‘I’ vs ‘You’ When Giving Advice

Back in 2008 I had the opportunity to join Entrepreneurs’ Organization (EO) and go through a day long program called Forum Training with the excellent Ellie Byrd. In addition to meeting a number of great people, the most valuable education to me was learning about the Gestalt Protocol.

The Gestalt Protocol, in it’s simplest form, says to share personal experiences for the purpose of giving advice only using ‘I’ and never ‘You.’ Most often, when people give personal advice based on their experiences, it’s in the form of “You should do X because that’s what worked for me.” Instead, remove the use of ‘You” and reword it with ‘I’ so that it’s like “I did X and here’s what I learned.”

When giving advice, especially from a person that’s in a position of power or more experience, it’s too easy to start telling the other person how to do things, even while they lack the details and context of the situation, beyond what they’ve been told. In addition, when receiving the advice, it becomes less valuable when the advice comes across as directives without the corresponding experience and learnings behind it.

By following the Gestalt Protocol and using ‘I’ instead of ‘You’ when giving advice, it becomes more about experience sharing and letting the other person understand what did, and didn’t work, from a similar situation in the past, without passing judgement on the specifics of the current scenario. Personal experiences, delivered via the use of ‘I’ make for much better sharing and mentoring.

Mentors would do well to follow the Gestalt Protocol and focus on sharing personal experiences.

The Struggling Executive Who’s Really a Manager

One of the more common conversations I’ve had with entrepreneurs scaling their startup goes something like this:

Me: How are things going?

Entrepreneur: We’re having a hard time with leader X?

Me: Why’s that?

Entrepreneur: It feels like he’s always reactive.

Me: What do you mean?

Entrepreneur: Well, we keep having issues in his department and it feels like they’re things that shouldn’t be issues.

Me: What should he be doing?

Entrepreneur: He should be proactively spotting things that could be potential issues and addressing them so that they they’re non-events.

Me: Sounds like the struggling executive is really a manager, not an executive.

I’ve had this conversation with entrepreneurs numerous times and it’s always the same issue: a person was put in an executive position and they aren’t really an executive, they’re a manager.

Managers see short-term, right in front of them, and are often reactive.

Executives see long-term, around corners, and are proactive.

Managers bring problems forward.

Executives bring solutions forward.

Now, not all managers are like this and not all executives are like this, but the key difference between and a manager and an executive is the ability to see further out into the future and proactively get things done.

The next time you’re having an issue with a leader, ask the key question: are they a manager or an executive?

Why the Lack of a Strategic Plan?

When meeting with entrepreneurs I like to ask to see their strategic plan. Many times, I require seeing a simple strategic plan as a prerequisite before meeting so as to have a more informed conversation. Only, the vast majority of the time, no strategic plan exists, simple or otherwise. Then, when a strategic plan is present, and we go through several of the items, it becomes clear that it’s out of date and/or not remotely achievable. What gives?

I hearken back to the early days of my first startups and realize I never had a strategic plan. My strategic plan was Herb Kelleher’s famous quote:

We have a strategic plan. It’s called doing things.

While that worked well for me with a tiny team and few moving parts, as team and complexity grew, I needed a way to align everyone around a common, high-level focus. Enter the strategic plan.

Now, I believe, even with limited people and resources, a strategic plan is worthwhile. As a tool to communicate with employees, advisors, mentors, and investors, it’s invaluable.

One of the reasons so few entrepreneurs spend time on a strategic plan is the belief that it’s time consuming and difficult. From my experience, the simpler, more concise, the better. Here’s a simple guide for a basic strategic plan:

  • What do you do? Why?
  • Who do you serve? Why?
  • What are the measurable goals? Current values? Target values?
  • What are the priorities? Who owns them?

https://twitter.com/davidcummings/status/1134546561730584576

More complicated strategic plans are less likely to be updated and maintained, rendering them nearly useless. Finding a balance that has enough value but isn’t cumbersome is key.

Entrepreneurs should build, regularly update, and share their strategic plans. Keep it simple. Keep it accurate. Keep it worthwhile. Strategic plans are a valuable tool every entrepreneur should employ.

Statute of Limitations on Experience

Last week I was talking to an entrepreneur and she started asking me questions about recruiting best practices. How do I recruit engineers? Where do I find them? How do I build a high performance engineering culture? All great questions, but is my personal experience out of date?

This prompted me to think about the role of experience, more specifically recency of experience, in helping entrepreneurs. When an entrepreneur asks me for help, it’s most likely due to the success of Pardot. Only, Pardot was nearly seven years ago.

Since we sold Pardot, I’ve started several more startups but never got to product/market fit, making it feel like there wasn’t as much experience gained. Now, the investing and co-founding side has proved more successful than expected, but I’m a layer removed from the front line decision-making.

When does advice become stale?

When does the statute of limitations for experience occur?

Some of my recommendations should be timeless. Build regular simplified strategic plans. Be the best place to work and the best place to be a customer. Develop a meeting rhythm. Culture is the only sustainable competitive advantage completely in control of the entrepreneur.

Yet, my more specialized knowledge is dated. SEO? Marketing automation? DevOps? Agile? UI/UX? Recruiting? I’m feeling stale on a number of things that were stronger a few years back.

Now, my approach is to focus advice on high level startup and leadership strategies, and away from specific tactical things we employed at Pardot. Today, it’s more sharing personal experiences, mental frameworks, and startup strategies leaving tactical items to other practitioners with fresher knowledge.

General experience is invaluable, tactical best practices age over time.

Mind the Valuation Gap

Recently I was talking to an entrepreneur that’s raising a round and the topic of valuation came up. Valuation is always a sensitive issue. Entrepreneurs, rightly so, figure they should get the highest valuation possible. Investors, on the other side, want the lowest valuation possible that still wins the deal. Only, we’re in unusual times with valuations at or near their all-time highs (excluding the dot com days, of course).

Entrepreneurs need to mind the valuation gap.

The valuation gap is the delta between what the public market multiples currently support and the valuation private investors are willing to invest. For example, if super high growth SaaS companies trade at 8x run-rate on the public markets, and an entrepreneur raises money from an investor at 12x run-rate, there’s a 50% valuation gap.

Assuming superb execution, the startup will grow into the valuation and skip over the gap. For entrepreneurs, the risk is raising at too high a valuation and not growing into it. One of the worst possible outcomes for a venture-backed startup on the fundraising treadmill is to have a down round. Startups are essentially broken when they raise a new round of funding at a valuation lower than their last round.

The strategy for entrepreneurs: find a balance between the best valuation possible and the best valuation that ensures a strong likelihood of a higher valuation in the next round. There’s no right or wrong answer, but there’s often an answer that makes it easier to sleep well at night — find that one.

When the Opportunity is Bigger Than Expected

Three years into Pardot we were humming along and had just cracked the $1M annual recurring revenue milestone. Customers were loving the product and saying things like, “I don’t how I did my job before using Pardot” — a great sign we had a must-have product, not a nice-to-have. After listening to customers talk about the value they received, internally we started debating raising the price to match the value.

Then, of course, worries emerged:

  • Would prospects pay the higher price?
  • Would sales cycles lengthen?
  • Would sales velocity slow down?

And, naturally, the sales reps didn’t like the idea because they feared they’d make less money.

After getting internal feedback and input we made the call and doubled prices. What happened next was unexpected: sales and revenue grew even faster than planned.

At that point, it dawned on me the opportunity was bigger than expected.

Marketing automation was a billion dollar market in the making.

We were at the right place, at the right time, with the right team.

But, honestly, at the start of Pardot we thought it was a decent idea but didn’t know if it was good or great.

We didn’t know if the timing was right.

We didn’t know if the Great Recession would slow us down.

Three years into the business we knew we were on to something big — even bigger than expected.

Challenge the Inertia Around You

Back in 2012, I was frustrated with the lack of options for startup office space. Landlords, often with their institutional investors, had tremendous inertia to make any changes. Potential tenants had to sign 5+ year leases, show profitable operating history, and deliver letters of credit — all this just to get office space. Clearly, the commercial real estate industry had grown up around the traditional business as customer and was never going to provide a solution for high growth, high risk startups.

Now, and then, it was abundantly clear the market missed a segment of potential customers. Today, the combination of community and co-working is incredibly popular and we have great options like the Atlanta Tech Village and WeWork.

Challenging the inertia around you is often the most difficult, and rewarding, course of action.

I tried workarounds in the commercial real estate industry for years — special subleases, different term structures, etc. — and the inertia was too strong. My solution was to buy a building, recruit a team, and move forward without the industry. Sometimes it takes more dramatic approaches, sometimes there are more elegant approaches.

Embrace the inertia as a challenge. Recognize how and why it’s there. Fight through it.

When the industry insiders scoff at you, like they did with us and the Atlanta Tech Village, you know you’re on to something.

Challenge the inertia around you.