Cromwell: I understand that you believe the pandemic and other crises this year is creating a situation that is asking more of startup founders and other CEOs of types of businesses than they have ever been face with before.
Jake: I think that this is a time in which faith in our institutions has been fundamentally shaken, and I mean institutions writ large. It is somewhat similar to what happened in 2008, but it’s much wider spread and obviously much more existential, because this involves a lot of social issues, as well as life and death issues.
I remember when I was a young associate in New York City in the mid-2000s and kind of rode that wave up. I remember in 2008, when everything collapsed, the stress of major institutions going down.
My roommate worked for Lehman Brothers. We thought that was an institution that had always existed and would always exist. We just had faith in that. When that crumbled, it kind of left us questioning.
I think that what's happened in this moment, but this is even bigger and more profound. The faith of people in many institutions no longer really exists, particularly millennials. They now make up a significant portion of the workforce and they're seeing institutions that they took for granted or thought they once trusted, fail to deliver on public health and the social justice issues. There's a vacuum, specifically around leadership, that a lot of people, particularly in technology companies, feel.
Cromwell: How does that affect business leaders?
Jake: I think people are very naturally looking to the leader that is most proximate to them. That person is the CEO of their business.
That means that CEOs are being required to play a role that they have never really been required to play before on a large scale. They are being asked to be not just the steward of the business, but in some ways, a moral compass for the people that work for them.
That's an extraordinarily hard role to play. That's not the role that I think most people expected to play. Employees are looking at them and many are saying, "I don't know who to trust. I'm scared for my life. I'm scared for my friends. I'm scared for my family in this great time of uncertainty and anxiety. What leadership can you provide me? Not just in terms of the future of the growth trajectory of our company, but more broadly I'm looking to you as a leader that can guide me — and guide us — through this moment."
I'm spending a lot of time with our CEOs, trying to help coach them through this moment.
Cromwell: Give an example.
Jake: One that I think is very common right now across many of our portfolio companies is that employees are really holding leadership to account around questions of diversity and inclusion.
One of the challenges we've seen where some companies have done an admirable job is in trying to increase the amount of diversity in their business. They are trying to get people from as many different backgrounds into the business as possible. But they are failing on the inclusion side.
One of our portfolio companies, a Seattle company named Textio, helps companies hire more diverse candidates by helping to eliminate bias in the hiring process. There are a bunch of other tools like this, but Textio, I think, has developed a really effective way to increase diversity in a company.
But you also need to ensure that you're including all of those diverse voices and hearing them once they're in the company. Some companies are doing this by, for example, ensuring that in any given meeting the most junior person always speaks first. That’s because many times those diverse voices are new and coming in at the junior level. If you do a good job of ensuring that junior voices are heard, it's a good way to ensure that you're hearing all the different perspectives.
Cromwell: What else are you telling founders?
Jake: It is an insane pressure cooker that CEOs are now operating in. They have growth expectations that are put on them by their investors and by the market, but they also have to find ways to keep their team motivated, and to try to find ways to let out some pressure and stress along the way.
The first thing that's really important to talk about is how the CEOs themselves can ensure that they're in a place of stability from which they can operate in a calm and coherent way. That’s because in many ways they are the absorbers of all the stress. They're getting it from their employees, from their customers, from their investors and from the outside market. The buck stops with them.
So the biggest piece of advice that I try to give to our CEOs is to find an outlet that relieves that stress that they can consistently draw upon. I advise them to do this because I care deeply about them as people, but also because they're not going to be able to effectively find pressure release valves for the companies unless they can do it for themselves.
Cromwell: What does that mean?
Jake: Sometimes it is meditation. Sometimes it is workouts. Sometimes it’s therapy, ensuring that you have someone outside of the business that you can speak with consistently.
Another effective tool that we've seen CEOs use is peer grouping. This is the idea of getting together on a regular basis with a group of other CEOs in noncompetitive spaces, where they can be as transparent and honest as they can about the challenges they're facing. It’s good to have empathetic ears listen and say, "I'm there too." Just hearing that phrase is extraordinarily powerful.
I'm part of one of these peer groups myself, actually, for emerging partners in VC firms. It's extraordinarily helpful for me to share with them what's going on with me and have people say, "I understand. I feel very similarly right now, or I have in the past."
It’s been a really effective way for me to then go back to my CEOs and help show up as my full self with them and with my partners, etc.
The same thing exists with some of these CEO peer groups. There's an increasing number of organizations that have been created to try to do this for CEOs. There's one called Enrich. There's one called Reboot. There's a number of these organizations that I think are really powerful mechanisms to try to get the CEO to a place where they could show up and effectively be this kind of steward, both of the company and frankly of their people.
Cromwell: It must be harder to accomplish what you describe with so many people working remotely.
Jake: It's exceedingly hard. I think the first thing you have to do as a CEO is acknowledge that.
If the strategy you're taking is just to say, "Everything's great. And things are just like normal, but we're remote" — that's just not true. Things are different.
There's some ways in which the remoteness of it actually makes it better. But there's obviously a lot of ways in which the remoteness of it makes it worse. So you have to adapt the way you think about running the business, and be transparent with the challenges as you're making that adaptation with your teammates.
As an example, here’s something that we're doing at Emergence that has been really meaningful. We formed something that we call the “Stay Connected Taskforce.” It's a group of people that rotates over time, but their job is to find ways to create a way to build the group experience in a new way virtually.
One thing we’ve done is to schedule virtual painting events, where we ship people canvases, and we have a Zoom-based painting session. Some things look like competitions, like a workout competitions. I think a lot of companies have been doing that with their peers.
Some of these things look like little, very thoughtful care packages. I got a care package from our team a week or two ago, that was extraordinarily thoughtful. It was an aloe plant, that they were using as a symbol for healing and it had our logo on the pot. It made me feel a level of connectedness and warmth from my team and for my team, that I've missed virtually.
But this stuff is hard, really hard. It's a skillset, again, that CEOs don't necessarily naturally have. When you're classically looking to invest in a founder, often you're looking for things like, do they have incredible product insight? Do they really understand the problem they're going after and trying to solve? Do they have product expertise?
A newer skillset needed now is how you can become this pressure release valve and kind of glue and a moral compass for people that are going through what's probably going to be the greatest upheaval of a generation and grow the business? It's an extraordinarily hard thing to do. So my level of empathy for the founders we work with is so high.
I've seen people who we funded because we thought they were incredible salespeople, we thought that they had real deep product expertise or empathy, blossom into these moral leaders, for lack of a better term. That's been really inspiring.
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