CHAPTER 9
Steve Reveals How the Revolution Kills Its Leaders First
There is a contradiction at the heart of entrepreneurship that I think every entrepreneur should understand at the outset: The skills and personality that enable a person to conceive and start a company are not necessarily the same skills that will enable that person to manage and institutionalize a maturing company.
As both brewers and distributors of other brewers’ beers, Tom and I had a ringside seat to watch the development of the microbrewing industry in the eastern United States in the 1990s. New York City has always been a harsh environment for microbrewers, and we have watched many well-financed start-ups fail for many different reasons. Nothing is more heartbreaking than watching a company go under because the founder is unable to develop and manage his or her business. As Tom would always say when he did presentations, usually to the media, about the Brooklyn Brewery, “When you are building a small business, you can be boasting about your accomplishments one day, and fighting for your life the next because there are literally hundreds of pitfalls out there that can sink you at any time.”
THE PIONEER (WITH THE ARROWS IN HIS BACK)
Matthew Reich, the founder of New Amsterdam Brewery, was one of the visionaries of the microbrewing business. He pioneered the idea of contract brewing—contracting with an existing brewery to produce a beer for you. He sold approximately 15,000 barrels of beer a year in 1987, the year Tom and I started our business. Since a microbrewer is defined as a brewer producing fewer than 15,000 barrels of beer a year, Reich had in five years graduated to becoming a regional brewer before we were even out of the gate.
It later appeared to us that Reich had built too grand a brewery in Manhattan, and indeed, Reich now says that the brewery he tried to build could never have made money because of the inherent costs of doing business in Manhattan. But according to Reich, it was not the brewery that did him in, but rather the success of the venture firm that backed his enterprise. He said the venture firm he used had hit the jackpot with one of its investments, making a half-billion dollars on a small investment in a railroad. Shortly after that, the firm closed its doors and refused to extend further financing to New Amsterdam. Saddled with debt that he could not service, Reich was ultimately forced to sell the company to pay the banks. This is not one of the problems that a successful business owner sees coming. Who could have ever anticipated that the success of the very venture firm that backed him would end up being the end of his business?
When Tom and I first started out in business, a reporter for Manhattan Inc., a local magazine, was writing a story about us. The reporter called me just before publication to say that she had asked Reich for a comment on our venture. His comment: “I hope they fall flat on their faces. They have stolen every idea I ever had.”
I don’t like the word stolen, but I have freely admitted to Reich that Tom and I certainly went to school on his project, and it had a tremendous impact on the way we ran our business and made some of our decisions. We contract brewed our first beers, and we set ourselves up as a limited partnership like Reich. Others went to school on New Amsterdam, too. The most successful of all the microbrewers, Jim Koch of Samuel Adams, agrees that it was Reich who pioneered the idea of contract brewing, which enabled Samuel Adams to attain its meteoric growth in the first 10 years of its business. The rule of thumb here is that if you are a business owner, you can be sure that people will go to school on your business, too—with a vengeance.
I think Reich’s problem with the venture firm was unusual. A more typical problem is exemplified by pioneers like Bill Newman of Albany Amber Beer and Nat Collins with his Woodstock Brewing Company in Kingston, New York. Tom and I were so impressed with Nat’s microbrew that we actually invested in his company in 1995. Nat is a former building contractor (and Olympic swimmer) who caught the microbrewing bug. He built his small brewery from the ground up and started making a great ale. Nat was a dynamo. He would get up in the morning, brew a batch of beer, harvest another batch in the afternoon, rack it into kegs, and deliver the beer to his customers in the afternoon and evening. He was builder, brewer, salesperson, distributor, and promoter—all packed into a burly, 5-foot, 8-inch frame. He always had a smile on his face and never had a bad word to say about anyone. I used to call Nat “Superman” when I introduced him at beer dinners in New York City in the mid-1990s.
THE ONE-MAN BAND
Nat exemplified the optimism and confidence that characterized the microbrewing business in the 1990s. We all were enjoying double-digit growth, and we all thought it was going to continue forever. People were drinking less beer, it was true, but they were drinking better beer, like the beer Woodstock Brewing Company and Brooklyn Brewery were producing. It was a euphoric time. It seemed that every day we heard of a new brewery starting up somewhere in the country. We all thought we had the big guys on the run.
Only later, when Nat partnered with a local businessman and his brand began to wane, could I reflect on what had happened. I think Nat’s problem was that he had never been able to raise the capital necessary to bring more people into his business. One man or woman can’t do everything alone. The beer business is about quality, which Nat’s brewery clearly had, but it also is about volume. One person can only reach a certain number of customers. I don’t know what that number is ... maybe it is 100. But 50 customers will not sustain a brewery. You need 2, 3, or even 10 times that to cover the expenses of a 25-barrel brewery like Nat’s, pay your bills, and try to make a little money for yourself. Ultimately, there are many cases demonstrating that, 9 times out of 10, you can’t do it all by yourself and expect to grow.
Milton Glaser, our designer, impressed me because he told us at the outset that he would personally be designing every bit of material his company created for us. Milton works with a small staff of fewer than 10 people. At any given time, he has dozens of projects under way for all levels and styles of markets and businesses. His company is named Milton Glaser Inc., which sounds like a real corporate sort of business, in the way that Martha Stewart Omnimedia does. With his success, he could easily expand his office and increase the number of employees, so I once asked him how he had settled on the size of his company.
“Years ago, I thought I wanted to build an empire,” he said. “I wanted a big office with lots of designers. But when I had the big office and all the designers, I realized that I was no longer involved in the creation of the work, which is what I love. I was more like the director of personnel. I decided to scale things back and find a size that would enable me to be involved in every project.”
That decision has made Milton a successful, and happy, businessman.
Nat Collins seemed to want to have his hand in every aspect of Woodstock Brewing Company. But he never developed the organization. Microbreweries do not have to keep growing forever, but like any business, they need to achieve a certain size to make money. For example, David Geary, of DL Geary Brewing Company in Portland, Maine, has maintained his volume at around 20,000 barrels for years and managed to keep his business going. Geary’s success seems to rely heavily on the loyalty of customers in his home market.
The Brooklyn Brewery started in a position similar to that of Nat Collins and Woodstock Brewing Company. We contracted with the Matt Brewing Company to make our beer, but we sold every bottle ourselves in the beginning. We were five people at the outset, and there was no training program for us to go through, no “beer school.” We just told our guys to get out there and sell the beer to whomever would buy it. We sold and promoted and solved problems all day long. If a customer had a problem with a foamy keg, we took our tool kit and tried to adjust the draft beer system. If a customer forgot to order for a weekend, we put a keg in our car and made the delivery—no matter what day it was. When one of our drivers got hurt in a car accident, I took over his route for almost three months, delivering our beer all over Brooklyn.
In Thomas Wolfe’s story “Only the Dead Know Brooklyn,” there is a line that people are fond of quoting: “It would take a guy a lifetime to get to know Brooklyn, and when he did, he’d be dead.” I think I disproved that theory in those three months, delivering our product to every reach of Brooklyn. Nevertheless, entrepreneurship will kill you if you let it.
Tom and I have participated in every aspect of the business, from brewing and delivery to sales and managing cash flow. We have grown our business by hiring additional employees and allowing them to do their jobs. We have learned that we cannot micromanage all our employees. At night, we did T-shirt giveaway promotions in smoky bars. During the day, we put on suits and did beer dinners in fancy restaurants. We did co-promotion events such as running the Brooklyn Lager Bandsearch and the Beer Festival under the Brooklyn Bridge. And with our hands in so many pots, our direct involvement in selling the product—whether to customers, media, or the community—has always been integral. No one could sell Brooklyn Lager like Tom or I could, so in theory at least, one of us had to be involved in every sale along the way.
HIGH ANXIETY AND A FORCED LESSON
Our company hit a financial low point in 1991. We were really struggling to sell enough beer to pay our bills. We went without pay for two months. We made it a point to pay our employees, but we did not pay ourselves. Both of us dug some holes of debt at that time that would haunt us for many years to come. That same year, my former employer, Newsday, asked me to come back to the paper to work on the first Gulf War. Tom and I discussed this option—taking our financial situation into account—and we reluctantly agreed it was the right thing to do.
Delegating Authority
When I returned to Newsday, I was working a shift that started at 4 P.M., so I was able to be at the brewery most mornings, but I could no longer handle many of the important customers I had personally dealt with from the beginning. Problems instantly arose as my favorite customers, people who were used to personal service from a cofounder of the company, discovered they could no longer get the individual attention I had given them before 1991. And the result was that they cut back on their orders. Unfortunately, these customers also refused to do the in-store promotions they had done with me and Tom since 1988. When I went to see them about this, they accused Brooklyn Brewery of betraying them after they had helped us to build our brand. They felt neglected, and they acted on that feeling. It got messy. But unlike in prior years, I now had a full-time job to tend to in order to bring home a paycheck, and this job started at 4 P.M. every day. The reality was that I just had to walk away at a certain point and trust my new employees to deal with our disgruntled customers. We would try to give them the same attention we’d always offered; it would just be coming from a new member of our brewery family. The transition, therefore, was somewhat complicated but necessary.
In retrospect, this was probably a good thing. It helped me understand that if Brooklyn Brewery was going to grow, I had to learn to work through and leverage its salespeople. I could not personally handle every account forever, and neither could Tom. We lost sales in my favorite accounts because it was difficult to win them back, but we gained overall because two salespeople can cover twice the territory of one. From this particular growth experience I learned to step back and look at the bigger picture no matter how much I initially tried to grapple with the changes.
Help Getting the Word Out
Our experience in the marketing arena was similar. Until 1991, I personally managed all the marketing we were doing. But that year, Tom had to run the Brooklyn Lager Bandsearch and handle contacts with the media that I could not field from my desk at Newsday.
It is difficult for entrepreneurs to accept the realization that they might someday no longer be vital to the success of their own companies, but it is a reality that all entrepreneurs should work to create.
When I returned to the company full-time in 1992, after a year of multitasking, I had a different view of my role at the Brooklyn Brewery. I was very self-consciously trying to mentor and work through the company salespeople rather than rushing out of the office to solve every problem on my own. This gave me more time to devote to setting up and presenting beer dinners and tastings, among other things. Ultimately, this use of my time was much more satisfying and productive.
I did a beer dinner every couple of weeks for the next two years, and I became quite proud of my presentations over that time. I was able to keep a dining room full of people, usually 50 to 100, entertained for the two hours or so it took to present a five-course meal with seven beers. I began to hone my speaking skills at these productions. I started to recognize which lines would get a laugh, and I sharpened my presentation. One of our salespeople, Jim Munson, went to school on my dinners—taking note of style, content, and what worked—and soon began scheduling his own presentations.
Munson was a graduate of Williams College, an English major like Tom and me, and he quickly developed a very entertaining style of presenting beers and beer dinners. I felt some pangs of jealousy as I watched him doing solid productions at fancy New York City restaurants. But I knew in my mind that this was a good thing because it meant we could reach twice as many people.
Becoming a True Manager
In the business world, the entrepreneur and manager roles are analogous to those of reporter and editor in the journalism world. A reporter is out there digging for stories, which are the lifeblood—and the fun part—of journalism. Some good reporters go on to become good editors, but many do not. A good editor doesn’t just deal with content but battles with other editors to get his or her reporters’ work into the paper. A good editor must be willing to nurture reporters to enable them to go out and get great stories. But the stories appear under the bylines of the reporters, not the editor, so the reporters get the glory. Some reporters who become editors never let go of that desire for glory. They never give their reporters everything they have; consequently, the reporters who work for them never develop as fully as they might.
For a period of about six years, from 1988 to 1994, I had been the primary public face of the brewery. But it was clear that we were going to need more than one face if we were to spread our story more widely, especially by word of mouth. When looking for someone to help get the word out, Munson was my first disciple. I overcame my jealousy that he was mirroring my presentations out of my belief that the Brooklyn Brewery needed Munson to help it expand. In effect, we needed all the Munsons we could find. Interestingly, some of the other senior managers also became jealous of Munson because they saw him slowly assuming the role that, up to then, only I had played. When I noticed this response, I told them that Brooklyn Brewery needed “all the stars it could find” and that they could be stars, too.
The next breakthrough on my journey from entrepreneur to manager came when Tom and I hired Garrett Oliver to be our brewmaster in 1994. The first time we met, I recognized Oliver as a very strong-minded, flamboyant man (see Chapter 2). He has been a student, lover, and champion of beer for many years, and has visited most of the classic breweries of Britain, Belgium, and Germany. Once we hired him, he quickly became one of those stars I had hoped for. And I immediately realized—perhaps because of my experiences with Munson and similar talented individuals—that I would have to further curb my ego to accommodate him.
Making Room for the Brewmaster
Garrett’s talents became very apparent to me at the Great American Beer Festival in Denver in 1994. An independent filmmaker was doing interviews with all the pioneers of the current microbrewing movement at the festival. During his round of interviews, he asked Oliver and me if we would sit for an oncamera discussion and talk about our company and our beers. As the camera started rolling, I began to tell the story of how Tom and I had started the Brooklyn Brewery, but within minutes Oliver elegantly took over the show. Although Tom and I had originally developed the recipe for Brooklyn Lager, and Brooklyn Brown Ale had been based on my early homebrewing recipes, Oliver spoke with proprietary passion about both beers. In the months after joining the Brooklyn Brewery, he had tweaked the recipes of both these beers, making them his own. During the interview, I was very impressed by his presentation of our product and as a spokesperson for our brand. The camera was clearly drawn to him. If I could have disappeared, I would have. To this day, I defy anyone to try to get between Garrett Oliver and a rolling camera.
It was clear to me from that moment that Oliver was much better at talking to that camera than I was. His opening line was lifted from the John Belushi/Dan Aykroyd movie The Blues Brothers: He claimed to be “on a mission from God.” He spoke eloquently of the mysteries of yeast, malted barley, and hops. Later, when he gave tours of the brewery, he plunged his hands into the grain and shoved it into the faces of his audience. He vigorously crushed the hop flowers between his hands and urged his listeners to smell their flowery aroma. He grabbed their attention. He wanted them to smell and taste and feel the beauty of the simple, sensuous ingredients that go into beer.
Soon after he joined the company, I urged Oliver to collaborate with Timothy Harper, a former AP national writer, on a book about beer. They published The Good Beer Book (Berkley Books) in 1997, and it established Oliver as a beer authority. Soon the New York Times was calling him “one of America’s foremost authorities on beer.” Because of his genuine passion, he has won equally genuine attention. In 2003, Oliver published his second book, The Brewmaster’s Table, which firmly cemented his position as an authority on beer. I am pleased to say that from day one he has always highlighted his role as brewmaster of the Brooklyn Brewery. In addition to his books and interviews, he has appeared on Emeril Live and Martha Stewart Living, and on NBC with Al Roker.
Our brewery in Brooklyn must be one of the most photographed in the world because of its accessible location in a city of millions. There are camera crews at the Brooklyn Brewery in Williamsburg virtually every week of the year. This offers the perfect forum for all of us to talk to the media about our business, whether we are discussing our products, special events, or our many community-based initiatives. Oliver’s personality has translated well to the media, and he now routinely speaks at beer festivals and all manner of events around the world.
As for me, I still get my share of attention from the media. Tom and I are the founders of the Brooklyn Brewery, and no one can take that fact away from us. But nowadays, I tend to pass most of the television appearances on to Garrett Oliver because I know he is the best at presenting our company on camera.
About the same time, I also ceded the day-to-day management of sales for the Brooklyn Brewery to Jim Munson, who ran the overall sales for the distributorship, and Mike Vitale, one of our three original employees, who ran the overall sales for the brewery. (These were always two distinct roles. The distributorship sold all the beers we distributed; the smaller brewery sales force focused on the sales of Brooklyn Brewery products.) Tom divided the managerial aspects between us. Munson reported directly to Tom, and Mike to me. Ed Ravn, second of our three original employees, was responsible for all out-of-state sales, and he also reported to me. Among the five of us and our sales representatives, the number of whom shrank and grew throughout the years, we had selling covered.
PROMISES, PROMISES
The development of a sales department with real managers who wield real power over a team and assume responsibility for profit and loss is a key indicator of whether a company has made the transition from entrepreneurship to successfully managed enterprise. Over the years, I learned the aspects of this transition from watching the sales operations of breweries that we represented. More than a few of the breweries whose products we helped to distribute were constantly turning over their sales managers. It seemed that the founders would come to our Craft Brewers Guild sales meeting three or four times a year to introduce new sales managers as the primary contact for their companies. You could almost see our salespeople trying not to roll their eyes when the rookie sales managers, most of whom lived outside the city, appeared before them and pledged to work five days a month in the New York City market in order to support our sales efforts.
As I have noted, New York City is a cold place to sell beer—to sell anything, for that matter. The customers who buy our beer to sell to consumers are very busy people, with their own supermarkets, restaurants, and bars to run, and they don’t have much time to spend with salespeople. They are tough and abrasive. One of the lessons we learned right away is that some owners, buyers, and managers even seem to take pleasure in tormenting salespeople. These people deal with a demanding public every day of the week, and thus take their own doses of abuse. A salesperson who walks through the door is an easy target for an exasperated owner, buyer, or manager who has been taking it all day and now has a chance to dish it out. There are dozens, even hundreds, of beer brands that get sold to these buyers every year. In their fast-paced environment, who has time to listen to all the sales pitches?
Truck drivers are often treated even worse. I know this from personal experience. Once, I was delivering beer to a deli in Brooklyn Heights. I pulled up right at noon, when there was a line of customers at the cash register. I signaled to the owner that I had her Brooklyn Beer delivery. She said, “Okay, go ahead.” I opened the metal trapdoors to the basement, piled my cases on the sidewalk, and started walking them down the steps into the storage area. After the first load, I walked up the steps and felt a slap on the side of my head. “Don’t open doors,” the owner scolded. “Don’t open doors.” After berating me, she forced me to take the beer back out of the basement and wait until she had checked out her lunch crowd before I could make my delivery. And this is only one of many incidents I could recount.
So when a fresh-faced sales manager blows in from the suburbs or from Vermont and commits to being in the market one day a week, or one day a month, no one who has actually worked in this region is impressed. That sales manager will either prove himself or herself in the coming weeks or fail. Some of the breweries we represented went through six or more sales managers. Looking back, you could predict the success or failure of the company by evaluating the performance of the sales representation they put in the market. Developing a disciplined sales force that does what it says it will do is essential to the success of a brewery. We required our salespeople to make 20 to 25 calls per day, including three cold calls, on new customers, and report on the results. And we constantly told them that if they couldn’t deliver on a promise, they shouldn’t make it.
SO WHAT DO I DO BESIDES MANAGE?
So what is my biggest role today, you ask? Well, today I deal directly with the general manager of the brewery, Eric Ottaway, and the sales manager, Robin Ottaway, on a daily basis. Eric schedules meetings of our operating committee about every two weeks. The operating committee includes Eric, Robin, and me; our brewmaster, Garrett Oliver; the controller, Debra Bascome; and our VP for sales, Mike Vitale. At these meetings, we exchange information about what we are doing and discuss any pressing issues that have arisen in the previous weeks.
In general, I try to stay out of the day-to-day workings of the administrative and operations side of things, including the sales organization. In other words, I try not to micromanage the company’s distinct parts and trust our employees to do their own jobs. I have lunch with Oliver every week or so, and I look at Debra Bascome’s tax filings. Bascome also gives me weekly reports about our cash position and monthly reports on our profit and loss and expenses, by department. I look at the big picture and oversee the financial flow and sense of the company’s work.
I do try to get out into the market with at least one of our brewery salespeople or a sales manager from the distributor once a week. I also visit some key customers every week or so to ask how our distributor is doing and get feedback about our beers and our marketing efforts. When I go into the market and stop over with customers, I try to stay out of their day-to-day issues. I do not make any deals with the customers I’m visiting unless I clear it with the salesperson for that area first. When I make my rounds, I find that customers appreciate having direct contact with the president and founder of the company. Many remember when I was selling them the beer myself and delivering it to their doorstep from the back of my own truck.
The only area that I continue to micromanage is marketing. Brooklyn Brewery is a fairly high-profile company for its size, and we get pitched by ad firms, public relations firms, and marketing firms on a daily basis. Because we have been effective at guerrilla marketing, I have never entrusted our marketing to anyone else. Milton Glaser (who developed our logo) and Tom and I have written every slogan we have ever had. Milton alone has done all the artwork for us. Looking back on our marketing tactics of the past 15 years, I think we have made a pretty good team, one that is constantly pushing the envelope. Conversely, all the material we have seen from outside ad firms smelled too much like traditional advertising. I believe that advertising can be effective, but I don’t think that traditional advertising is an area where Brooklyn Brewery can shine. It seems to me that if Brooklyn Brewery is spending X on advertising, and Samuel Adams is spending 10X, and Budweiser is spending 1,000X, then Brooklyn Brewery looks like a speck on Budweiser’s behind. Why play in that game? Traditional advertising just won’t win us the attention we deserve against the dollars of the big competitors.
Recent Innovations
In 2005, we embarked on the first consumer-focused program we have ever done: the Brooklyn Vacation, the purpose of which is to expand our presence in supermarkets and stores. Supermarkets like promotions that offer prizes to their customers, and they guarantee that we will have displays in all their stores. This gets us into stores that have not carried our beer before. Maybe someday, Milton and I will run out of ideas and then we may have to farm out the marketing to innovative ad firms, but until that day we continue to churn out our own successful programs, continually creating new markets for our products.
LESSON NINE 
HIRING AND FIRING
In his book Jack: Straight from the Gut (Warner Books, 2001), well-known CEO Jack Welch, of General Electric, recommends that the bottom 10 percent of any organization be fired every year to keep people on their toes and bring in new blood. I doubt that Welch insisted on an exact number of firings, but after reading about it, I thought there might be something to this rule of thumb.
In the early days of the Brooklyn Brewery, we rarely fired anyone. We were too busy selling beer and solving problems to worry much about the intricacies of personnel. Some people left the company because they clearly did not want to work as hard as we did. We also let some people go when they were caught stealing from the company. In most cases, stealing and driving while intoxicated were the only two infractions that led to summary dismissal. In other cases, we let some drivers and salespeople go because they mistreated our customers, and there were also a few times when we had to let people go because we did not have the money to pay them.
Of course, no one in our company liked firing people. But once the company reached a certain size—about 30 employees—we began to let people go on a fairly regular basis. With the growth of the company, we established annual performance reviews (discussed in Chapter 5), and these reviews inevitably began to show that some people were not living up to expectations in their position. I know this sounds harsh, but after a dozen or so years of leading a company, I became much more confident about firing people because I knew that, in many cases, you are doing someone a favor when you let them go.
The other side of this coin is the problem of attracting too many overqualified people because of the allure of the product we are making and selling. All in all, we have had a fairly stable cadre of senior managers. It occasionally becomes clear that a middle-level manager has reached as high a level as he or she can in the company. When this happens, the employee can develop a simmering resentment toward the senior staff and might become alienated from the social life of the company, necessitating some heart-to-heart talks. My only regret about many past firings is that I did not give those employees the attention they needed earlier, possibly saving them some unnecessary grief.
In such cases, we often did not fire people outright. In the course of discussions with these employees, the reality of the situation would surface and we would ask them to resign, assuring them that we would give them good recommendations for the future. Without exception, these employees took our offer and went on to good jobs. In some instances, they even started their own companies.
At our high point, we had about 100 employees between New York and Boston. Even for a company of this size, Welch’s 10 percent rule is still an important idea. When considering performance, employees at any company should prove that they deserve to work there and be evaluated at regular intervals to determine whether they are living up to the manager’s expectations of their position. Most important, the company should be a fulfilling experience for the employees. If this is not the case, they are better off somewhere else. Employee job satisfaction adds to the growth of the company and in turn creates more opportunities for employees. The relationship between employer and employees is symbiotic and should be reviewed regularly because the health of this relationship is a major determinant of the success of a company.
TOM WEIGHS IN
Let me admit it up front: I’m no Jack Welch. I don’t have his amazing record of success, I haven’t created billions of dollars of shareholder value, and I’ll never run the largest corporation in the world. I’m not as dynamic as he is and not as smart. So why listen to me rather than him? Well, you’re probably no Jack Welch, either. Maybe you’re more like me.
Everyone who starts a company for the first time wrestles with internal demons. Like a brand-new teacher in front of a classroom, you struggle with how you see yourself and how others see you. You wonder: Is anyone paying attention to me? Do they respect me? Or are they giggling at me? You reach out mentally to role models, stealing bits and pieces from people you admire until you can develop your own management style and skills that are effective for you. Depending on your personality and the skills you start with, Jack Welch might not be the right role model.
Leaving the corporate world and starting a company stripped me of all exterior management support. There were no policies at the Brooklyn Brewery until Steve and I created them. There was no financial system, no back office, no sales programming, no nothing; and in creating them, we created ourselves as managers. It is an entirely different process and a more personally revealing one than becoming a manager at an existing company. Some things about myself I learned quickly; some things only over time.
I found out that my first instincts were often wrong. Like a new teacher, perhaps, I did not appreciate the importance of daily discipline. I thought that if I worked very hard myself and set as high an example as I could, I was being a good manager. Wrong. What the company needed was more structure and less sloppy love. Over time, Steve and I grasped that providing discipline actually helped us create the positive work environment we wanted.
At first I also thought I could do anything and everything. For instance, I created all of our original office procedures and set up, programmed, and ran our first three automated accounting packages. Even when our company grew larger and more complex, I didn’t want to waste money on hiring a real controller or chief financial officer because I thought I could do it better than anyone we would hire. In a backward way I proved myself right: I was making the mistake of being so cheap that we kept hiring people who didn’t have the skills to do a great job. We’d call the person a “controller,” but I kept thinking of him or her as just assisting me. Naturally, we kept being frustrated and disappointed. We kept getting lousy financials until we finally hired a real professional. I learned.
I eventually figured out that as a manager I could do anything, but I couldn’t do everything. Not well enough. And I also learned that working hard and setting a good example are necessary but not nearly sufficient. Without an environment of smart discipline, a good example means little.
I hate firing people. I always have and always will. I don′t think I’d want to work at a company where a certain percentage of people are routinely fired, and I don’t want to run a company that way. That’s not the kind of motivation I want to build a culture around. So I’m no Jack Welch. I most admire CEOs like the former Procter & Gamble chief John Pepper, a legendary nice guy who was also able to make smart and tough decisions. That style better suits my own personality (or at least the way I’d like to see myself). Sometimes my own managers criticized me for being too nice, and there was some truth in it, but I believe you’ve got to be true to yourself. I found a way to make it work, eventually.
I have learned the hard way that avoiding or delaying firing someone inevitably makes everything worse for the individual and for the company. Often I felt guilty because I found myself firing people for reasons that were more my fault than theirs—or that were no one’s fault. Perhaps I had approved their hiring even though they weren’t really suited for the job. Or they were given a job that was poorly defined or poorly supported. Or the company had just moved on, passing their skill set by and leaving them awkwardly out of place. No matter the circumstances, and even if the ultimate fault was my own, the good of the company still required fast action. That was a tough lesson. I think Steve grasped it much earlier than I did.
Our Grade: Steve and I each had a lot to learn as managers. I initially thought I would be a natural but instead found myself on a long learning curve. As Steve noted, an entrepreneur’s take-charge skills might not be those suited for running a mature corporation where intelligent delegation is key. And the reverse is also true. I found that management skills I had initially learned in business school and in a corporate setting didn’t always translate in a start-up situation. Both Steve and I took some self-inflicted wounds, but we survived and adapted. I give us both a B for honorable hard work and improvement.
