Startup Leadership: How Savvy Entrepreneurs Turn Their Ideas Into Successful Enterprises

"Derek is a professor of entrepreneurship at Princeton University’s Keller Center. I met him because his son worked at AppNexus and he invited me to speak at his class called “Entrepreneurial Leadership.” I went down to Princeton and gave a lecture called “Three Failures and a Big Success,” about how my first three businesses after college were failures. I got fired, I was unemployed, and had a dismal experience for my first few years. Finally, I hit it big and founded a company called Right Media which was extremely successful and sold to Yahoo for a lot of money. The reason I love him and his class and his book is because he talks about the skills you need as a leader to be a founder and an entrepreneur. He has some really basic ideas. You have to understand the firm and have almost a mental model of how the company works. What do people do? Your job is not just to envision a product, it’s to envision an organization. How do you think about an organization? If you’re a college kid and you’ve never started a company, you might have a great product, but how are you going to think about the people and the org chart and the processes and how they interact and the management structure? You need to understand people and how they work together at scale in business. The mental model of the firm, and how that changes and evolves over time, is a critical lesson from this book. Another key lesson I love and that I still use with my teams is the difference between a process and a project. A process is something that you do repeatedly forever, and a project is something with a start and an end. His point is that companies are built on processes , and the only way to create a new process is to start a project to stand it up. He also argues that all processes regress to the mean over time. This is a key insight for people who are building companies, especially as they move through their lifecycle. Derek lays out four lifecycle phases: In phase one, you’re scrappy and trying to find product-market fit. Is this product something people will buy? You don’t have any processes, you don’t need any processes, it’s all a bunch of projects. Then the next phase, you’re trying to put some process in place: can we repeatedly sell this, can we find customers in a structured way? In stage three, it’s mainly process. As the founder, you’re no longer searching for customers, you’re no longer this amazing entrepreneur. You’re a manager. You’re running a mainly process-driven company that is the opposite of what it was at the beginning, which was the scrappy little rowboat. Now you’re running an ocean liner. Maybe people are getting food poisoning! You have to deal with tons of overhead and meetings and budgets. Why do we think this same person will be good at pulling the oars as will be great at sitting at the helm of this massive money-making machine, and what does that mean for us as leaders? In stage four a company starts fragmenting into different business units, either through acquisitions or innovation, and might get scrappy again at scale or slow down and get so process-driven that it stops innovating altogether. Few companies get this far—and even fewer founding entrepreneurs. The final point about this book is how much Derek talks about self-awareness. Imagine taking this class at Princeton. These are kids who’ve never failed. They’re brilliant, probably all play four sports, three instruments, and write in Latin. And you take this class where a key lesson is that if you want to be an entrepreneur, you’re going to fail. A lot. Being ready for that failure and learning from it and understanding yourself emotionally is at the heart of leadership. It’s not about being the smartest person in the room. It’s about knowing yourself, and understanding basic ideas about how companies work and how people succeed. It’s about understanding how you interact with different people differently. It’s a lifelong journey about people. I just love that. I highly recommend this book. It’s about leadership and is critical reading for anyone who wants to understand the skillset and the core concept of ‘What is a startup?’ and ‘What is a leader of a startup?’ You asked what the point of business books was. I think the point of business books is that millions of people have gone before you. This is not a new journey that you’re embarking upon. I don’t think you can learn entrepreneurship or leadership in a classroom, it’s something lived. As you’re living it, books are amazing, because just like carrying Into the Tornado in my backpack, every time you open one of these books you feel this knowledge coming in from people who’ve gone before. It’s kind of a real-world school. You’re able to pull these ideas into your everyday experience in a way that is deeply meaningful. I don’t think reading them in a classroom would be anything like reading them through that journey. These are lived texts, if that makes sense."