Silicon Valley’s CEO Whisperer, Rich Hagberg, on Why Most Startup Founders Fail

Kris Safarova  01:09

Welcome to the Strategy Skills podcast. I’m your host, Kris Safarova, and our podcast sponsor today is StrategyTraining.com. If you want to strengthen your strategy skills, you can get the Overall Approach Used in Well-Managed Strategy Studies. It’s a free download, and you can get it at firmsconsulting.com/overallapproach. You can also get McKinsey and BCG-winning resume, which is a resume that got offers from both of those firms. And you can get it at firmsconsulting.com/resumePDF. And lastly, you can get a copy of one of our books that we co-authored with some of our listeners, some of our clients. And you can get it at firmsconsulting.com/gift. And today, we have with us Rich Hagberg, who is often referred to as Silicon Valley’s CEO whisperer, is a trained psychologist who has spent the last 40 years of his career as an executive management coach for over 6000 executives. And since 2009, he has worked with companies like Tinder, Twitter, Dropbox, Zendesk, Quora, Asana, Pinterest, Salesforce, Reddit, Instacart. Rich is often quoted in the business and general media, and he is also co-author of the new book, Founders, Keepers. Rich. Welcome. So let’s rewind a bit. How does someone with a background in psychology ends up coaching leaders from some of the most influential companies in Silicon Valley?

 

Rich Hagberg  02:39

That’s an interesting story. I got recruited out of academia after I’d gotten my PhD and moved to a consulting firm in San Francisco, and all we did was assess candidates for hiring, senior candidates for hiring and and I had real questions about their effectiveness and the validity of what they were doing. They would give people, like a 16 minute IQ test, and then interview people for two hours, and on that basis, they would try to make decisions. And I, I had been trained enough using personality tests and and computers were new. I had used them in my graduate work, but the personal computer didn’t exist, and I saw the possibility of utilizing computer technology and personality testing, and then later on 363 60 feedback, and so my boss told me that I should go back to my when I shared that idea with him, he told me I should go back to my office and that I wasn’t the properly deferential apprentice. And I quit within a month and joined a firm that did that helped people who were in between jobs assess themselves and try to coach them. Coaching wasn’t something that anybody talked about in those days. In 1984 I formed a company that focused exclusively on coaching executives in Silicon Valley and along the way, I’ve done research. So that’s the psychologist in me. I started by doing research on executives in trouble, terminated executives, and then in the in the late 80s, on best leaders, people who had been rated by their colleagues as being outstanding leaders. And there was a clear pattern that I could see in the tests and in the interviews I did with them, but also then the 360s told me what others were seeing, and so that’s just grown. And I’m also a serial entrepreneur, and have started quite a number of companies. Yeah. So when my old company got acquired by Accenture in 2006 I had to stay with them for three years, and then I decided I was going to launch, relaunch my consulting firm and focus on startups. And luckily enough, I got introduced to some of the most well known entrepreneurs of the time by the venture capital firms, who are the people who send me most of my business, other than referrals from other entrepreneurs. And that’s what I’ve been been working on for that since 2009 when I started that, but gathering data on them, and ultimately, I collected personality, 360 data on 122 founders, where we also had multiple of invested capital data. So how well did they do financially? And then we studied all founders, and then we studied the successful ones who got more than a 10x return, and compared those to people who got nothing, and found some very interesting patterns. And so that’s where the psychologist comes together with the founder, entrepreneur and business.

 

Kris Safarova  06:20

And can you share with us a few moments in your career where those were really defining moments for you to, so to say, break out of your orbit at that time?

 

Rich Hagberg  06:30

It goes back to those initial times, and what happened was 360 review feedback didn’t exist, and somebody come came up with it in the late 70s. And I remember sitting at a table and looking at the data from what 15 of this person’s colleagues said, and then what the personality test said. And it was, it was an aha experience. It was like, Oh, this is what’s happening inside them, and this is how people are seeing their behavior, so their personality and their behavior. And it was like, ah, we can put this together.

 

Kris Safarova  07:11

Incredible. So your book opens with the idea that most founders are built to fail. What exactly in the psychology of behavior that makes that true?

 

Rich Hagberg  07:21

First of all, we’ve done research on leadership, and there are three different styles of leadership that show up to be specific. We do factor analysis on our data. It’s like sorting your laundry into three piles, and we identified three types, the visionary evangelist. Think of Steve Jobs, Bill Gates, Elon Musk, the relationship builder. I think of Howard Schultz at Starbucks, or Indra Nooyi, she was at Pepsi, even Jamie diamond, I think, is a, is a relationship builder, probably mixed with other things, and then the managers of execution. They’re the people who are organized and orderly and make the trains run on time. Founders, overwhelmingly, are visionary evangelists, and they’re, they’re creative risk takers who have insights because they know something about the technology or the market, and they come up with these inspiring ideas, and they get people motivated, but they’re not particularly good at execution. What if you think about high, medium and low. They’re generally high vision, medium to low relationship, and all of them, almost everyone, is below the mean on managing execution and what happens as the company grows and it scales and it becomes more complex, and you can no longer be the loner who makes all the decisions by yourself, going off on the mountain and talking to God and coming down with the tablets. You need to start working through people, and you need to start being sure that your ideas get implemented. And that’s where they fail. The successful founders, the ones who got a 10x return are about average on relationship building, but they’re still low on execution. The unsuccessful are low on relationship and very low on execution. And so what happens is the company starts to scale. Is that becomes a problem, because things don’t get executed in a disciplined way. They wait for things to break, rather than putting in place systems. Fact, most founders see systems and processes as bureaucracy when it really is about efficiency, and so that resistance or. Resistance to letting go of control, or resistance to chasing after shiny objects their latest idea, and simply not being able to have the discipline to be sure that it gets executed. That causes it’s like a ticking time bomb. It goes off and the board will kick them out, or the company will fail rich.

 

Kris Safarova  10:25

And when you work with founders who have this issue that they’re just not good at actually implementing the ideas, how do you help them make that shift?

 

Rich Hagberg  10:33

One of the things I realized when I started working in Silicon Valley was these people believe data, it can get through their defensiveness. And so one of them said once he was an Israeli guy. He said, Rich. When you the shrink tell me I’m insensitive. I could write that off. I can say, What do you know when your tests predict I’m insensitive. I respect what you’ve done with your statistics these days, machine learning and but when my when 24 of my peers, superiors and subordinates rate me low on sensitivity and write a page and a half of comments on that, I listen, and that’s that’s what usually gets through to them.

 

Kris Safarova  11:29

It’s one thing to understand. Another thing to actually learn the skill of being able to execute or work through other people. What happens then, once they understand?

 

Rich Hagberg  11:38

Well, it’s different with different people, but it’s very, very hard to change your personality. You can change your behavior to some degree, but it’s very hard to change your fundamental personality. And these people are creative, divergent thinkers, and they’re independent, sort of rebellious renegades, very hard for a tiger to change its stripes, and so the most effective way is to recognize the few things that you can change. So I usually try to get people to boil it down to maybe three or four things that they can work on changing, and show them some best practices. You know, this is how you hold people accountable. This is how you build a high performing team. This is how you make effective decisions, so that you’re not biased. But I think a more realistic solution is you hire people around you who are good at the things you’re not good at, people who are better with relationship and people who are much better at execution and discipline and focus. These people are more convergent thinkers, rather than divergent thinkers, like a COO or a chief of staff or someone in each of the key functions who can bring discipline, but then you have to listen to them, and you have to empower them. That was a hard one for me. Luckily, I I hired a woman who was my COO and then became the CEO, and she was medium, maybe a little above on visionary evangelist, high relationship and off the graph on execution. And she was the perfect balance. And she would challenge me, she I would say, I have this great idea. And she’d say, Well, where does that fit in the strategic plan? And then we would have a dialog about that.

 

Kris Safarova  13:43

You mentioned that you helped found this, identify a few things that they can change. What are some common things that founders can change?

 

Rich Hagberg  13:52

Well, I think if you look at the successful ones, you can see what they can change. They learn that as the company gets bigger, they can’t do it all, they can’t make all the decisions. They can’t micromanage everything, and so they have to learn to delegate and empower. And the effect of one’s delegate and empower. They learn to work through other people. They learn that their own biases can cause the team to not feel safe challenging them. Nobody, nobody wants to tell the emperor he’s got no clothes. So it’s important that they learn to do things like ask disconfirming questions, like, if we were to follow my proposal, what could go wrong? What have I not thought about? What are your concerns about this? Um, and, and basically they have to learn to run a discipline process that surfaces the facts, that surfaces alternatives, and and then run a. A process where everyone’s biases get overcome, if not just reduce, right? That’s another thing. I think the other one is stress management. I think startups are extremely stressful, and most of these people, it it takes a toll on them, takes a toll on their decision making. It takes their takes a toll on their health. Many of them, you know, start using alcohol and drugs to deal with the stress. And you know, their decisions really suffer and they get more reactive. The unsuccessful ones are more impulsive and reactive than the successful ones. So over time, they have to learn to deal with stress, and a big part of that is learning to delegate, because they start burning out because they’re controlling everything, and at a startup is almost a Darwinian survival of the fittest. The other thing that really seems to make a difference is is founders who seek feedback, a lot of people won’t tell the founder about their shortcomings, and so that’s where a coach comes in. That’s where objective assessments come in, and that makes a big difference in in helping them to see what their blind spots are and what’s getting in the way. And the successful ones are more learners. The unsuccessful ones are more defensive. They hold on to their original ideas. And adaptability. If we had to zero in on the one thing that is the biggest differentiator, it’s adaptability. You never have permanent product market fit and decisions that you make too early about a product, without getting feedback or listening to feedback from your customers, your users or your team, if your stubbornness gets in the way, you’re going to make bad decisions. So adaptability is really, really key. You have to be open to input. You have to listen and when, when people resist you, you have to listen to the resistance, because they may be telling you something you don’t see. So those are, those are the big things.

 

Kris Safarova  17:36

Rich, and when you have a client that they’re under a lot of stress, and so they started using alcohol, drugs and so on. How do you help them shift away from that?

 

Rich Hagberg  17:47

I think you have to teach them. You have to be proactive, and you have to teach them that they they have to set boundaries on work. How much is healthy and unhealthy? They have to delegate because they can’t do it all. That’s what happens. It’s the stress. My my master’s thesis was on meditation, my doctoral dissertation was on stress and its effect on people’s mental health. And so, I mean, I have a very busy life, but I meditate, I walk, I live in the forest. I walk in the forest, in the day, I set boundaries about when I will, you know when I will, how long I will work, and when I had overload. I refer that to somebody else. So you have to set boundaries. And I mean alcohol and drugs are temporary fixes, and ultimately they don’t make anything better. And sometimes you have to refer them, but, but that’s that’s not something that happens that often with me, I see it occasionally, and I will call it out, but it doesn’t happen very often. I think they want to grow, and they want to get better, and they want to be more successful. And if you can show them that there’s the stress is getting in the way of their success, that’s a driver that that helps them to help themselves.

 

Kris Safarova  19:13

And when you call it out at situations where people say, I don’t have a problem, I have it completely under control.

 

Rich Hagberg  19:19

Yeah, well, alcoholism and drug addiction are diseases of denial, and I’ve had numerous 360s where raters, their subordinates anonymously, will tell them they have an alcohol problem or they have a drug problem, and then I will say, Well, let’s talk about This, and then I’ll refer them to a treatment program.

 

Kris Safarova  19:46

Anything else you want to say on stress management? Because, given your background, you know so much and our listeners, that is something they really struggle with.

 

Rich Hagberg  19:55

Well, it starts by asking yourself, do. So how much do I really want to run a startup? I have a lot of people ask me, Should I be an entrepreneur?

 

Rich Hagberg  20:09

And my first question is, how important is work-life balance to you? And if they say anything other than it’s not important?

 

Rich Hagberg  20:24

I say, well, you need to look at it carefully, because it’s almost impossible for a person to maintain work life balance in the early stages of a startup. It’s just too chaotic. There’s too much to do. You don’t have resources, and you probably don’t have an A team in the beginning. So if you surround yourself with good people, if you learn to delegate, if you take care of yourself once or twice a year vacation doesn’t do it. You need to manage it day to day. You need to get physical exercise. I do yoga every every morning, I go off and meditate for a week every year, but it’s really the day to day management of your schedule. I mean, some of them don’t even have when, when the company’s quite large, they don’t even have an executive assistant. And so I say to them, what’s the best and highest use of your time? You should be spending your time on that stuff, not on scheduling appointments or whatever that could be handed over first, maybe to an executive assistant and then to a Chief of Staff. Ultimately, if they’re not too threatened by a Chief Operating Officer. That’s a good idea, too. So recognize what they’re good at and focus on that and hand off the rest.

 

Kris Safarova  21:48

Very important advice. Given your background in studying meditation and doing meditation for a long time, even taking a week a year. How many people take week a year to meditate? We have to talk about it. What can you share with us on what you learned about meditation? How to do it effectively? How to incorporate it into your life on a daily basis?

 

Rich Hagberg  22:11

Well, I meditate in the morning and in the evening, and I have for 57 years, so I’m pretty committed. I think going off only for one week a year wouldn’t do it. You have to build it into your schedule. And what I notice is that the thing that’s most well the research on meditation shows one of the things that almost always goes up the most is creativity, and IQ goes up. And what I personally find is that many of the ideas, the product ideas that I’ve had over the years, came up, either popped up in meditation or came up afterwards, because there’s a level of clarity that you get that helps you stay focused and helps you think through things. After my meditations, my my my thinking is much clearer. In the morning, it helps me prepare for the day. In the evening, it’s like wiping the whiteboard clean, because there, you know, there’s decisions and data and everything coming at you, problems context switching all the time. And at the end of the day, you can feel like your head is spinning. But over the years of meditation, what happens is you carry a little bit of silence with you that gives you perspective, and that grows over the years, and that’s made a big difference in my life.

 

Kris Safarova  23:57

Richard, what kind of meditation do you practice?

 

Rich Hagberg  24:00

I do transcendental meditation, and that’s worked for me.

 

Kris Safarova  24:03

And do you do it for about 20 minutes in the morning, 20 minutes in the evening?

 

Rich Hagberg  24:08

I do it for somewhat longer now, because I’ve done it for so many years, but, but that that’s that’s the place to start, 20 minutes in the morning, 20 minutes in the evening, and you have to arrange your life around, around that, because you have to build it into your routine, then it doesn’t become a discipline. People say, gee, you must be really disciplined. The fact of the matter is, it’s been part of my routine for 57 years, and it’s just how I work, how I operate. I get up at 5am I meditate at six. I meditate before dinner as part of my routine.

 

Kris Safarova  24:48

And currently, how long do you meditate?

 

Rich Hagberg  24:53

On average, I meditate about 45 minutes, morning and evening.

 

Kris Safarova  24:56

And do you, after so many years, do you still feel that you need the mantra?

 

Rich Hagberg  25:03

Yeah, well, can you just go without it at some point, it’s like a soothing, a soothing bomb that gets it when you, when you, particularly in the afternoon, when you start repeating that sort that sound, it has a soothing effect on you, and you settle down quickly. What happens over the years is that you may start your meditation with that, but you go deep right away. I mean, it’s there’s it’s that it’s no longer difficult to transcend thought. I mean, that that’s what it’s about. It’s about transcending the monkey mind, the busy thinking process, and it becomes slower and slower and more and more silent. And finally, there you sit. You’re awake, but you’re sitting in silence.

 

Kris Safarova  25:52

Can you tell us about that week of meditation you do once a year?

 

Rich Hagberg  25:56

Yeah, I’ve done it in many different ways. I typically go off for for a course where everything is taken care of. In other words, I don’t have to worry about cooking and I don’t have to worry about anything else. I just can focus on the meditation, and that’s what I would recommend to people, um, in the first year I was meditating, i i I learned to meditate in January. In December, I went off to a five day course, and I got a glimpse of silence. I got a glimpse of the mind quieting down. It was still pretty busy, but I got, I got a taste, and I realized after leaving, after five days, that I was taking some of that silence with me. Once I went off for a month. That was when I was doing research on meditation. I went off for a month, and that helped me tremendously over the next few years, because again, there was clarity and there was silence,

 

Kris Safarova  27:16

And during that month of meditation that is very unusual experience. Most people will never know what it is like. What were you able to achieve given how much of a time you dedicated the meditation?

 

Rich Hagberg  27:28

It’s not about achievement. It’s about taking away thoughts. It’s like, it’s like when there is, when there’s no when there are no thoughts, when there’s no turbulent emotion when you’re when you turn your attention inward, you just settle, you settle down, and you just be. And it’s not about achieving anything in the meditation, because achievers sort of want to set goals, and they want to, you know, achieve things that are tangible. It’s preparing you for action and activity by, like I said, cleaning the whiteboard and making your your your thinking more clear and your decisions better. I mean, we could see in the research on unsuccessful founders that they’re more stressed and they’re more impulsive and they’re more reactive. And what’s interesting is that the successful founders are more reflective, and they’re still impatient. They’re not, you know, they’re not Mother Teresa, they’re not saints, but they have a level of perspective that gives them the ability to make choices more deliberately, rather than react. It’s on the personality test. All founders show up as impatient and demanding and in a hurry. But the unsuccessful ones are also impulsive and reactive. They’re more emotionally reactive.

 

Kris Safarova  29:13

When I mentioned I probably should have been a little bit more clear. I was talking about the state, a particular state.

 

Rich Hagberg  29:20

when you’re in meditation, the state, yes, well, what can you say about the state that where there is no thought, you’re completely awake. It’s like being awake during your sleep. You’re completely relaxed. Your mind is clear, but there are no thoughts, or thoughts are at a low ebb. It’s more like in the beginning, thoughts are in the foreground and the silence is in the background. Over the years, that switches over the years. Then thoughts are like a haze in the in the distance and the silence is in the foreground. I. It’s about silence.

 

Kris Safarova  30:03

For our listeners who have never tried meditation before or tried but could not do it and they after listening to this, they really want to try it again. Could you share some advice?

 

Rich Hagberg  30:13

Right? Unfortunately, I’ve never known anybody in all the years who taught themselves to meditate and followed through, whether it’s a Buddhist meditation, mindfulness or kriya or transcendental meditation, or some other practice, having a practice where people help you learn how to do it effectively, because people, especially founder and intense types, they think it’s all about control, and it’s not about control. It’s about letting go of control. So I’d say, learn a technique, whatever technique you learn. I think the apps that are out there are good to get people started and give them a glimpse. But I think if you’re going to follow through and make it part of your life, you need to, you need to allow it to influence the way you live your life. And that means having a having an established practice

 

Kris Safarova  31:08

And last question on meditation and on the unsafe you feel comfortable sharing any specific retreat that you found worthwhile to consider, because there are a lot of them around the world, but not all of them will be experienced.

 

Rich Hagberg  31:22

Because I practice TM. TM has retreats. I go off once a year to a place called the Raj, which is an Ayurvedic Treatment Center in the middle of Iowa, and I just came back, and while I’m there getting those treatments, I meditate, um, but I think the most effective way is to go off to something where, where the whole purpose of the retreat is to give you a deep experience of silence.

 

Kris Safarova  31:55

Thank you very much. What specific behaviors do you think distinguished founders who are trusted by the teams, even if they are not naturally very warm or outgoing people?

 

Rich Hagberg  32:06

Right? Well, what we saw was that the successful founders had a little above average on emotional intelligence and social astuteness. The unsuccessful ones were low, their behavior is the things that destroy trust are emotional reactivity. You know, if it’s unsafe to disagree with somebody, then nobody’s going to speak up and there won’t be trust. People are going to be guarded. They’re going to think, well, how is he or she going to react to this? And so they won’t speak the truth to power. And so I think you have to create psychological safety, but you have to also show enough caring about people that they think, that you don’t see them just as tools or cogs in the machine, and you need to treat them with respect, and you have to pay attention not just to their thoughts and their ideas, but to What’s going on with them in terms of their COVID their concerns and their feelings, you don’t again. You don’t need to be a therapist. But what we can see from the best leaders research particularly is that the best leaders have a level of empathy and the level of sensitivity to people that allows them to build trust on their team and be trusted by their team. When a founder is narcissistic, self centered, abusive and treats people like a means to an end, they sense it, and we see in many of the behaviors of unsuccessful, not all unsuccessful. Obviously you might have the wrong product at the wrong time, something else might go wrong, but by and large, a lot of the unsuccessful founders are unsuccessful because of the way they treated people. They micromanage them. They make it unsafe to to volunteer alternatives. If it’s not consistent with the leader, you need to make relationships. You need to invest in relationships rather than being transactional. The unsuccessful founders are they, they see, they see it as a transaction rather than an ongoing relationship. You have to invest in building the relationships with your team members.

 

Kris Safarova  34:44

One of the common issues for founders is challenges they have with a co-founder. What advice would you give to someone who is currently a founder? They have a co-founder who is a very challenging person. And they kind of struggled to work together.

 

Rich Hagberg  35:01

It’s one of the most common reasons that startups fail. I think it starts with picking your co founder very carefully. I think a lot of times it’s just, you know, this was your college roommate or or somebody who you knew, and they happened to have something that was a little different than you. Maybe you were the business person and they were the technical person. Maybe you were the technical person and they had something else and not really select for them, being complimentary, both in style and skill, and a lot of if they’re if, if, if their styles are different, if their values are different. Um, if they have a superficial understanding of their co founder and and the fact, if the, if the usually, there’s one person who’s the more dominant founder, but not always. Um, if that person has a need to be right and to be in command. That’s that’s a common problem. The other thing is that many, many people in your first startup, whether it’s a co founder or the other part of the team, maybe that was all college roommates. That’s not uncommon. Almost none of them have the kind of experience base that they need in order to scale with the company. So probably the most common thing that I talk to founders about is a problem with one of the members of their team or multiple members who are not performing and I’m the sounding board that they use to help them figure out how to unpack that problem. I occasionally will do sort of marriage counseling, in a sense. I’ll sit down both of with both the founders, and many times, I put them both through leadership development at the same time and after they’ve taken the personality test, which, which is, may our personality test measures 50 elements of personality, and it uses machine learning to predict their 360 before they actually get the 360 so it tells them what their autopilot is, and then they get the 360 and then they have objective feedback on how they’re seen by others and and how the software sees their style, then they can see that, oh no, it’s not just my founder who is accusing me of this or problems that I’m having because of their their problem. It’s, it’s, it’s both of us, right? So that’s one solution for trying to work through differences. But team Zuo, my co author, I’ve worked with team for about 15 years. His company, when I started working with him, was about 50 people, and it’s, you know, it’s a multi billion dollar company now, I think their current valuation is 1.7 billion. I have no idea how many of his direct reports I’ve worked with over the years, but it’s over 25 and it’s like there’s been three generations of people in the key functions, and I think he’s too slow to make changes. I think he would admit he’s too slow. And so I think the our loyalty to the initial founders becomes difficult. I’m working with two founders right now who are having a similar problem. In both cases, they have two co founders, and it’s not uncommon that the job grows beyond the co founders, and a lot of times, the job grows beyond the founder. And so I think a founder needs to recognize their own limitations. By the way, one of the most interesting findings of all in the study is that there’s an item on the personality test that says, I frequently reflect upon my past successes and failures. The successful founders say strongly agree. The unsuccessful founders say strongly disagree. And and on we have a scale that is about self reflection. The successful founders are more self reflective. We also ask them to rate themselves on the 360 and then we compare their rating on each of the skills, like delegation and being inspirational or whatever. We compare their self rating with the rating of everybody else, an average of 12 coworkers rate them. The successful founders have a less of a gap between their self rating and the way other people write rate them. The unsuccessful ones have more blind spots.

 

Kris Safarova  39:59

If there is one question every founder could ask themselves weekly or daily or monthly to stay grounded, what would that question be?

 

Rich Hagberg  40:08

What’s the best and highest use of my time, and what should I delegate and empower people to do so that I can work on what I’m good at and where I add the most value. And then, how do I create an environment where I help them succeed once I’ve delegated and empowered them?

 

Kris Safarova  40:31

Very powerful. How do you help founders get comfortable working on the business rather than staying in the weeds of day-to-day execution?

 

Rich Hagberg  40:41

One of the things I say, I try to teach them about what leadership is. And I say in the beginning, you probably saw yourself as sort of the chief individual contributor, right? And I say you need to go from being a facilitator, I mean a doer, to a facilitator of doing a very well known founder. I came into his office one day. The company was about 17 people at the time, and by the way, they had a multi billion dollar exit less than five years later. And he looked really discouraged. And I said to him, what’s going on with you? You look pretty down. He said, I don’t feel I’m adding any value anymore. I used to be I used to write code, and then I turned that over to other people. I used to manage projects, and now I have other people managing projects, and I’m managing managers of managers that he wasn’t quite at that level yet. It was 17 people, but he was managing people who are running projects. And I said, then the next task for you is to learn to be a leader. It’s about leading. It’s about setting direction. It’s about inspiring. It’s about creating a culture. It’s about being sure that execution happens, but you’re working through others.

 

Kris Safarova  42:03

Rich and when you see a founder spiraling into distorted thinking, overconfidence, toxic behavior, what is your first move as a coach?

 

Rich Hagberg  42:15

Well, the first thing is that they take this personality test, and so it measures 50 elements of personality. And then we use machine learning, which astounds them, to actually predict those things you just brought up. And that’s that’s the beginning. I talked to them about it looks like your autopilot is to do this, but let’s see what that what your colleagues really say, and it takes a few more weeks, and then they get that, and the same things show up and and that gets their attention. But then I start talking to them about decision making, and the research that Kahneman and others have done on decision making, and I talk about the importance of running a discipline process and not dominating the decision process, or stifling people from being open about facts and alternatives that may not be yours. If I start there, it seems to work best. I tell them about overconfidence bias. Overconfidence bias is not knowing what you don’t know, and so you’re involving yourself in things you should have no business. And you know, being involved in, I said, that’s why you hire experts in each of the functions, because maybe in the beginning, you knew more about what was going on all over the company than anybody else. But ultimately, you should hire experts, and you want to listen to what they say. Not just pick it apart, but listen to it. Many people deal with resistance by trying to dismantle their logic, or just persuade them, or just bulldoze and say, do it, because I say so. But many times, especially when you start being able to hire senior people, people who have more experience than you have and more expertise in their area, there may be something they’re seeing. There may be something that you’re doing or not doing, that you’re not even aware of. You may not know what you don’t know. I remember a very well known CEO I worked with very well known and he hired a marketing person, and when she came in and started putting in place a marketing plan, he wanted to fire her. And I had a discussion with him about what he thought marketing was, and I said, Well, next time we get together, I’m going. To bring you some material, and I had a pie chart that said, What’s marketing all about? What are all the elements of marketing? And I showed him the pie chart, and he looked at it, and if you can imagine, you know, 12, 1234, he said, It looks like all I’m seeing is from one o’clock to three o’clock. And I said, Yeah, that’s the point, right? So bias, whether it’s confirmation bias, where you only listen to data or ideas that confirm your existing bias, or whether it’s over optimism bias, or whether it’s or status quo bias. I mean, in the beginning, startups are like a family, and it’s very informal, but the minute you have 20 people, even the minute you have 10 people, that starts breaking down, and you have to recognize that a culture evolves, and the company’s culture needs to evolve and become more like a high functioning team. You know, it needs to be a more disciplined way of going about things. You need job descriptions, and you need processes. And processes don’t always mean bureaucracy. And founders are allergic to structure. That’s a very interesting point. When we studied unsuccessful founders and successful we found that the successful ones were on the mean. They were average on putting in place good systems of processes to eliminate inefficiencies. So they weren’t great, but they were on the mean but when we looked at the comments on the 360 and we analyzed hundreds of pages of comments, it came out very clear. The unsuccessful simply waited for things to break, and the successful ones were more proactive in putting in place things and delegated that to other people, and didn’t resist it, right? I look at myself, I resisted structure, systems and processes because I’m a typical founder. I have all the characteristics of a founder. In fact, when Tina and I decided to write founders keepers, we didn’t mean it to be autobiographical, but when we got about halfway through, we realized it was right. And so that’s why I was drawn to founders. I didn’t realize they were sort of my people, right? They were people who I could relate to, because I had the same weaknesses they had, I had some of the same strengths, right? I realize now how I drove my team crazy at some stages by engaging in some of the very same behavior I’ve described today.

 

Kris Safarova  47:53

Listen, you mentioned the importance of self-awareness. How do you help someone actually build it?

 

Rich Hagberg  47:59

Yeah, first of all, what we noticed about the successful founders with is they had a learning orientation, a learning mentality. So you have to want to learn and grow as a leader, and that means that you’ll listen to feedback, you’ll ask for feedback, you’ll get formal feedback on in terms of surveys like 360s or culture surveys or engagement surveys, so that you can actually have a metric that shows you how you’re doing. I think it’s about getting mentors and coaches who, who who will tell you when they see you doing something wrong, and are not afraid to tell the truth to power.

 

Rich Hagberg  48:45

I’m sort of a hybrid, because I’ve been a founder and I’ve started a bunch of companies, and I’ve also studied leadership, and so I know some best practices, so I can use my psychologist skills to help them unpack problems and see how they are in the way I can use those skills I learned as a therapist, but I’m also a mentor. I mean, when you don’t know how to put in place a strategy process that you think of strategy as once a year, you going off on the mountain and talking to God and coming down, or once, once a year doing a drill. It’s an ongoing process. As the company gets bigger, you have to, you have to put in place a strategic planning process as part of how you do things on an ongoing basis. So you need mentors to teach you about best practices in the last the book, it’s got three parts. The first part is what makes a founder a founder, what are the characteristics and the behaviors of founders, and how does that help and hurt? Then there is what differentiates. The successful from the unsuccessful. And the last part is best practices in the areas where the 10 areas where their colleagues said it was important for them to grow, but the scores were low, so the gaps between what was important and performance. And there we go over best practices in each of those 10 areas, things like strategic planning and addressing conflict and holding people accountable and delegation and and on and on. So all the areas that are that are typical challenges for founders

 

Kris Safarova  50:39

Rich, I want to wrap up with one or two of my favorite questions to ask over the last, let’s even say, over your entire lifetime. What were one, two, three Aha moments, realizations that you feel comfortable sharing that really changed the way you look at life or the way you look at business?

 

Rich Hagberg  50:57

First of all, one of them was that I realized I was creating a culture that reflected my strengths and weaknesses, and that if I was going to make the company better, I was going to have to grow as a leader, and that I had to address the things that were my personal weaknesses that were becoming institutionalized. I The second was that my independence, well, my independence and my ability to tolerate ambiguity were in the way. And let me tell you what happened in my first 360 I was accused of drive by delegation, which meant that I sort of drove by, yelled out the window what I what I expected, and didn’t clarify it, and drove away. And it was up to them to read my mind. They would try to read my mind, and they would not succeed, and I would get frustrated and angry. And then, and then the third one was, was really how that when I, when I saw, I did a factor analysis of the 360 back in 1986 and I saw these three clusters of visionary relationship execution, and if it occurred to me that I needed a bunch of people around me who were really good at the things I wasn’t good at. I was high vision, medium relationship, low execution. And I needed, in the beginning, I needed to bring in people who were good executors, but when I brought in somebody who was a good executor, but they didn’t have the social skills, they were not good at relationship, they just made everybody angry, right? They were rigid and they were, you know, difficult. They said no to everything. So I needed to find people who helped me build out the full range. You need all three of those things, and I needed all three of those things, and I made some mistakes in hiring people who are just like me. And then we all agreed as we went gleefully off the cliff together, right? We were in agreement, and we all had the same blind spots.

 

Kris Safarova  53:22

And last quick question for today, if you could instill one belief to the heart of all of our listeners, what would that be?

 

Rich Hagberg  53:31

It’s very easy for you to become obsessed with your career and let your ambition and your greed and all the other things that drive you to turn you into something that is not only not good for the company, but isn’t good for you, and it’s certainly not good for those around you and your family and who are close to You, because You can be consumed by it. And if you think you need to add something to yourself in order to be good enough, I think you ought to look at that. Because I think it’s about find turning inward and finding out who you are, rather than adding power and recognition and money and all the rest.

 

Kris Safarova  54:26

Where can our listeners know about you? Buy your book? Anything you want to share?

 

Rich Hagberg  54:31

Um, well, they can read the book, Founders, Keepers. They can reach me at hagbergconsulting.com and I’m if they go in and put Richard Hagberg psychologist or whatever in Google, I’m all over the place.

 

Kris Safarova  54:50

Rich. Thank you so much. Thank you for being here. Thank you for everything you said. Our guest today again have been Rich Hagberg. Author of Founders, Keepers and our podcast sponsor today is StrategyTraining.com. If you want to strengthen your strategy skills, you can get the Overall Approach Used in Well-Managed Strategy Studies. It’s a free download, and you can get it at firmsconsulting.com/overallapproach. You can also get McKinsey and BCG-winning resume, which is a resume that got offers from both of those firms. And you can get it at firmsconsulting.com/resumePDF. And lastly, you can get a copy of one of our books that we co-authored with some of our listeners, some of our clients. You can get it at firmsconsulting.com/gift. And it’s called Nine Leaders in Action. It went to become number one bestseller on Amazon. Thank you so much for tuning in, and I’m looking forward to connect with you all next time.