The Case of the Polyamorous CEO

Hi friend

A visionary founder friend of mine is on fire. Let’s call her Jenna.

Jenna’s empire is always growing and glowing on LinkedIn.

In just a month, you’ll see a new Coca Cola deal, a Fortune magazine write-up, a Best Place to Work award and a new Facebook executive joining them.

Recently, I caught up with her on the go. Having just launched a London chapter followed by a partnership signing in Singapore, she was en route to an investor meeting in SF.

The best part is that Jenna’s someone who you really want to win.

She’s as humble & passionate as the day that I first met her in that dingy co-working space all those years back with her frumpy sweatshirt & her big smile.

But after a few minutes of banter, the floodgates open.

“Nikhil, I feel like a piece of sh*t.”

What follows is a non-stop 20 minute confession/ diatribe of how she’s messing it all up. It’s only when she pauses to catch her breath that I say,

“I get it… you’ve got a Big Love problem.”

The Big Love Problem

The HBO TV show Big Love is a sleeper hit. It’s about a polygamist, Bill Henrickson & his 3 wives.

Bill is trying his hardest to be a great dad & a doting husband all while juggling the financial, emotional & logistical complexities of having 3 separate families. It’s suffocating him.

Jenna’s got 3 families too.

Originally starting as a live event organization, she found a successful niche business. Then as they were spreading, they also started providing web tools for event organizers all over the world. Soon, the content that was coming out of their community was so fresh that it becomes its own thing.

Like many smart entrepreneurs, Jenna built a flywheel of value for her clients that drives their growth.

That means today Jenna is running an events business, a tech startup & a content house.

And they’re all driving her to an early grave.

In fact, most of her travels was to make sure that her people didn’t go off track. She found that face to face was the only way to motivate them, guide them & put out the fires.

“Every 2 weeks, I’m with a new team. And no matter how often I show up, no one is happy with how much attention I’m giving them. They still feel a bit lost & uncared for. And that kills me”

Jenna’s guilt of being an absentee leader is actually slowing their growth & draining her.

With each passing day, she sinks deeper into each team’s minutiae & feels more frustrated with the lack of progress in all of them.

I hated seeing Jenna like this so I offered 2 insights.

I: Simplify to be #1 or #2

I first told Jenna about Basecamp.

Everyone who’s been in the project management game since the 2000's knows the name. The company that built it, 37signals, literally helped invented the category.

If there was ever a business poised to take over the world, it’d be them. And so they did.

They first built a file organizer tool.

Then a chat platform.

Followed by a neat little CRM, and guess what, they were all hits.

At it’s height, they had over 3M users & revenue was doubling every year so by all accounts, life looked good for 37signals.

But then one day, the founders announced they were shutting down everything & only focusing on Basecamp. People were aghast but they calmly explained.

“Basecamp… represented about 87% of our revenue [and] 90% of our revenue growth.”

The other products were also successful but they were really small slices of the pie.

“Basecamp was our big hit, and it was time to be honest about it.”

Founders like Jenna spread their revenue wings to speed up their growth & minimize revenue instability. But at this stage of the company, often the complexity & headache it takes to run these additional businesses, has the opposite effect.

Worse, diversifying without dominance ultimately hurts the core engine of the business. 

We don’t give our flagship product the proper attention it deserves & after a while, the whole company suffers.

That’s why legendary CEO Jack Welch told every GE business unit when he took over, Either come up with a gameplan to be #1 or #2 in your market or find a way to sell/merge. 

Because life becomes simpler when you can be #1 or #2 in your niche.

II. Sequence over Strategy

I could see Jenna’s eyes widen with fear so I quickly explain The Domino Effect as well.

It’s where a single domino can take down another domino that’s 50% bigger. So that means that if we lined up 10 dominos with each successive one 1.5X bigger, a regular domino could take down a domino as tall as a person.

If we lined up 31 dominos, we could take down one as large as Mount Everest.

That’s the power of a compounded sequence

Jeff Bezos is a master of this.

Books (1994)

Amazon only sold books for the first 4 years. When every other ecommerce company was in a mad rush to sell everything, they just stuck to books.

They did it because books are the most universal - meaning they have the best chance of building a relationship with the most amount of people.

Also it was the easiest way to learn how to do back-end logistics.

Music & DVDs (1998)

Once they conquered books, they moved into music & movies. It was the least amount of effort to add-on while also testing their infrastructure.

As their hyper-diverse competitors were IPOing & getting insane valuations, they stuck to their slow guns.

Expansion (1999-2003)

After feeling totally comfortable with their back-end & stabilizing the core business, Amazon started thoughtfully adding tougher categories every few months using the same formula.

By 2000, most e-commerce companies had died by the wayside.

Only to have Amazon come by a few months later to pick up their dropped sticks & run with it.

Amazon Prime (2005)

Prime is truly the culmination of this focused strategy.

Same day shipping only exists when one has solved every single logistics problem one can have in e-commerce.

Compounding sequencing is linearly simple & exponentially effective, but emotionally complex.

Most people don’t want to wait until they have a stable & durable base. But if they can manage, they will be rewarded with huge dollops of time, insights and resources to take on a domino that is 50-100% larger.

And if they stack up all the right dominos in order, nothing is impossible.

Conclusion

Jenna sat in silence for a bit and said, “Fine, what’s my #1 business & what’s my sequence then?”

Jenna knew the answers to both of them. She always had.

Her events business drove everything else & it was easily her biggest competitive moat. She also realized that the tech part was not their forte.

Over the next few months, she found a way to spin it off while at the same time scaling back on the content team. It was a bit painful & embarrassing.

But 6 months later, when I catch up with her, she flashes me a huge smile & says,

“I got my family back.”