Good Leadership is a Prerequisite for Good Business (#1 of 8 Lessons from 8 Startups)

"Plaid Pants are Bad for Business"

I’ve recently been giving a presentation I titled “8 Lessons from 8 Startups.” It’s a history of 8 young companies where I’ve worked or founded, and give a story from each that led to a teachable moment. For the next couple of months, I’m going to follow up each of the 8 lessons with a blog post.

Startup One, KnowledgeSet Corp.

The first lesson came from my time at KnowledgeSet Corp in the late 1980’s. KnowledgeSet (KSC) was a pioneer in the early PC days, one of the first to put data on a CD-ROM, before CD readers were standard on PC’s or windowed operating systems were the interface to your computer. The company was founded by Gary Kildall and Tom Rolander. By many accounts, Gary was the the “father” of the PC operating system inventing CP/M, before Bill Gates. Gary founded Digital Research Inc. (DRI) and then KSC with Tom in the Pacific Grove region of California (Monterey). Tom Rolander was an Operating Systems guy and VP of Engineering. I remember that he was also a runner, an avid pilot (building his own bi-plane), and someone that said “if anything is worth doing, it’s worth doing to excess” (quoting Edwin Land, co-founder of Polaroid).

It was a company of about 15 geeks - and I mean that with every connotation of the term. We did very cool projects at KnowledgeSet - the Grolier Encyclopedia on CD, Boeing maintenance manuals on CD for Fedex, a joint venture with Sony Japan, the electronic help and doc system for the IBM RS6000, and got to innovate with Steve Jobs and NeXT. With PC’s now being able to access so much data (from the CD’s), we became expert in search and retrieval (KnowledgeSet Retrieval System, KRS).

When Silicon Valley became a thing, they decided to move the company from Monterey to Mountain View. That’s about when I joined them. We had the top floor of a 5-story building off Castro Street and did what you do in Silicon Valley - we snuck to the roof for smoothies and beers and enjoyed the awesome views of NASA’s Ames Research Center, watching P-3 Orions (sub hunter planes) come and go. Those were the days…

Parental Supervision

We did often work hard, but… there wasn’t much management presence in the company. Gary wasn’t involved in the day to day of KSC and Tom stayed in Monterey. Tom flew himself in about once a week. It was sometimes my job to pick him up at the San Jose Airport (it was still small, didn’t even have jetways) as I commuted from my home in San Jose to the office in Mt. View. So most of the time, there wasn’t a lot of parental supervision. We were a dysfunctional family of teenagers whose parents worked full time and were never home. (That’s an analogy, if it wasn’t obvious.) I do remember we had an office “mother,” Rosemarie, who did try to keep us in line, but was there as office manager, so mostly made sure we didn’t leave dirty dishes in the sink.

The lack of management was bad, but it was also a lack of leadership. There was no one to set a vision, manage the finances, inspire and motivate us to take the company somewhere. Tom ultimately realized this and brought in two leaders to work with us on the ground in headquarters. One was a part-time interim CEO for hire (i.e., consultant). I forget his name, but do remember that he’d come in a couple days each week after golfing, in polo shirt and plaid golf pants. He’d go into his office and close the door. Maybe that’s why I can’t remember his name. Dan? Phil? Something like that.

The other new leader was a VP of Engineering, hired out of the excitement and innovation at a young Hewlett Packard. Yes, HP was exciting and innovating then. I remember this guy’s name well, but for all the wrong reasons, so I won’t share it. (I checked, he’s still living.) First and foremost, we weren’t HP. His style was suitable for a larger organization, but not a scrappy and dysfunctional startup like ours. He had trouble understanding us. Second, he had trouble understanding our technology. Engineers (developers) were embarrassed to be in a room with technology partners and clients as he participated in discussions for which he was ill equipped, despite his PhD. Finally, he was comfortable to make inappropriate personal remarks. He was born and raised in an Arab country. In a 1:1 coaching meeting once, he shared with me that he grew up in a Jewish neighborhood, so he understood “people like me.” I suppose my Jewishness was obvious (as well as my New York upbringing) and that because he had Jewish friends, it gave him unique credentials to coach me (or someone “like” me). (Parenthetical management lesson here, there is never an appropriate use of the phrase, “people like you.”)

I didn’t last two years at KnowledgeSet. I was happy to get poached by another young tech company (giving me more stories for the next article). I have no regrets about KSC. It was my first startup experience. I learned a lot, made good friends, got to meet Steve Jobs and a whole cast of colorful characters. (There are so many more stories I could tell.) Most important, I got to build cool tech.

Lesson About Leadership

KnowledgeSet didn’t get much farther. It was a pioneer. We had the talent and the ingenuity, but a lack of leadership meant we never really had a business. The lesson I learned there is that good leadership is a prerequisite for a good business.

We can agree about the importance of leadership at bigger companies, but often I hear that younger companies should be scrappy, opportunistic, and even socialistic. The need for leadership is universal. Companies at any stage require a strong leader - to start, to grow, and to be successful.

The leader’s role in a business is to

  • set the vision and inspire others,

  • build and coach the team,

  • represent the company to the outside,

  • ensure financial health to all constituents.

You can see why doing this well is critical for success regardless of how young or small the company may be.

For smaller and younger companies, it's most effective for that leadership to be “in the trenches,” with sleeves rolled up and hands dirty. The risks for this business are greater, the team is less established, and the vision might not yet be as clear. You need an organization to be nimble, to respond quickly to assumptions not validated, benefit from consensus of others’ thoughts, and develop culture and processes where previously there were none.

I’ve learned that tech founders can be both a blessing and a curse. Can the company be led by its founder or by technologists (who are rumored to not always have the best “people skills”)? All I need to do is point you to the Steve’s Jobs Law, and look at him, Larry Ellison, Bill Gates, or Mark Zuckerberg, to see that founders and techies can certainly make good leaders. But that law isn’t quite universal.

It Isn't Easy

It’s not as easy as it sounds. At my most recent tech startup, IntroNet (#8), I fault some of our lack of success on my having missed the opportunity to be a better leader sooner. I had the experience and the skills, but still made mistakes. We secured the funding, I built a good team, and laid out clear plans - I did what I knew a leader should. But once the team was in place, I wasn’t hands-on enough. I was being the CEO and letting the team drive itself. Our challenge was that the vision was still being formed, the market was unproven, and we were learning too much too quickly to keep the plans intact. The team was new and I missed the depth of their struggles to work effectively together. When I should have been making everyone crazy having their leader in the trenches, I actually led from too far. I might as well had come in with plaid pants (but I don’t golf and didn't have a door). Thankfully, I was paying attention and did catch myself. I became a different kind of leader but not before we had wasted a few months of cash and shortened our “runway.”

As a coach today, I spend a lot of time helping develop the leadership, communication and business skills and capabilities of founding or technical leaders, expanding their comfort zone. It’s never too early to focus on strengthening leadership. If KnowledgeSet had someone leading the company, working in the trenches with a young team, helping to pioneer unproven markets, who knows the success it might have achieved. Good leadership needs to be in place day one, and then every day from there.

“Good leadership is a prerequisite for a good business” is the first in 8 Lessons from 8 Startups. I look forward to sharing more in a couple of weeks with stories from the next startup, Verity (#2), where I had my first experiences in management.


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