they can’t control.  Should CEOs wake up in the middle of the night over them?

Again I say no.  Why?

Making bets is a big part of a CEO’s job.  Based on available information and working with the team, the CEO places a set of strategic bets on behalf of the company.  The company then needs to execute those strategies.  While the quality of that execution is under the CEO’s control (and should be high to remove execution as a source of noise in the strategy process), the outcome is not.

Why be stressed while the roulette wheel is spinning?  It’s a natural reaction, but does it change the outcome?  You’ve placed your chips already.  Does stressing out increase the odds of the ball landing on your square?  Does not stressing out decrease it?  No.  It changes nothing at the roulette table.

I’d argue that in business, unlike roulette, stressing out can effect the outcome.  A CEO who’s constantly under stress while the wheel is spinning — e.g., waking up in the middle of the night — is likely to perform worse, not better, as a result.

  • A tired CEO does not make great decisions
  • A haggard CEO does not inspire confidence
  • A grumpy CEO does not handle delicate situations well

I’m not trying to minimize the very real stress that comes with the CEO job.  I am, however, trying to provide a rational, contrarian, and hopefully fresh point of view that helps you better frame it.

In the end, there are two types of things that CEOs can potentially stress about:

  • Things they can control.  They shouldn’t stress over these because they should do something about them, instead.
  • Things they can’t control.  They shouldn’t stress over these because doing so will not change the outcome.  Worse yet, it may well change the outcome — for the worse — over the things they can control.

Ergo, CEOs should never stress about things.  QED.

As Warren Buffet said, “games are won by players who focus on the playing field — not by those whose eyes are glued to the scoreboard.”  Focus on what you can control and, as Bill Walsh says, the score will take care of itself.

Congratulations.  You’re the CEO.  You’ve got the best job in the world.  Enjoy every day.  And sleep well every night.

# # #

Notes

  • To reiterate, none of this is to trivialize the stress that comes with the CEO job nor to suggest that CEOs shouldn’t work hard.  It is to say that I believe they will be happier and more effective if they find a way to sleep well — as most senior executives do.
  • To look at this from an outcomes perspective, while I was pleased with the operational results at both companies I ran, I was not particularly pleased with the outcomes.  Did I work hard and obsess about things?  Yes, in general.  If I worried more and slept less do I think it would have improved my outcomes?  No.  Were some of the worst decisions I made in part due to being worried and stressed about things?  Yes.  Did I in general sleep well?  Yes.  I have always naturally focused on running plays well and believed that the score would then take of itself.  In my experience, sometimes it does, but sometimes it doesn’t.
  • In writing this post, I found a few anecdotal, fun, and one somewhat ironic article on success and sleep.
  • This Bill Walsh quote seems to undermine my argument.  “If you’re up at 3 A.M. every night talking into a tape recorder and writing notes on scraps of paper, have a knot in your stomach and a rash on your skin, are losing sleep and losing touch with your wife and kids, have no appetite or sense of humor, and feel that everything might turn out wrong, then you’re probably doing the job.”  That said, he’d use this as an opener to speeches which were largely about focusing on what you can control.
  • Walsh’s other quote on sleep was more proactive:  “If you want to sleep at night before the game, have your first 25 plays established in your own mind the night before that. You can walk into the stadium and you can start the game without that stress factor. You will start the game and you will remind yourself that you are looking at certain things because a pattern has been set up.”