Let’s just get this out there: on paper, I’m a terrible CEO. I avoid going into the office, I only meet with my team a couple times a week, and I especially hate giving speeches, coming up with vision statements, leading meetings, and all the other CEO-y stuff you read about in HBR. To make matters worse, I rarely start work before noon.
By conventional terms, I’m lazy. You’re thinking it, I said it. Guilty as charged. But despite all this, I’ve somehow managed to start a group of companies with over 200 employees and invested in more than 30 other companies along the way. All this from someone who rarely gets out of bed before noon.
A couple years ago, I thought my laziness was my Achilles' heel. I watched as my entrepreneurial friends pushed boulders up hills and worked themselves into the ground, while I just hired people to do the stuff I hated. I felt guilty about it. It felt like cheating. But over the years, I’ve realized that my so-called laziness is actually a huge advantage.
By cobbling together a bunch of ideas from people much smarter than I am, I’ve worked out a system I call Lazy Leadership that I use to run my companies. Lazy Leadership isn’t about sitting in a hammock all day or working a Four Hour Work Week from Costa Rica, it’s about taking a step back, leaning on your team, and becoming an observer instead of an active participant in your business.
The Lazy Way
Entrepreneurship is really just a fancy word for delegation. It’s a continuous process of removing yourself from the equation step-by-step and empowering your team to do the things that they do best.
First, you cut out the middle man (your boss) and start working for yourself. Then, you hire someone else to actually do the work while you handle the high level stuff. Over time, you realize that you can hire more and more people to do more and more work. Then managers to manage these people. Then executives to manage the larger groups of people. Finally, if you want, you can hire a CEO who will run the whole company for you while you sit on the board.
How crazy is that? You can literally delegate running a whole company. Of course, this is all easier said than done…
When I first tried letting my team take the wheel, I was terrified. My company felt like an unmanned car, slowly swerving into the ditch only to be pulled back — usually by me — at the last second. It always felt like everything was going to blow up without me, and I often wished I could just clone myself and get on with it.
But, after a couple years of giving my team space and providing some simple process and guidance, my companies grew beyond anything I could have imagined. When I finally managed to take my hands off the wheel, I realized that my team could keep the trains running on time and deliver far better work than I ever could have. Best of all, I got to empower a great group of people to do the best work of their careers while I focused on building the machine (more on that later).
The Delegation Barrier
Some entrepreneurs never break through the delegation barrier and get stuck along the way. They try hiring someone, and when that person doesn’t behave exactly like they would, they jump in and take over.
They build up muscle memory and eventually convince themselves that the only person who can do things properly is them alone. That without their constant micro-management, their company will descend into chaos.
I know a lot of people like this. They’re miserable.
“If your business depends on you, you don’t own a business, you have a job. And it’s the worst job in the world because you’re working for a lunatic.” — Michael Gerber, The E Myth
Ask yourself: what would happen to your company if you went on vacation for six months?
If you think it would fall apart, you’ve made yourself more important than you need to be, and you’re working in your business instead of on it. It’s time to build a machine…
Building Your Machine
Henry Ford didn’t build cars, he built factories. To me, a great leader’s job is to build a machine that produces a product. It’s not about doing the work itself. Many CEO’s forget this and get stuck in sales, marketing, product — whatever part of the business they love — while they ignore the bigger picture. An exceptional leader builds a company that functions without them.
Ray Dalio has this on lock. While most of corporate America burned to the ground during the 2008 financial meltdown, his company Bridgewater Associates blew the doors off. He’s one of the world’s most successful investors, with a portfolio of over $150 billion and a 30-year track record of market-crushing returns.
The secret to his success? According to him, it’s that he thinks about his business as a machine that he engineers to produce the outcomes he wants. He wrote a book about it called Principles. It’s awesome and very weird, and it completely changed the way I run my companies.
Inspired by Ray, I now think of my companies as machines. I determine the result that I want, design a machine that will produce the result, then figure out what sort of people I need as part of it. If I’m part of the machine, I think about my strengths and weaknesses, and if necessary replace myself with someone better suited to the role.
For example, I hate travelling. It wipes me out and I find it takes a huge toll on my productivity. For years, I pushed myself to go on weekly business trips. I hated it, but there was too much revenue on the line not to go. Despite the fact that each trip resulted in new business, it made me miserable, and over time I dragged my feet.
I was telling myself a story: buck up. You’re being lazy. Other people travel for work and they’re fine. The story worked for a while, but eventually I got burnt out, stopped traveling as much, and our growth suffered as a result.
Once I started thinking about my business like a machine, I realized that there were people out there who relished the opportunity to travel for work and thrived doing the same thing. I swapped others into the roles that required travel, and the business grew because I was no longer the limiting factor. I focused on what I loved, while they focused on what they loved. It was a win/win, and we grew as a result.
The MetaLab Machine
To give you a better sense of how I think about my companies, here’s the framework I use when thinking about MetaLab:
MetaLab is a digital product agency. We make apps and services for some of the biggest companies in the world, as well as successful startups like Slack. Over the past ten years, we’ve also started and spun out companies like Flow and Pixel Union, but at our core we’re a services business. We build stuff for other people and they pay us for our work.
We require a few things in order to have a successful result:
- Happy former clients to build and maintain our reputation.
- Demand from new clients to pay us for our services.
- Talented designers and developers to build apps for our clients.
To accomplish all three, we have built a machine composed of the following things:
- Human Resources to recruit talented designers and developers, keep them happy, and maintain our culture.
- Operations to run the team of designers and developers, keep projects on time and budget, and ensure the team is always improving.
- Client Relations to build relationships with our clients, understand and anticipate their needs, and make sure we exceed their expectations.
- Business Development to find great new companies for us to work with and sell them on the value of our services.
- Finance to make sure we keep our costs under control, bill our clients, and track our results.
For the first few years after starting the company, I wore most of these hats. I was lead designer, HR, and biz dev guy—three things I’m pretty good at. But I was also CFO, project manager, and recruiter—three things I’m absolutely terrible at. The company was chaotic and inefficient and our clients were often frustrated as a result.
Today, I only spend my time on things that I’m both good at and that nobody else can do. The one important operational thing that I do at the company is spend time learning about our clients and making sure that we are meeting their needs. Getting to know our clients and building trust is key in order for me to be able to build a machine that can solve for their goals and deliver great work. Since I need to build the machine with that result in mind, it’s important that I understand exactly what our clients want.
Aside from that, I could get sideswiped by a semi tomorrow and the trains would keep running. I’ve hired super talented people who are better than me at each key role at the company, which frees me up to focus on the important stuff: our culture, our process, and our results.
Sure, I’m watching over things and jumping in when the team needs help, but for the most part I’m flying at 30,000 feet and focusing on the machine itself.
Here’s where I focus my time:
I spend a lot of thinking about our culture and how to maintain it as the company grows. Back when we started, we were five people in a room. We were all friends, and our culture just kind of happened naturally.
Everyone knew what we stood for, because it was the sum of the group of us. Now that there are almost 100 people at MetaLab, culture becomes a whole other beast. Suddenly it has to be written out and shared with stories and core values, something I never thought we’d do.
Despite what a lot of companies seem to think, culture isn’t beer taps at the office or everyone wearing company branded swag. It’s giving your team a framework for decision making. Should we hire this person who’s really talented but kind of seems like a jerk? Should we ship work we aren’t happy with because the client has a tight deadline? Should we let people work remotely?
When you build a framework of values for your company, most questions that come up are answerable without your involvement.
Here’s a list of values that we share with everyone who joins our team:
- A job that doesn’t feel like a job: We want to give our team the freedom and autonomy to work when and how they please. We hire smart people, give them great work, and treat them like adults — even if they want to start work at 4PM, work from a cafe, or road trip across the United States.
- A focus on craftsmanship: We take a breath before we ship and ask “Is this the best we can do? Are we proud of this?” If the answer is no, we go back to the drawing board. We don’t ship work we aren’t proud of, even if it means having an uncomfortable conversation.
- No jargon or buzzwords: We think jargon destroys companies. It’s designed to make one person feel superior, while the other feels less than and nods along. We use simple terms that everyone understands, and we do the same with our clients. Our work speaks for itself, there’s no need to dress it up.
- No assholes allowed: This one is pretty self-explanatory. No political climbers, bullies, yellers, or machiavellian BS. We operate in a climate of mutual respect, and when one bad egg crosses the line, they need to go before they sour the whole bunch, regardless of how talented they are. This goes not only for our team, but for our clients too.
- People over profits: We’d rather break even than run a company that isn’t enjoyable to work at. Profits are important — they keep the lights on and give us long term security — but we will not compromise the quality of our work or make ourselves miserable in pursuit of financial gain.
- Be honest, not perfect: We all make mistakes and have flaws, and we should be comfortable owning our mistakes and knowing it’s ok to mess up once in awhile. This isn’t about being kumbaya, but accepting the gap between where you are and where you want to be. We think the gap makes us do better work, especially when we’re honest about it.
Most important questions can easily be answered by going back to these core values. Sure, stuff comes up from time to time that needs my direction, but for the most part I leave it to my team.
I used to hate process. To me, process meant things not being fun anymore. I thought of it as something that kills morale with endless meetings and reports. Today, I’ve learned that simple, unintrusive process is key to running a successful company.
I used to think that MetaLab was too complicated for process. It’s creative work, after all, and everyone knows there’s no recipe for creativity. For years, when we started a project I would hap-hazardly throw a team of talented people together and tell them to talk to the client and start building stuff. That was it.
We had mixed results. While we did some amazing work during this time, we also had some nightmare projects that went off the rails and risked the business and our reputation. We hadn’t taken the time to think about the recipe that made the good projects work.
If we were a bakery, we were hiring bakers and just saying “make pies” without giving them a recipe. Sure, the bakers were talented, but every pie was different. Our clients would come to us because we’d made a friend of theirs a great pie, but theirs came out a little burnt or in a flavor they weren’t expecting.
Today, our process is simple: we give the team 5–10 questions that they have to answer during each phase of a project before they can move on to the next one.
For example, we have to answer the following questions before we kick-off a project:
- What problem is the client trying to solve?
- How does their product solve that problem?
- Who is the target customer?
- How is it different from other products in the same space?
- What do they stand for? What are their core values?
- What kind of pain points are existing users experiencing?
- What are existing users loving about it?
- In one sentence, how will we know we’ve been successful?
Like our core values, knowing the answers to these questions gives our team a framework to use to answer most of the important questions that come up during a project. Combined with our own values it helps ensure that we’re following a rough recipe and it has helped us significantly increase our hit rate.
Tracking Our Results
In the early days, I knew things were going well if we had more money at the end of the month than the beginning. Like process, financial statements and metrics weren’t something I had any interest in keeping track of.
Unfortunately, I quickly learned that once you scale up, your bank balance doesn’t tell you much. Work quality can be in decline. Morale can be bad. Clients can be unhappy. Staff can be without work. These were all things I was on top of when we were small, but as we’ve grown there have been times when I’ve realized all sorts of shitty things had happened on my watch. People going without work for months, crazy amounts of money being spent on dumb things, and months where we barely made a profit. All because I got pulled into the weeds and wasn’t watching our results.
Call them KPI’s, results, metrics—whatever. They are the pulse of the company. These are the 10 metrics I track on a weekly basis, that allow me to quickly figure out where we’re slipping and where I need to focus my attention:
- Team Utilization: Do people have enough work?
- 30/60/90 Day Team Utilization: Do we have enough work coming up?
- Client Net Promoter Score: Are our clients happy?
- Team Net Promoter Score: Is our team happy?
- New Business Pipeline: How much potential new work do we have?
- Cash in Bank: How many months can we run without additional cash?
- Accounts Receivable: How much do people owe us?
- Accounts Payable: How much do we owe other people?
- Collection Effectiveness: Are people paying us on time?
- Profit Margin: Are we making money and running efficiently?
If I see one of these metrics slipping, I know I need to get to work on improving our process and work with my team to fix whatever issue is causing us to slip.
Take a Step Back
The other day I said “it’s not like I’m a workoholic” and my wife burst out laughing and kindly pointed out that I never stop thinking about work. It’s not like I’m surfing all day. I still have a lot to do, and I still get stressed out and work crazy hours. The difference is that I’m working on my business instead ofin it, and focusing on the things I’m good at while I let people who are good in my weak spots do on the rest.
Instead of getting stuck making the pies, I’m writing the recipes, and that lets me focus on growing and improving my business instead of trying to maintain it. And something amazing happens when you realize that you don’t actually have to be the one to make all the pies…
You realize that the difference between building a Fortune 500 and a small business isn’t all that huge (ok it’s still huge, but less huge than you thought). You can design a machine, target a result, plug in the right people, and tweak it until it spits out the result you want. Big or small, it’s a framework used by just about every successful business person, regardless of what they call it.
Lazy Leadership isn’t really about being lazy. It’s about spending time on what matters and what you’re good at, then leaving everything else to your team. Giving up on the idea that you have to drive yourself into the ground in order to run a successful company, and thinking about your business as a machine that you design and optimize, instead of becoming a worn out cog within.
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