Defining values and making tradeoffs in business, Chris Moody, Investor, Foundry Group
Startup Victoria’s Growth Club gives scaleup founders access to real world experience on building a high-growth business, from successful founders, technology executives and investors.
This August, Growth Club had the pleasure of hosting Chris Moody, partner at Foundry Group investment firm. Chris has been the CEO of Gnip, the world’s largest provider of social data, and became GM/VP of Data & Enterprise at Twitter after they acquired Gnip in 2014.
Chris is the VC who doesn’t really love venture capital — the first three episodes on his new Youtube channel list the reasons founders shouldn’t take funding.
Chris’s favourite thing is to visit companies and help people grow their businesses, and so he travels the States, sharing knowledge from 27 year building businesses.
This Growth Club, he talks about how founders can approach tough decisions, and how a strong set of values helps inform those decisions, to help you get the most out of your team, scale your business, and develop a brand that people can connect with.
Every decision is a tradeoff
A decision, Chris says, is a trade off where a founder chooses what they’re willing to sacrifice, rather than choosing a particular outcome that’s either good or bad, wrong or right.
Tough decisions are one of the things that defines an entrepreneur and a business. Many founders, for this reason, take on much of the burden of decisions within their business.
This becomes increasingly untenable as a company grows, as the business becomes more complex, and a founder becomes increasingly removed from some aspects of the business.
Instead, leaders need to train their team how to make great decisions, which happens most effectively in companies with strong values where its people are hired on the basis of those shared values.
A strong set of values doesn’t change with time. Meaningful values are divisive, in that not everyone will align with them. Values define how everyone in your team treats one another and how they treat your customers.
In fact, Chris says that this may be the most important thing in building a successful company.
When you have a strong set of company values, they inform how you lead, market and scale.
Passing off decisions can be challenging, but having a strong set of values in place enables a founder to feel confident in the decisions of their team.
Empower your team to make decisions
It’s important for founders to empower their people to make decisions.
Great leaders are servant leaders, Chris says, who hire people smarter than they are and give them the autonomy they need to do their best work.
“One of the most powerful statements you can make is: I trust you to make this decision,” Chris says.
It can be helpful to remember that the people working closest to a problem have better data and can understand the tradeoffs better than the founder.
Resist the urge to make a decision when people come to you with a problem in these cases.
It’s much better to tell people what you want to see from a decision, and let them make the final call themself. This trains your team to make decisions how you would in that situation, and means that you’ll have to be less involved in this kind of decision in the future.
It’s also important to let people know that responsibility for the outcomes of a decision are shared by the team, not them alone.
Supporting your staff in this way means they’ll feel less ‘at fault’ when things don’t go according to plan. Problems will be addressed more quickly after they arise and that person won’t have lost their confidence by the next time it falls on them to make a decision.
Sometimes the wrong decision will be made and you will always have the power to shift course when it’s necessary.
“As the CEO you’re the only person who can pull the lever and stop the train,” Chris says, but urges leaders to remember, “it takes a long time to restart the train … use the lever lightly.”
Choose how you scale your business
Understanding tradeoffs is important when it comes to scaling a global business.
The main choices for founders are between a centralised and decentralised model.
A centralised model can be very tempting for many, though it’s much more expensive. The head office maintains control through processes, and has more say over how the business develops in a new market.
A decentralised model, on the other hand, is directed by a market leader with more power to make decisions based on the needs of that market, making it more agile.
In either case, choosing the right market manager is incredibly important. When they’re making fewer decisions — as in the centralised model — their leadership will still determine how well the team performs.
Again, your people are your most expensive and important asset, and Chris stresses the need to find the right people for these management roles.
Hiring based on values is important here, as is the decision to replace someone if they aren’t the right fit, even for hires that come with impressive credentials.
“People aren’t binaries,” Chris says, and points out that any person, no matter their past achievements, won’t perform at their peak unless the conditions for their performance are right.
A great hire makes an impact immediately, so don’t make excuses and don’t wait if you feel like you’ve made the wrong decision. This may mean going through another long hiring process, more money and more time, but it’s a tradeoff. The cost of acting slowly can be far greater.
Define your brand values
Values influence how the people within your business operate and relate to one another, but they also engage customers with your brand.
According to Chirs, you can only tell people about what you do once or twice, but you can tell them what you believe endlessly.
Talking about your purpose helps build a strong value proposition that people can identify with and reminds everyone within your team why you do what you do, acting like a source of energy that drives the machine, and makes your people want to do their best work.
Ask yourself what you believe and what your company stands for.
There are always going to be tradeoffs when defining your brand. This is the reason a luxury brand like Apple doesn’t make a cheap computer.
The best companies with the strongest brands understand the tradeoff, and create more authentic, self-actualised brands.
Once you know your brand’s values and what you believe in, Chris says, it’s only a matter of finding other believers.