Succeed as a Serial Entrepreneur

Anita Brick: Hi, this is Anita Brick and welcome to CareerCast at Chicago Booth. To help you advance in your career. To help you advance in your career. Today I'm really, really delighted to be speaking with Steven Mark Kahan. He is the author of Be a Startup Superstar: Ignite Your Career Working in a Tech Startup. Steve has helped grow seven startup companies from the early stage development to going public or being sold, resulting in more than $3.5 billion in shareholder value. In his current position at Thycotic he is CMO and has helped take the company from 10 million to more than 100 million in the first four years. Steve, I know you are like amazingly busy and so do take time out for us. We really, really appreciate it.

Steven Kahan: The pleasure is mine. Anita, it is great to be with you.

Anita Brick: So first question, and I think this is probably on the minds of the students and alumni and others who are listening at a very basic level. How can you concisely tell us why you decided to be a serial entrepreneur?

Steven Kahan: I don't think you wake up one day and say, gee, I'm going to be a serial entrepreneur. I think it certainly involves. I remember as I was growing up, actually in Schaumburg, Illinois, my father used to tell me so many times he'd say, Steve, go to work for a large corporation. You work hard, they'll take care of you and you'll have a great career. And then he would say, of course, your mother and I would much prefer that you become a doctor or a lawyer, but short of that, getting a job at a large corporation will do. So that was a path that I took.

So actually from graduating college, I went to work at an organization and I was processing claims. And I remember about a year in taking a look at the pile of claims that I had to process that day. And looking at my bank statement, I was down to $50 in my bank account, and the student loans seem to grab a hold of my paychecks before they ever got a chance to hit my bank account. I asked myself a question that day and it was, how can I earn a great living and love the work I do? It was at that point that I decided that I wanted to go to work for a startup and started researching startups, made all the mistakes in the world that really is how I began my journey. And what's interesting is that once the company that I joined went public, it was at that time that I got the bug and never left the startup world.

Anita Brick: Okay, a student asked this question: “Hi, Steve. Sounds like you're a risk taker and I am not. What are a few things you would advise someone like me to mitigate the risks of joining a startup?”

Steven Kahan: It's a great question because most startups don't make it. What I recommend is looking at the following criteria for separating a startup, because you'll talk with CEOs and startups, and what you'll find is almost all of those CEOs have great stories, having a great story and a great chance of being successful is rare. These are the criteria I look for first is quality people who share your values.

In many ways, people reflect the company's culture, and if you don't think you can respect, trust and admire the people involved, then you need to move on. And what you're looking for in particular is a solid team of leaders, management team who rock your world. So that's number one. Second, I look for a concept that fills a big market need. What you'll find, particularly if you're in the business world, is that customers just don't spend money on nice to have or should solve problems. They spend money on muscle problems. There's so much that's available online analysts or influencers to make sure that the concept is filling a market need that is big enough that it starts to get at that criteria of something that a buyer must have. Don't be dissuaded if you see that there's lots of competition. In fact, what I've learned is be dissuaded. If you see that there's no competition, that there's not a big enough market.

The next criteria that I look for is a great product that I believe in, beyond just the research, is that I want to see the product demonstrated to me, or to really understand that service and to feel confident that I would purchase, use or recommend that product myself. If you can't get behind it with great enthusiasm, move on. And then finally that the startup itself is well funded. Naturally, you want to choose a startup that has a long enough runway to get off the ground, and you want to find out how the company is funded, and to make sure in particular, that they're properly capitalized so you have the best chance for growth and stability. Those are the criteria that I look for to this day.

Anita Brick: Well, it sounds like you're looking at the company not just as a potential founding member or executive in the company. It sounds like you're also evaluating it the way we would if we were investors.

Steven Kahan: Absolutely. When I choose to join a startup, I approach that decision as an investor. When we talk about those criteria, every single one of those boxes have to be checked. What I've learned is when you make that approach, you will typically make a smarter decision. But then also what I've learned, and one of the things that I love about startups, if you're fortunate enough to get in early enough and get stock options, when I get those stock options that I've been fortunate enough to get, and I really understand the company, what I'm really doing is betting on myself and the team that I'm working with, and that has really been the best investment that I have ever made. I absolutely approach those jobs that I have looked for within the startup world as an investor would. Again, those are the criteria that I look at, and it's those stock options in particular as to how the factor and the role they can play in helping you to succeed at the next level financially, if in fact, that's something that's important to you.

Anita Brick: Good big factor about founders. So here is a question. And she said: “I understand that founders are the company at the beginning and drive success and culture in the startup. What are a couple of things you look for in a founder when deciding whether or not to join an early stage company?”

Steven Kahan: I think just so love that question. It's so good. Let me tell you the things that I look for. First vision. So I'm looking for a founder that's to some extent a visionary, someone who sees a business opportunity or an opportunity in a marketplace. They know how to solve it. What you're looking for here is that those founders in the best startups are led by people who typically have identified a major pain point in a market space, and they really understand how to solve for that problem. That founder has clarified that vision and quite frankly, keeps clarifying that vision over the long haul. So that's that's one second is a founder who has the ability to execute. Having a vision is great, but without the ability to act on it, you're really not going to get very far. You really want to make sure that founder or founding team has that vision in mind, but has broken it down into attainable milestones such that you could understand how you're gaining traction along the way.

Third, I look for a founder that has great passion and real passion, and that's something you just can't fail. You have it or you don't. And you know you can see it because it's coming from the heart with respect to the communicator. And this is one of the absolute most important ingredient. I also look for a founder that is a good communicator, someone that can translate that vision and make it become a reality not only within others in the organization, but others externally. And then I guess maybe just one other thing that I think is important as well is that the founder is not necessarily concerned with popularity, but someone who is much more concerned with being respected. You can't please everyone along the way. That's okay. I really kind of look for that as well. Someone who's going to be willing to make the tough call, because there's tough calls that will need to be made along the way to success.

So those are some of the traits that I look for in a founder. I know that I've, in many ways described a Superman or Wonder Woman. I guess even if you fall a little bit short against all of those traits, that you'll likely be finding someone who's great. And one thing I will add to this is I don't get dissuaded if that founder has failed in the past, we all have. That's just what happens with risk takers occasionally. So it's okay if there's some failure along the way, so long as you can see that founder has learned from it. So again, those are the criteria that I look for.

Anita Brick: All right. Great. Second question. This question comes from someone who was working in a startup and found a high level of frustration with the founder. And he said: “My question is around setting ground rules with the founding team members. How do you create an open environment on giving and receiving feedback? And if the feedback is not listened to at all and there is no performance improvement, how do you gracefully and respectfully leave the team?”

So it sounds like there are multiple questions. How do you create a culture if you're not the founder, where feedback is part of the DNA and then if it's not working, how do you leave?

Steven Kahan: Respectfully, let mtell you what I do. As you mentioned, I run marketing at a cybersecurity company called iconic. What I do really, no matter who I report to. And and I'll do this with people who work for me as well, is I am extraordinarily proactive about talking to the person that I report to, or vice versa, and defining the type of relationship that we want to have. And I typically like to do that at the very beginning. And let me tell you what I mean by that. At one of the companies that I work for, there was the chairman or the CEO became chairman. There was a new CEO, and I sat down with the CEO there and literally said, let's talk about the type of relationship we want to have. I would assume that you want to be able to keep a scorecard against me, against quarterly objectives. Is that correct? Yes. In this case, how would you like for us to set those objectives? Would you like me to propose them to you? Would you like us to discuss them and work together to formulate those? How would you like me to report on the status of those objectives? What would be ideal for you? Would you like to meet weekly? Would you like a written report? How would you like our communication to work between us? How often would you like to meet? If there is bad news? Like when do you want to find out about that?

Typically, what I try to do with people that I work for is to gain their agreement and defining the ultimate business relationship that they want to have. I mean, the best one they have. Let's design it together and I'll literally take notes, document them, and then go send that back to them in an email and clarify and make sure that I'm right. Part of the reason why I also do that is that then if you find out that something has changed or something's not working, perhaps the way you think that it ought to be is that you can kind of go back that and say, you know, we agreed that we were going to manage our relationship in this way. Remember when we did that? And so this particular item doesn't seem to be working the way that we anticipated that it might. And so has something changed or should we redefine that? Right.

It gives you an entree to come back and to make sure that you're able to not only hold yourself accountable, but then hold the person on the other side of the table accountable as well to that ultimate relationship. And what you'll find is defining that in great clarity just really is helpful in building alignment, in getting new relationships started on the right foot, or even existing relationships that you want to be able to improve upon. It's just a really good tactic. A lot of times if you do that and then you're talking about the way in which you want to communicate and you're talking about open communication and so forth, or the lack of it, now you have some agree ment in which you've talked about the ground rules of that communication that perhaps are not being met the way you both agreed to. And now you can actually not go in there and say, gee, you know, I think I need to leave, but perhaps you can take some preventative medicine by defining this along with that person such that it really never gets there.

Anita Brick: Okay. So you get to the point where you need to actually leave. What are a couple of things that you would advise someone to do it respectfully?

Steven Kahan: I will give you the criteria that I sort of use when I decide to leave. To me, just a word about control. Right. And so I have worked for, control freaks and I have had control freaks work for me. That is, you know, scenario. That's tough because that is something that needs to openly be discussed in terms of defining that, because a lot of people want to have the freedom to succeed. And when you're working with someone who's micromanaging, that can be difficult. And and so the first thing I would say is go back to what I just described, because oftentimes you're able to manage away some of the problems associated with you managing or working for a control freak such that you could define what makes the environment best for you and then come to some happy medium, because control freaks understand that they're control freaks, and it's not a surprise to them.

So a lot of times that could be avoided. But when I decide to go is rarely on the basis of working for Control Freak, I decide to go when I'm miserable 24/seven and dread going to work if the job is taking a toll on my health. If where I'm working there's moral or ethical differences I can't live with, or if there's systemic problems at the company, it's a sinking ship, or if it fosters illegal behavior like sexual harassment, or if I've exhausted all opportunities to grow in advance. Those to me are the reasons for sure. When you would go, it's typically when you're unhappy. At work, I've often felt that there's a difference between the ups and downs and being completely at the end of your rope, and that I would encourage people not to make rash decisions to try to manage that as best they can and wait a few months and to see like if some of, for example, the remedies that I've mentioned might actually provide some improvement.

And then if you see that there just is no improvement, then perhaps make that move. And then when it comes to doing it respectfully, never speaking poorly about the company or about the person that you work for and, making sure that you're leaving the place, that you're working in a better spot than what it was before you got there, always leave with a good taste in your mouth and in the mouth of others, and have them wanting more. That's the best way to leave at least in my view.

Anita Brick: I totally agree. Just to shift gears, an alum said: “I'm having a hard time shifting into a tech startup. After nearly two decades in a traditional consulting and corporate environment. In your book, you mentioned that someone with my background would be an impediment in a startup. How do I overcome this?”

Steven Kahan: First of all, I hope you didn't take that. Someone who is working at a larger organization, that would be an impediment. This is how I see it. There are all kinds of people that can be super successful at startups, and I think that when you really look at the skills and experiences that make you a stand out candidate, no matter what functional area that you're working for at a startup, to me, these are the ones. And let me list them for you first. You are probably a standout startup candidate. If you are someone who embraces and loves to be accountable, you know, sometimes at large organizations you can hide. At startups, everything is visible. You've got to really embrace being accountable. Second, typically because you're working with smaller teams, you will not work at a startup. If you're an AI person. And an AI person to me is someone that takes all the credit. But if you're a wee person and someone who is happy to share the credit works really well with the team, that would be one of the key criteria. I also believe it's someone who is prepared to work hard at startups. You are going against bigger, better funded competitors all the time in brutally tough environments, and there's no easy button, so you gotta be willing to work hard.

I also believe startups in particular, it is important if you're someone that pays attention to the details. The reason for that is the difference between an A or a B result. It's always the details, and you've got to be willing to do that because there aren't the masses around you in terms of people where you could offload a lot of perhaps things that you might perceive as busywork or details to others, you've got to handle that too. Finally, people that have great persistence and tenacity. At startups in particular, you are going to run into obstacles. It is a for sure. You run into them all the time. First of all, you don't want to be a person that takes small obstacles and tends to be someone that turns them into mountains. That would be one thing. And if you're one of those people, you probably know who you are. And then also having the tenacity to work through those obstacles that are there because they're going to be there. The competition is constantly moving, and so you've got to be willing to fight through them. And I think if you have a lot of those types of attributes, no matter where you come from, and then no matter what functional area, I think it sort of positions you to be someone who could be very successful within a startup environment.

Anita Brick: So it sounds like you need to use those qualities because there was a related question and someone says: “I feel like an outsider in the startup world. How do I go from being an outsider to an insider and be taken more seriously?” Sounds like what you're saying is use that obstacle of being viewed as an outsider to demonstrate your tenacity and your persistence and your commitment, and that could help you. Is there anything else that you would add?

Steven Kahan: A couple of things that you can do? First of all, it starts with the mentors that you have at different stages in our lives. We need different mentors. Cracking into more of that startup community might be starting to find people who have achieved where you want to go, and looking to build relationships with those people, and to gain mentors that might be from that community, that might be able to help and advice that would be one. Secondly, and this is one of the benefits of the startup world is the lack of formality. Often if you're applying for a role, say like at a GE, probably pretty darn formal, you, you are going through a process to do that. But I've had a number of people over the years and, certainly with me and, and I've done this myself as well, engage startup leaders online directly.

So if you start researching startups in your area, or maybe even outside of your area, and you start looking at what those startup leaders are saying socially or online, engage them, engage with them respectfully. A great way to do that perhaps, is directly through LinkedIn messenger. And so I've had people contact me, and you've got to be able to do this very respectfully, very sincerely, very heartfelt. So it doesn't seem like it's salesy in any way where you're able to say, gee, you know, you've accomplished some things, perhaps that I would like to accomplish. And, you know, I've read some things that you've written about, and I would love to be able to connect with you to learn a few things and what you'll find oftentimes is those startup leaders, they realize that people have helped them along the way, too, and they want to pay it forward.

And don't be dissuaded if not everybody responds to you. But if you engage some of those leaders online, and then if you're doing it in a respectful way, you have the ability to transition that conversation about yourself, about where you'd like to head, then talk about that path that you might take. You really would have the opportunity to gain entry into that executive's network, perhaps, or open really good roles within that organization.

And most startups are desperate to hire and so if you are able to make a few of these really cool connections, very personally, you'll often find that doors will start opening for you. To me, those are two things that you could do if I was going to add a third one. If you Google startup accelerators in any city, major city in America, you will find that there are accelerators that have meetup groups. There are a lot of their portfolio companies. This is sort of unknown. People don't know this post. The really great jobs that they have right online and those accelerators. Right locally there are a number of startups that get together, and you can go to some of the events that these accelerators put on and begin to join that community as well. So three specific ideas that I think any listener can take pretty easily to, to break in great.

Anita Brick: I love the fact that you just go boom, boom, boom. You make it very, very clear. Steve, do you have time for a couple more questions?

Steven Kahan: Absolutely.

Anita Brick: Okay, cool. So now I'm set and I'm very curious about your answer to this. In the book you talk about winning with humility. And so this alum said: “What does it mean to win with humility?”

Steven Kahan: One of the things that you'll find particularly with people in the startup world, is they're a competitive lot. You've got to be right. So you want to win, and when you win, you're coming in first place or whatever that might be. And someone else isn't what I have found. There's two aspects to this. One is you always want to win when you're going up against external competitors. With respect, never saying anything bad about a competitor, never, ever, ever, ever. In fact, complimenting them, even if you're taking it to them all day, that would be just one aspect. It's complimenting competitors. But by the mere fact that you're winning, you could just sort of relish in that fact.

The second aspect to it is internally, you never want to win where someone else loses on your team. And I have seen this happen over and over again where due to the competitiveness of people within an organization, sometimes they forget that the enemy isn't within, that the enemy is that external competitor, perhaps, and they start viewing others within their organization as the competition. And they might be for jobs. But you just need to take a perspective.

And my view, which is all about winning with humility, is to not view others within your own organization as the competition. And it's funny, people may not say it, but you could almost sometimes see it evolve in terms of how they act, or what they say or how they talk about others. One of the things that I have made a habit in my career is if I start seeing people talking negatively and particularly about others, and I hate it, and I will disconnect so fast, you won't believe it. To me, that is also about another aspect of humility, and it's about being gracious. It's about being respectful. It's about paying compliments. And you know, we all want to win. And we all want to win big. And startups certainly have big ambitions, but we don't have to do so in a way in which you are disrespectful in any way, shape or form, or speaking negatively about others. It never benefits you in the long term to take that perspective. That's what winning with humility, in my view, is all about.

Anita Brick: That's great, I love it. It's so important. And actually it leads us to our final question. For right now, what are three things that you would advise someone who wants to create and develop an enduring career in leadership within startups?

Steven Kahan: The first thing is build deep, deep, deep knowledge in your particular area. The world pays for very, very deep knowledge for me. In my career, I've become quite knowledgeable in the role of marketing. Then from there, I started to build my general management and knowledge across the various functions. But I always had that expertise and so the first is that deep knowledge.

And I will just want to add one other comment about it, and I'll use my particular profession, marketing, as an example. When I started out in the startup world, the world of marketing was entirely different than what it is today, even five years ago. Right now, marketing is all about the metrics and the numbers and the contribution to revenue. It's very financial way back when it wasn't. And so that deep knowledge is something that you have to make a commitment to constantly learning so that you're able to keep up with the pace of change. So that's one second is to surround yourself with A-plus talent. Really, what you want to think about this is what's the type of A-plus talent you need around you to bring out the best that you have to offer? Not all of us can be great at everything, so we need those complimentary players around us so that you can flourish at the highest level and really defined that. Think about what that is, and try to do your very best to make sure that you're surrounding yourself with that talent.

And then I think the third and this is really important, and particularly in the startup world, is you have to realize that not everything is a high priority. If you're at a startup, you may have the DNA of being a high performer, and high performers tend to take on massive workloads. You know, it's okay. I mean, working hard is a trait that I certainly respect, but it can create a lot of stress and it can lead to burnout. It can lead to you feeling overwhelmed. Success isn't about how much you do. It's about performing the right actions toward the right goals that will yield the biggest impact. It's really a shift to that mindset, because sometimes it's going to seem like you've got a gazillion and one high priorities, but you can't have that because you will deliver at a C-level across all of them. And that's not going to get you the results you want. And ruthlessly prioritizing those is key. So those to me are really three that I would offer. Just to build a great leadership profile within a startup.

Anita Brick: That's wonderful. You are incredibly articulate. You make things that could be very complex, very clear, very concise, and very to the point. Just like in the book, Be a Startup Superstar. Steve, thank you from the bottom of my heart. This was very, very valuable. And it's not just the information, but it's your perspective and wisdom and insights around it that are so powerful. So thank you so, so much.

Steven Kahan: Thank you for having me. It's been my honor.

Anita Brick: Thank you. And there are a lot of really interesting things, more interesting things definitely in the book, but also at Steve's site, which is Stevenmarkkahan.com. And thank you all for listening. This is Anita Brick with CareerCast at Chicago Booth. Keep advancing.