How to hire, fire, and lead as a CEO (and what you’re doing wrong)
Eric Liaw is a general partner at IVP, one of Silicon Valley's oldest and best-regarded firms. They’ve backed 400 companies, counting an astonishing 130 IPOs so far. Eric himself has led IVP’s investments over the past 13 years into companies like Datadog, GitHub, RobinHood, Klarna, MasterClass, Supercell, UiPath, WHOOP, and ZipRecruiter. He clearly knows what a category-defining company looks like and what it takes to build one. We gathered Giant’s portfolio CEOs for a breakfast masterclass with Liaw, and here we share some of his wisdom so you can learn from the great CEOs he has worked with.
Eric Liaw at our Giant portfolio event
How do great CEOs hire and build startup teams?
The old adage of ‘hire slow, fire fast’ still reigns true. “Fire people early,” says Liaw, “if your gut says it won't work, it won't”. You should hire ahead of where the company is, too. At the Series A stage, it is best to hire two years ahead, aiming for employees to scale with you. Some people will scale with the company, but be ready to act because many people can't scale and change at the pace required. “The train is going to go either way,” says Liaw, “it’s OK if someone comes on at one station, and leaves at another. Maybe they’re bored, maybe it’s a bad fit - that’s OK. You don’t need your first finance hire to IPO with you.”
Most people aren’t doubling or tripling their own capacities every single year, but they should be great at what they do. “When you’re a small team, you want each person to be truly excellent. When you are a 1000 person company not everyone will be excellent, but when there are eight excellent people and two that are ok, it feels demotivating.”
In terms of management, leadership is not a one size fits all, and how involved you are in decision making depends on the CEO - some CEOs delegate completely, and some might be aware of most things but not making the decision. There’s one thing that should be avoided, says Liaw, “You really have to avoid micromanaging”. You need to stamp out your micromanaging for the sake of the company as, after all “you can’t have a 1000 person company where the CEO is making every decision”.
Does culture matter in startups? (and what does “culture” really mean?)
Culture becomes especially important as you scale, or as Liaw puts it: “once the CEO doesn’t know everyone's name, you are truly relying on culture”.
The early phases of culture are founder-centric - and culture often begins by replicating the founder's lived experience. At UiPath, Liaw saw some cultural pillars naturally emerging from the founder's upbringing - a boldness, a sense of nothing to lose - both coming as a result of the founder leaving communist Romania.
At Supercell, where they were focused on building great games, failure was not considered something punitive, it was a necessity on the path to success. “When they [Supercell] killed a game they celebrated with champagne; they celebrated getting their time back. People can be worrying about mistakes more than pushing the boundary. You will make mistakes if you are pushing the boundary.” Here, celebrating failure was part of the culture.
But you should hire for the broad founder trait, not the exact replica, warns Liaw. For example, if you love adventuring up rivers - it might mean that ‘adventurous spirit’ ends up as a core cultural trait of your company, but you don’t need to hire carbon copies of yourself: you don’t want to build an entire culture of up river rowers. You might ask yourself: what do I bring to the company that’s difficult to replicate? There is one key cultural trait that Eric Liaw recommends that every company instils however: the spirit to “do something hard and go against the grain”.
What should CEOs consider when it comes to CEO succession?
CEO succession was once a normal topic to discuss, then it became taboo, and now people are back to talking about it again. The challenge for both sides in talking openly about succession is that venture investors are disproportionately investing in the CEOs themselves.
“We aren’t asset firms where we like the business, but we can fire the team. But, just like you’ve probably known for 1-6 months if you need to replace someone from the team, it’s true for leadership too,” says Liaw, “if you're supplementing gaps in a leadership team, it’s like putting ‘a band aid on a stab wound’. Sometimes the board needs to broach that conversation.
This is true for co-founders roles too. You may see their role scope narrow. In this case, sometimes it’s an invitation to see there is a better fit for their responsibilities. For example, an original co-founder could be a great co-founder but have no real interest in managing a team. Here you’ll need to change the role scope, advises Liaw, and then observe if performance comes back up again, “sometimes it doesn’t and sometimes it does”.
What is the difference between Europe and US tech ecosystem?
It’s now more exciting to invest in Europe than the US, says Liaw - who has moved from the US over to Europe. “In Europe, the desires and goals are now commensurate with the US”. The workplace challenge unique to European founders is the early fragmentation of offices - for example with mobility company Bolt - Americans meanwhile are struggling with the decision of whether to bring people into the office.
When it comes to investing, in a post-Covid world investors are now more intent on visiting companies’ HQ - whether they’re in Europe or US. “Before Covid, I would never invest in a company where I hadn’t gone to their HQ. In 2020, I had to bin that rule. But investors made some mistakes over Zoom, and I’m now back wanting to visit the office and get to know each other again.”
Getting to know investors should be a key priority for CEOs too. Founders should spend around 5-15% of their time on Investor Relations, says Liaw, but it will grow to 30-40%. “It’s part of every CEO’s job to manage risk and create opportunity. One risk is availability of capital. If investors are total strangers you will reduce the probability of success.”
To contact IVP head to their website, or connect with Eric Liaw on LinkedIn.