Billionaire entrepreneurs relate the warning signals they wished they had seen before making bad decisions.
When I ask self-made billionaires what they wish they knew when they started out in business, one of the insights they most frequently share points to a common experience for all leaders when it comes to decision-making: They struggle to get out of their own way.
1. You don’t get paid to make all the decisions.
“You can’t grow or scale your business quickly if you’re making all the decisions. It’s not about you,” warned Vinod Khosla. The billionaire has had a few notable failures, but is best known as a co-founder of SUN and a pioneer in venture capital at Kleiner Perkins and his own firm, Khosla Ventures. “It’s too risky to bet year after year on a company that depends entirely on one ego.” The job of a leader is to “recruit and develop people who can make better decisions than you. What you’re looking for in leaders is the ability to build the teams that can make decisions on their own–while the leader asks great questions and provides guidance. They’re more of a beacon than a commander,” he smiled.
“If they are proactive CEOs,” he continued, “just the fact that they asked a particular question may change the direction in which his or her team thinks. Of course, the leader has to be there to resolve differences between team members, but most of the time a leader’s job is putting together the right team, and putting the right questions in front of them to change their inherent internal built-in biases.”
2. You don’t get paid to do what others are doing.
At the turn of the century, market analysts wrote about how Amazon was going out of business. “They had low margins and the company was under enormous pressure. Amazon started to raise prices for a little bit, and that made Wall Street happy temporarily,” Khosla shrugged. “Jeff Bezos realized it was the wrong long-term strategy, so he reversed that decision. ‘We’re going back to low prices,’ Amazon announced, which earned greater customer loyalty, but thinner margins. They took a pummeling in their stock price.” But the long-term decision he made was correct and today Amazon is the world’s biggest store.
“To me, leaders are too influenced by what Wall Street and the press have to say,” Khosla insisted. “This gets worse the bigger a company gets. Overreacting to what someone writes (who hasn’t run a business like yours) is risky. When the press criticizes your direction, it’s likely because they’re following conventional wisdom, which is what everybody else is doing it anyway.”
Steve Jobs showed great counterintuitive “courage in announcing the iPhone in 2007 at a price point everybody thought would be disastrous and with no keyboard, which everybody thought would fail,” Khosla reminded. “You should look at December of 2006 and see how the press predicted doom for the iPhone. Everybody wanted them to follow BlackBerry and Nokia. Guess what would have happened if they’d followed those two other market leaders at the time?” It’s not your job to follow the crowd.
I shared that story with Khosla’s disruptively brilliant friend Elon Musk. “You don’t get paid to copy the other guy,” he laughed. “It’s too easy to fall hopelessly behind; it’s your job to have the courage of your convictions and dare to disagree,” the founder of Tesla and SpaceX said.
Musk’s sentiment is reflected in the headline on the opening page on Khosla Ventures’ website: “Change depends on unreasonable people.”
3. You don’t get paid to chase the next crisis.
“When you sit down Sunday night to look at your week, what percentage of your calendar is focused on being proactive?” Khosla asks. “What direction do you want to lead that will create a clearer path to growth and profitability, as opposed to just responding to one meeting request after another, or an emergency here or there? There will always be crises that must be managed. But the difference between being proactive rather than reactive is making the time to really decide” where you want to lead your organization.
“How will you help others solve problems to build a better future, not obsess about the past?” Bill Gates once admonished me when I whined about a crisis that had wiped out my day. We were at the World Economic Forum in Davos to talk about reinventing business and America’s richest man thought I was missing the point. “You have to learn from your problems, but stay focused on the road ahead, not just what’s in the rearview mirror.”
That’s what your clients are counting on when they give you their hard-earned time and money to do business with you. That’s why investors will take a bet on you. And that’s why the best employees and leaders risk their careers to come to work for you. What are you creating that’s bigger than you are?