Smart Leaders From Survey Monkey and PayPal Explain When to Let Fires Burn

Knowing when to let fires burn may be the difference between success and failure says billionaire entrepreneur Reid Hoffman in the most recent bout of Masters of Scale.

Editor’s Note: In the brand new podcast Masters of Scale, LinkedIn co-founder and Greylock partner Reid Hoffman explores his philosophy on how best to scale a business — and at Entrepreneur.com , entrepreneurs are responding with their own ideas and experiences on our hub . This week, we’re discussing Hoffman’s theory: smart managers know when to let fires burn.

When Selina Tobaccowala started at SurveyMonkey in ’09 2009 as president, she learned immediately that the business – whose business design is founded on extensive survey data – had no database backup.

“There is nothing,” says Tobaccowala. “If the machine had gotten corrupted or the info had gone down, the business enterprise could have been done.”

SurveyMonkey let this matter go — and was to do so, says Reid Hoffman the Greylock partner and LinkedIn co-founder. “The very best entrepreneurs? They let fires burn,” says Hoffman on Masters of Scale a podcast series that explores counterintuitive theories to growing a company. “Deciding which fires you let burn, and how long you let them burn for could make the difference between success and failure.”

We expect managers to “released fires” — to find answers to everyday problems, guide employees and create systems that avoid chaos. But entrepreneurs don’t have endless resources, capital or talent. They need to choose their battles and that sometimes means ignoring problems to put the business for something a lot more important later on. Problem solving then becomes a balancing act of sorts, where managers pursue the lesser of several evils.

Related: The Leadership Style You should Drive Your Company Culture

“Smart entrepreneurs don’t try fight every fire. They need to let some fires burn – and sometimes large fires,” he adds.

Entrepreneurs wondering exactly which fire to place out or let simmer can learn a whole lot from these entrepreneurs and their battle-tested strategies.

Act now, apologize later.

Lisa Curtis, the founder and CEO of Kuli Kuli, a power drink and snack company, received a call many entrepreneurs want: an enormous company wished to partner with them to greatly help launch their product.

Whole Foods wished to roll out their new drink made out of moringa, a nutrient-rich leaf, in a nationwide launch in half a year. After a huge amount of setbacks, your day came when the drink hit the shelves.

“We got samples sent right to our office once we’re sending out to 435 stores in the united states. We also had a batch of samples shipped to us,” she says. After performing a little cheers, they tried the drink and, “Most of us similar to made this face of like ‘oh no.’ This is simply not what we thought.”

The drink was gritty, not smooth enjoy it was said to be – and a large number of people were exceptional identical thing. They launched anyway — and tweaked the recipe. Later, with the improved drink, the business could scale.

Would Curtis have change anything? “I don’t believe I would’ve changed saying ‘yes’ and seizing the chance,” she says in the podcast.

Don’t spend your time on half-baked solutions.

Hoffman, among formative members of the PayPal mafia, recalls a period when the online-payment company was just setting up and running into major issues with customers.

“Back PayPal’s start, we neglected customer complaints, even while users grew exponentially,“ he says.

The business had a customer-service department of three people, meaning it had been impossible to stay together with email questions and complaints.

“We quickly started moving in the hole around 10,000 emails per month,” he says. After receiving no responses, customers naturally began to get frustrated.

“A few calls started trickling in with customers who had discovered our corporate contact number,” he says. “And very quickly … all the phones are ringing a day 7 days per week.”

Related: Google’s Eric Schmidt: TO INCREASE Persistence, DO THAT

Instead of address these current customers’ problems, PayPal employees just switched off the ringers.

“We let those complaints continue until 1 day we were positioned to resolve the problem all at one time.” The team flew to Omaha and setup a 200-person call center within 8 weeks.

“Problem solved, and I wouldn’t have solved it an instant sooner.”

Hoffman believes this type of approach follows an integral rule for companies scaling. “Provide whatever service you can provided that it generally does not slow us down — and that may mean no service.”

Concentrate on the core product.

The backup problem was an enormous issue at SurveyMonkey, but there have been definitely other fires – one being the appearance of the company’s website.

“People definitely called the SurveyMonkey web site design ugly and that came both from candidates as we were recruiting people in addition to meeting the people” says Tobaccowala.

Even though design seems just like a minor issue, one which doesn’t need immediate attention (the merchandise worked great), it did have negative implications, particularly when it came to creating a team.

“Each and every person underestimated SurveyMonkey because of just how it looked,” says Tobaccowala.

For this reason, some top talent hesitated to attain out to SurveyMonkey. So, the business decided to do its outreach and schmooze potential employees in different ways.

“With regards to the recruitment challenge, finished . we determined was if we’re able to get people in the entranceway we’re able to sell them on the vision,” says Tobaccowala. So, the team would scout out engineers at meetup groups, depend on their network and speak to as many people because they could.

Related: THE TRICK to Successful Leadership? Make and Break Plans.

Not surprisingly fire, SurveyMonkey defer changing the look.

“From my perspective, what I was more centered on was the fact that folks loved the merchandise, and it had been performing,” says Toba

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