Measuring a CEO's mind
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29 May 2008
Fred Wilson is running a series of quotes from a book about the father of venture capital, Georges Doriot. Today’s is from Dennis Robinson, CEO of one of Doriot’s portfolio companies, High Voltage Engineering.
At early board meetings, I would try to give an accurate accounting of the profit and loss. He would look through me and ask what I really thought about when I was shaving.
Fred asked if people were enjoying the quotes because he hadn’t received any comments. I commented that short quotes are like candy. They’re fun but without substance. They’re empty calories. What I’d really like is to talk about what the quote means, tie it to some examples, and start a conversation around it.
Doriot was looking for the true picture of an early stage company. What the numbers look like is important, sure, but in a very early company, what what Doriot wanted to know is what was occupying the CEO’s thoughts. Not everything that’s important can be measured. Not everything that can be measured is important.
I had dinner with a friend last night and we were swapping war stories from the dot com meltdown. He was working for one of the big interactive shops, running the technology projects for the company. He’d often attend analyst presentations and related how they’d share new projects or interesting technologies with the financial analysts. The analysts didn’t care. They simply wanted to know how many new seats the company was adding. How quickly is headcount growing.
Because the analysts were basing their recommendations on this measurement, the company was leasing space like mad. Their stock price tracked closely to how many square feet of expensive downtown Manhattan office space they leased. They were being judged on measurements that weren’t important.
What occupies a CEO’s mind can show you where a company is heading. What issues are being faced. Where the strengths and weaknesses of the company are. And where the strengths and weaknesses of the CEO are. In an early stage company, these questions are critical. What’s more, during down time, you’re more likely to think about philosophical questions. Big thoughts without tidy answers. Things that are important but not measurable.