Managing People Risk

I hear investors talk about capital risk, market risk and product risk, but rarely do I hear them talk about “people risk”. How can investors manage “people risk”?

In this context of the investor we can define “people risk” as the risk associated with the leadership development, or lack thereof, of the founding CEO. How does an investor account for that risk- does this founder have what it takes to develop into a Mark Zuckerberg or a Jeff Bezos? Or will the founder flounder and become a Parker Conrad or Travis Kalanick?

After doing a Google search, I found the majority of articles and advice on People Risk management appear to be focused on the negatives- absenteeism, illness, stealing, loss of key people. What about the opposite risk- the risk of people not developing their skills, empathy, and leadership?

I preface this with the fact that I have never met any of the leaders I refer to, and I know nothing of their own personal development. Still, the public fall from grace of Uber’s CEO was not surprising, as the private fall from grace had happened much sooner. Given Kalanick’s actions along the way, the fall is inevitable. Stories of his hubris and his entitlement long swirled around the San Francisco startup scene. His co-founder Garrett Camp pursued Kalanick because of his attitude- an attitude characterized by a story Camp tells of Kalanick: “the pair had climbed to the top of the Eiffel Tower, during which Kalanick had hopped over barriers to get a better view. “I liked that quality of going for it,” recalls Camp. “I knew such a big idea would take a lot of guts, and he impressed me as someone who had that.”” In fact, as one investor said, ““It’s hard to be a disrupter and not be an a...hole.”

Maybe so, but as an Executive Coach, I can’t help but wonder how the trajectory of a CEO like Uber’s might have been changed by regular coaching from a strong coach. Granted one must be “coachable”, i.e. have the courage to honestly look at one’s triggers, behaviors and cares and be willing to make personal changes to get what you truly want. Still, in this process of discovery, leaders find that they get to know themselves better, and as they grow they become better leaders. And if you're not growing anymore, you’re not going anywhere.

I’ve seen it with my friends as well. On a recent road trip, one of my companions was complaining about the lack of leadership in his boss. In fact, he had already accepted a new position because of it. When he started talking about his boss, the CEO, about leaving, my friend regaled us with a story about how the CEO used guilt and avoidance in response to his leaving. He thought he could shame my friend into staying. How does that company continue to grow with a leader who manipulates people? How does a Board deal with that?

A founding CEO job is one of the toughest on the planet. Besides all the normal stressors like MVP, market fit, raising funds, and hiring great talent, there is the stress associated with being a leader. Plus, to lead a 5 person founding team is a completely different leadership skill set than leading a team of 50, or 500, or 5000. A leader must continue to develop as a leader at a greater pace than the growth of their company. How can a founding CEO grow to meet that challenge? And how can investors hedge their bets by developing the leaders they give money to?

Simply put, coaching. Whether with the Board, a mentor, or an Executive Coach, leaders must be willing to grow and learn to lead. Constant feedback on product development, for instance, is business as usual. I believe the same constant feedback should apply to a leader’s development.

Mark diTargiani, Executive Coach