Sunday, August 26, 2007

The Snack Algorithm and Leadership

Recently, I was sharing with a group of entrepreneurs that we at Roeder-Johnson have a rough internal algorithm for snacks in start-ups. We have learned through working with more than 80 start-ups over the years that you can learn a lot about the mood of the company by going into the kitchen and seeing the state of snacks. The algorithm roughly goes like this:
  • Phase I: Garage or the equivalent. Very particular to the founders.
  • Phase II: Early development (some seed money). A rough assortment of "developers' snacks"
  • Phase III: First institutional investment (still on the honeymoon). The piles of developers' snacks grow. Software needs to be programmed; products need to be developed. It's critical to keep those key developers fueled.
  • Phase IV: First product launched. Hope runs eternal. Developers snacks have bloomed to more exotic fare. A variety of sodas, some special juices and coffee drinks (and back in the Netscape days, fancy espresso machines in every kitchen);
  • Phase V: Reality sets in. People need food, but the company should be helped in paying for the more exotic fare. There should probably machines that require some subsidy to dispense the snack.
  • Phase VI: (Hopefully not every company gets here.) Coffee and tea bags only. The rest is on the employees.

Note: These phases can differ by the industry segment, investors involved, temperament of the management, and other factors. But anecdotal evidence supports this general scheme. (Also note that you can learn a lot about the cleanliness and other conditions of the kitchen, but I won't dwell on this.)

It's in phases V and VI where you actually see the mettle of the CEO and other senior management. As reality sets in and everyone starts to find out that the grand vision is still grand but a lot harder to accomplish than originally thought that you see the leaders come out.

I have observed CEO's of all sorts of young companies over the years. And it's pretty spectacular to watch the great ones lead their teams through the ebbs and flows of company challenges. The great ones are really heroes in my book. To keep the team going through development and customer challenges, and through the vicissitudes of the snack algorithm is terrific to see.

It's easy to think that being the CEO of one of these great technology start-ups is very glamorous. It might be. But it's also hard, sometimes lonely, and rarely is there a cookbook for the snacks or any of the other challenges the company may face.

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