We regularly invite leading entrepreneurs and investors to host Q&A sessions with the Stripe Atlas community. John Doerr, chairman of Kleiner Perkins, recently answered questions from Stripe Atlas founders.
Building a high-output company
How can teams make the most of objectives and key results (OKRs)?
Well, first let’s define what OKRs are. OKRs are a deceptively simple goal-setting system that was invented by Andy Grove in the 1970s—someone who’s considered the best manager of his or any other era.
Andy was both a superb CEO and a great teacher. He grabbed me one day and said: “John, it almost doesn’t matter what you know—it’s execution that’s everything.” And of course at Intel, in the chip industry, thousands of people need to etch lines into a circuit that are a millionth of a meter wide. And they need to do it perfectly or nothing works. So there’s a real premium on execution.
To guide this, he invented a system called Intel management by objectives (MBOs), which I renamed OKRs—objectives and key results. The objectives are what you want to accomplish, and the key results are how you’re going to get those things done. What and how.
So that’s what OKRs are. And the simplest way to measure them is to use something like Google Docs. But as your organization grows and your team gets larger, there are a variety of tools you can use. My favorite is Betterworks, which allows you to use mobile devices, the cloud, and social signals to align your team.
Another great place to start is my book Measure What Matters. It tells the story of a couple of startups and some large companies. There’s one called Zume, where the two co-founders describe that in the very beginning, they were so in sync with each other that they didn’t need goal setting. But as soon as they started adding other people to their team, they found OKRs to be incredibly helpful.
What skills should entrepreneurs cultivate?
In new (i.e., small) organizations, everyone is selling. And I think selling is a really high calling—whether you’re an engineer, a receptionist, or somebody responsible for getting orders.
Eric Schmidt of Google used to say, “Growth covers a lot of sins.” But if you don’t have a business that’s growing, then you’re in a tough spot.
Usually the hardest thing is to get really great people to help you grow the business. So I recommend that entrepreneurs—from the time they get up in the morning to when they can’t make any further progress—I recommend that they spend all of their time recruiting, interviewing, and trying to build diverse teams.
Now, this doesn’t apply to every business. There are plenty of businesses that are not meant to be led by large teams. In the case of family businesses or sole proprietorships, recruiting isn’t as important.
How can founders be better at recruiting?
I would make sure you’ve got a very clear message about your own business. And I would test that to make sure that other people understand what your business is and why it matters. I would write down a job requisition for anyone you’re going to hire.
Organizations adapt to the talents of the people working there, but you ought to be clear about what you’re looking for. Ideally you’ll have somebody other than yourself who’s helping you hire—a cofounder, for example. The responsibility of hiring shouldn’t just be on your shoulders; it has to be a team effort.
Advice on raising money
What nonobvious or often-missed questions should founders ask investors while fundraising?
I’d advise a founder to not be intimidated by investors. They should interview their investors like they were hiring a VP or a key partner in their business. One of the differences is it’s hard to fire an investor if it’s not working out.
The interview is a measure of the quality with which you want to approach the relationship. If I were a founder, I’d want to know the experience of the investors—have they ever been part of or built a business like yours? I’d ask them how they’re going to help in building the business. I’d ask for references to check.
I would ask them if they’re prepared to invest more money after the first investment. I would have a very long, detailed conversation with several investors. And I want to be realistic here—this is all if you’re fortunate enough to find investors at all.
How can companies outside the US connect with US investors?
That’s a hard problem. Different investors have different styles and approaches. We invest in entrepreneurs all over the world, but we want to be physically close to the ones we invest in. Or we want to invest in partnership with a local investor. I think you ought to try like crazy to find a local, successful business person or investor who can help you build your business.
What are some dos and don’ts when working with investors?
As for dos, I’d be thoughtful about getting introductions to investors. If you can, make your list of target investors and ask others who their targets would be. Then find out which entrepreneurs, lawyers, investors, and other service providers they work with and ask for an introduction. Getting a friendly introduction will be far more powerful than just a cold call.
Also, once you’ve secured a face-to-face meeting, but before the actual meeting itself, I would try to set up a phone call in advance. Just say, “Hey, I’m coming in to see you; we’ve got this time booked, and before we meet, will you answer some questions for me? I plan to tell you about the business, but what in particular would you like to see?” It can make the meeting go much, much better.
The last thing is—be very clear about your ask and the next steps that you agree on so that you don’t leave the meeting solely having had a nice meeting but without any clear expectation of timing and next steps for what the follow-up is.
As for don’ts, reading a lot of slides in a pitch meeting, verbatim, is a disaster. I think you ought to be able to state your value proposition up front, in 100 words or less, with one slide.
Also, I for one am interested in the answer to the question “What drives you?”
When and how should a founder answer that?
I think it’s great to have a slide that says, “Here’s our mission and our values.” When Google came to see me, they knew their mission was “Organize all of the world’s information and make it freely available for everyone, everywhere, on every device”—or some version of that. That’s what it was in the beginning and they’ve stuck to it.
Jeff Bezos’s was to build the world’s most customer-centric store. His commitment to customers came through loud and clear.
I also don’t want to be too high-minded about this. A lot of people start businesses so they can make money and feed their family.
Regardless of what drives you, just be very clear about what it is.
What kind of ventures do you invest in?
For my work, I tend to be an involved, hands-on investor. I want to be physically close to where the investments are. If I get a phone call and hear that a VP of a company has resigned or is thinking about resigning, I want to drive there and try to help turn around the situation.
As for what we invest in, Kleiner Perkins backs tech ventures—both early- and later-stage. We back companies that range from new AI-based services to help automakers develop routing algorithms for self-driving cars to Spotify, the big and successful music service. What we invest in spans software technologies to mobile technologies to all kinds of commerce to machine learning to artificial intelligence to direct-to-consumer brands to life sciences.
Personally, I have a particular interest in healthcare system transformation—using data to get high-quality, affordable healthcare to everyone—and in innovations to address our climate crisis.
So it’s a pretty broad palette of stuff, but there are some investments we’re consciously not making. We’re not investing in conventional retailers or real estate or heavy-duty manufacturing businesses.
You’ve worked with some of the most successful entrepreneurs of this era. What have you learned from working with them?
What matters the most is the passion of entrepreneurs. Whether or not they’re focused on serving a large, unmet market need with an outstanding team. The innovation could be an underlying technology, a business model, or even how the product works.
Personally, I look for entrepreneurs who are committed to technical excellence and who are obsessive about customers (rather than competition). I also want them to pursue unreasonable, audacious goals, with thoroughly reasonable finances. Companies can raise too much money as well as too little.
I look for a sense of urgency, the ambition and the vision, and the humility—and the purposefulness of putting their team above themselves. I’m looking for missionaries, not mercenaries.
What is the biggest change that you’ve seen in the successful entrepreneurs you’ve backed?
The biggest change I’ve seen is their approach to their teams. For many, if not most of them, this is the first time they’ve built a team, hired other people to get work done, inspired them to make the kinds of sacrifices that are required to start a meaningful new business. Startups are hard. They’re ugly. And so I’ve watched the best of the best really grow in their ability to build and manage a team.
Looking back on your career, what are the most impactful lessons you’ve learned?
I think the most important thing is the power of people. If you put people first, and you bring a people focus to all of your decisions, if you truly like people and want to help them, then things tend to work out well. And that doesn’t just apply to business, that applies broadly, to life.
I believe that family comes first, and the way to make meaning in life is through others. So that’s a really important and guiding lesson.
I find also that enthusiasm, optimism, humor, service—those are all powerful qualities that allow you to help people do more than anyone thinks is possible with less than anyone thinks is possible. By the way, that’s my definition of an entrepreneur—someone who does more than anyone thinks is possible with less than anyone thinks is possible.
Now, in the venture industry, it’s all about the entrepreneurs. The venture capitalists should really be off to the side or off of the stage altogether. I think we pay too much attention to VCs.
Any parting thoughts?
As a founder, you’re either in the middle of or you’re about to start something that’s very hard to do. Embark on that journey knowing that it’s very humbling and very exhilarating.
And I’d encourage you to read the book I wrote Measure What Matters. It’s got a dozen stories in it about entrepreneurs who have built big new businesses and struggling startups.
I think one of the really important things that you can and should do well is set your goals, know what your values are, write down your objectives and key results—and don’t do it in a way where you make a list, check it twice, and file it away. They should be your North Star. Share them with everyone you work with, and get them to do the same.
It’s not a substitute for having a great product that really meets a market need or having a strong culture or having a great management team. But when those fundamentals are in place, OKRs can really take you to the moon.