Tech Company Layoffs

There’s been quite a bit of news over the last several weeks of tech companies freezing hiring and laying off employees. Perhaps most notably, Meta (formerly Facebook) recently laid off 11,000 employees or 13% of its workforce. I thought I'd write a post about what tech companies are thinking about and the factors that are contributing to these unfortunate announcements. First, some history:

Until about a year ago, the stock market had been on a bull run for about 13 years. There are several reasons for this, but the primary reason was that, during this time, we had zero or near-zero interest rates. When interest rates are near zero, companies can borrow money almost for free, allowing them to invest heavily and grow, grow, grow. In addition, when interest rates are so low, money flows out of fixed-income investments and into riskier equity investments (the stock market). More money in equities means higher stock prices for public companies. Public company stock prices are a proxy for private company valuations, so private companies have experienced the same dynamics. This enabled companies to raise enormous amounts of money with little dilution for founders and shareholders. Due to classic supply and demand forces, more money in equities means that the same company with the same financial profile could be valued at 2 or 5, or 10 times what it would be worth in a less bullish market.

It was a great ride until COVID hit, and the economy stalled because people couldn't leave their homes and go to work and buy the goods and services they had been buying in the past. To get us through the crisis, the federal government rightly provided a massive economic stimulus to businesses and consumers by pushing more than $6 trillion into the economy. Again, more money in the system means higher prices for everything (including stocks). Due to COVID, we also saw major global supply chain issues and price spikes across nearly every category (again, the effects of supply and demand; reduced supply of products drives higher prices). Thankfully, the economy quickly recovered and Americans had surpluses of cash that they were anxious to go out and spend. And they did. As a result, we're now seeing historical levels of inflation. The inflation rate for the period ending in September was 8.2%; the average is closer to 3%.

This level of inflation is very dangerous. If prices increase faster than wages, it can literally topple the economy. And there have been lots of examples of this happening in the past. Luckily, the federal government can contract the money supply to slow inflation (less money in the system leads to lower prices). This has the effect of raising interest rates. And that's exactly what has happened; the federal funds rate sits at around 4%, the highest since 2008.

As a result, money has poured out of equities, particularly tech equities. The broader S&P 500 index is down about 15%, and the tech-focused NASDAQ is down about 30%. Tech companies get hit much harder in these cycles because they're investing in future growth and often carry a lot of debt. Because the profits from these investments won't be realized until further out in the future, increased interest rates discount the values of these future cash flows by an excessive amount (more on this soon).

An additional challenge is that as the Federal Reserve contracts the money supply and interest rates rise, it's not very predictable how quickly that will temper price inflation, so there's no way to know how long this drop in the markets and company valuations will persist. And there are reasons to believe it could get worse before it gets better. 

For companies trying to navigate all of these changing conditions, their worlds have become much more difficult. Valuations are way down. As recently as 10 days ago, Facebook’s stock price hit $88, down from a peak of $378. Stock options granted to Facebook employees over the last 6 or 7 years are likely worthless.

Further, the cost of capital (both debt and equity) for companies has significantly increased. This hits technology companies, which, as I mentioned above, typically have higher levels of debt because they're investing in new growth, particularly hard. The cost of running these businesses becomes much more expensive because the cost of debt increases (increased interest expense). In addition, some of these debt covenants have requirements around growth and profitability that companies need to meet. 

Moreover, and this is probably the most important part of what's going on that should be well understood, is that because tech companies are investing heavily in new growth, the profits from those investments won't be realized for several periods. And higher interest rates hit growth-oriented companies very hard because of the discount rate of future cash flows (more on that here). This is a very important economic concept that many in the tech ecosystem don't understand well enough. Said simply, a company is valued on its ability to generate future cash flows. And increased interest rates lead to a discount in the current value of these future cash flows far more than for companies that are profitable now. When interest rates are zero, there's no discount applied to future cash flows, so the market seeks high-growth companies that are making big, bold bets. When interest rates rise, investors look for companies that have profits now. Again, this is simply because of the discount applied to future cash flows.

Finally, and more broadly, businesses are seeing what's happening and are concerned that jobs will be lost, spending will slow, demand for their products will decrease, and a recession (two consecutive quarters of negative GDP growth) might be on the horizon and bookings and revenue may decrease.

That's the situation tech companies find themselves in today. So how are they responding?

Well, it's important to remember that a company's primary purpose is to maximize shareholder value (for external investors and employees holding stock options). Management has a legal duty to its shareholders to operate in a way that maximizes the value of the company, regardless of the changing markets and the lack of predictability around when things will get better or worse. So in a market where near-term profits and cash flows are very highly valued, companies must pare back longer-term growth investments and find ways to cut costs to realize profits more quickly. And, because, typically, the vast majority of expenses of a tech company come from human capital (employees), the only material way to do this is to slow hiring or decrease headcount.

And this is exactly why we're seeing all of the news reports of tech companies freezing hiring and laying off employees.

Of course, some will criticize these companies for hiring too fast and overextending themselves, and voluntarily getting themselves into this situation by investing too heavily too fast. In many cases, this criticism is fair. But it's worth noting that, while cost reduction has rapidly become very important, in a bull market, growth is inversely and equally important. Facebook, as an example, is taking a lot of heat for overhiring engineers, but should they? I’m no expert on Facebook, but it’s an interesting thought exercise to think through for any company. Again, the job of a company is to maximize shareholder value. And when capital is cheap or free, the companies that invest heavily in growth will receive the highest valuations (again, refer back to the discount rate applied to future cash flows). At scale, had Facebook and the other tech giants chose not to make those hires, those individuals would've been unemployed during that period or would've received lower wages from other companies during that period, possibly displacing less talented engineers. If a company has viable ideas and areas to grow, and capital to invest in that growth is freely available, it must pursue that growth. It must maximize shareholder value. Companies with high growth potential have to play the game on the field. They have to pursue growth if they believe it's there. This is an unavoidable cycle that innovative companies are subject to. And individuals that work in the tech ecosystem will inevitably be the beneficiaries – and the victims – of these realities. Other industries experience far less dramatic highs and lows.

Of course, it should be noted that these highs and lows seriously impact people's lives. And I've been glad to see many companies (though not all) executing these cost reductions with humility, empathy, and generous severance packages.

With all of this said, inevitably, at some point, inflation will slow, interest rates will decrease, companies will invest in growth, companies will start hiring again, we'll be back in a bull market, and everything will seem great. In the meantime, it's important that all stakeholders that have chosen to work in and around tech understand and plan accordingly around the macroeconomic cycles that have a disproportionate effect on this industry.

Investor Context & Incentives

The best managers prioritize giving their teams as much context as possible. When employees lack context, it leads to an enormous amount of unnecessary friction and uncertainty. It’s crucial for managers to give context around the work they’re asking employees to do, the decisions they’re making, and the priorities they’re driving. At the same time, employees should play a role here as well. If they’re not getting the context they need from their manager, they should ask. Employees should empathize and push hard to get in the head of their manager and understand their manager’s incentives and the context they’re operating in. It’s a partnership.

While this is fairly well understood, often, I find that managers don’t understand the context and incentives of their boss’s boss or even their boss’s boss’s boss (the company’s investors). I’ve found that deeply understanding how investors think is an essential part of being an effective operator. It’s even helpful to understand the content and incentives of a company’s investors’ bosses (the investors’ limited partners).

Here are four books that have helped me get inside the heads of the individuals that invest in the companies I’ve worked with, both venture-backed and private equity-backed. Understanding the history of these industries, their investment strategies, and how investors are measured and managed has made me a much more effective operator and leader.

Venture Capital

The Power Law: Venture Capital and the Making of the New Future by Sebastian Mallaby

Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups by David Rose

Private Equity

The Private Equity Playbook: Management’s Guide to Working with Private Equity by Adam Coffey

Two and Twenty: How the Masters of Private Equity Always Win by Sachin Khajuria

Consensus vs. Non-consensus

I recently heard a technology investor say that if most of his friends don’t laugh at him for investing in a company, then he knows it’s not a good investment. While this is a little strong, there’s definitely some truth to the statement, particularly in venture capital, where your big winners drive most of the returns. If you’re investing in a company that everyone believes will be successful, then you’re investing with the crowd, and your returns are limited. To maximize returns, you have to bet against the consensus and be right when everyone else is wrong.

Consensus and wrong — you lose your money
Non-consensus and wrong — you lose your money
Consensus and right — small ROI
Non-consensus and right — big ROI

Refusing To Fail

I heard Phil Mickelson, the legendary golfer, tell a great story the other day.

He was asked what makes the best golfers the best golfers in the world. He told a story about how a long time ago, he really struggled with short putts. One day his coach recommended that he try to make 100 three-foot putts in a row. If he missed one, he'd have to start all over again. And he should keep practicing this until he can reliably make 100 in a row. He claims that one time he made it all the way to 99, missed the 100th, and started over. 

Years later, he was mentoring an up-and-coming amateur golfer who was struggling with short putts, and he gave that golfer the same advice. Several months later, he checked in on how the golfer was doing with his putting, and the golfer said, "yea, that was really hard, I got to where I could make about 50 in a row, and I gave up.”

This golfer never made it in the PGA.

This is a great analogy when thinking about startup investing. Often, in the early days, you're really investing less in the idea or the product or the market; you're really investing in the founder themselves and their willingness to persevere and navigate through the idea maze and do what, in some cases, seems impossible. Some people work on some projects where for whatever reason, they will absolutely refuse to fail. Elon Musk is a great example. Both SpaceX and Tesla should've failed multiple times. But he persevered and forced it to happen through sheer will. Of course, he's incredibly smart and talented, but that wouldn't have been nearly enough. This quality doesn't exist in everyone, and even for those that do, it doesn't exist for every project at every time in their lives, given changing life circumstances and priorities.

This golf analogy is a good one to consider when you're investing at an early stage where you don't have much to go on other than the talents, skills, and dedication of the founder and founding team.

First Principles Thinking & Product Design

Will Ahmed, the founder of the Whoop, a popular fitness tracker, wrote a great Tweetstorm the other day about the wearables space. In it, he demonstrated an excellent example of first principles thinking around building a product. I wrote a post about the importance of first principles thinking in company building a couple of years ago. I found this Tweet inside of the Tweetstorm from Will to be the most striking.

This is a perfect example of first principles thinking in company building that sets out a framework for product managers to make literally thousands of small (and big), follow-on design decisions. The increase in efficiency and speed of decision-making is nearly infinite when leaders think and communicate this way.

Not to mention, it’s also a great strategy. Very few products can remain “cool”, for everyone, for many years. Whoop knows this and from day one (it seems) they’ve been pushing to get closer and closer to invisible, while most of their predecessors have tried to be cool and stay cool. A strategy of being cool while working towards invisible seems like a far more sustainable approach.

The 10 Best Books I Read In 2021

2021 was another year that was largely dominated by COVID, which meant lots of time to read some great books. I continued my near-obsession with books about Navy SEALs and books on surviving in the ocean. Not sure what that's about. Anyway, here’s this year’s list. Find past lists here.

1/ The Company: A Short History of a Revolutionary Idea by John Micklethwait and Adrian Wooldridge. This is a great book on the history of the corporation. It tells the story of how and why humans formed LLCs and joint-stock companies from ancient Mesopotamia to the multi-national corporations of the 1980s and 1990s. In short, without these structures, we'd have very few of the innovations we enjoy today. Entrepreneurs need legal protection to be able to take risks and innovate. This is a brilliant summary of the history of how we organized ourselves around these ideas. I only wish it was longer and went a bit deeper.

2/ A Speck in the Sea: A Story of Survival and Rescue by John Aldridge and Anthony Sosinski. I'm not sure what it is about these survival stories, but I love them for some reason, and this one was great. It tells the story of a fisherman thrown off a boat in the middle of the Long Island Sound in the middle of the night while his friend was sound asleep below deck and the subsequent search-and-rescue mission. It's a well-written, enjoyable read. I can't imagine what he went endured out there alone at night in the middle of the ocean in complete silence. 

"You forget that you hear waves only when they ride up on the shore; in the middle of the ocean you hear nothing. The silence is deafening."

3/ The Art of Impossible: A Peak Performance Primer by Steven Kotler. I really enjoy Kotler's books. Really interesting, motivating, and data-driven research on human performance and people accomplishing things they never thought they could through what he calls a quartet of skills — motivation, learning, creativity, and flow. The book talks a lot about meaning and purpose at work, which is so important for leaders to remember. From the book:

Once people feel fairly compensated for their time—meaning once that number starts to creep over $75,000 a year—big raises and annual bonuses won't actually improve their productivity or performance. After that basic-needs line is crossed, employees want intrinsic rewards. They want to be in control of their own time (autonomy), they want to work on projects that interest them (curiosity/passion), and they want to work on projects that matter (meaning and purpose). 

4/ Finding Ultra: Rejecting Middle Age, Becoming One of the World's Fittest Men, and Discovering Myself by Rich Roll. I've been listening to Roll's podcast for a while now and finally got around to reading his memoir. A well-written account of his transformation from an out-of-shape 40-something to an ultra-endurance athlete living a plant-based lifestyle. 

5/ Shoe Dog: A Memoir by the Creator of Nike by Phil Knight. I've been meaning to read this for a few years now, but I didn't expect how great it would be. Awesome book. A really enjoyable story, even if you're not interested in shoes or business.  

6/ Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail by Ray Dalio. In this dense and somewhat disturbing book, Dalio studies the repeating patterns of the major underlying shifts in wealth and power over the last 500 years. A very, very important book for investors to internalize to have a point of view on how things might play out in America and other highly developed countries over the next couple of decades. From the book:

”I've learned that one's ability to anticipate and deal well with the future depends on one's understanding of the cause/effect relationships that make things change, and one's ability to understand these cause/effect relationships comes from studying how they have changed in the past."

7/ The Attributes: 25 Hidden Drivers of Optimal Performance by Rich Diviney. Diviney is a former Navy SEAL commander that argues in this book that we need to evaluate people on attributes rather than skills or experience. Things like grit, drive, teamability, mental acuity, and leadership. I've become really interested in Navy SEAL training and how they weed out candidates. This book gives a glimpse into how it works. SEAL's go through a training period called 'Hell Week' where they weed out the majority of candidates. They keep recruits awake for most of the week. They'll make them carry huge logs across a wet sandy beach for hours in the middle of the night and then tell them that they can rest once they're done with the log training. But then they change their mind and tell them to do a 2-mile swim in the cold ocean in the pitch dark. I'm fascinated by the type of person that doesn't just quit but instead wades into the water to complete the swim. What do those people have in common? The book doesn't fully answer that question, but it does give some great insight into what separates the highest performers from the rest of the pack.

8/ The Death and Life of Great American Cities by Jane Jacobs. This is a very dense and masterful deep dive into the ingredients involved in successful urban planning. As someone that has lived in big cities for the last 20+ years, I found myself nodding in agreement at the endless insights inside this book. Really well done.

9/ How Innovation Works by Matt Ridley. This is a book about the conditions that drive innovation, from antibiotics to automobiles. He argues that innovation doesn't come from top-down, corporate or government programs. Instead, it comes bottom-up via entrepreneurial capitalism through relentless tinkering and iteration. An easy read with countless useful examples. 

10/ Angel Investing: The Guide to Making Money and Having Fun Investing in Startups by David S. Rose and Reid Hoffman. This is the bible on individual investing in startups. A really comprehensive guide that covers every topic you need to know related to this extremely risky investment category. Written in 2014, the book is somewhat dated given the madness surrounding venture investing over the last few years, but all the fundamentals are covered with some great frameworks on how to manage risk.

Finally, I didn't read a lot of fiction last year, but I did get around to reading Angela's Ashes by Frank McCourt. Obviously not the most uplifting book, to say the least, but the writing is just phenomenal. Highly recommended.

Hope you enjoy some of these.

DoorDash’s Empathy Policy

I read the other day that DoorDash is requiring all of their employees (including their CEO) to make at least one food delivery per month. A lot of engineers were less than thrilled with the idea.

I love this idea. One of the challenges in building b2b software is that your product/engineering team is often very disconnected from the user and the user's problems. DoorDash is lucky that many of its employees likely use the product from the consumer side. That's a massive advantage because they have built-in empathy for the user.

But they're also building for the business user (the Dasher), and many/most employees at DoorDash likely have little to no experience delivering food to a customer. Forcing them to do it once a month drives business user empathy and, likely, a much, much more delightfully built business-facing product.

Throughout most of my career, I've worked with companies that build software products for business users. So I've experienced this challenge first hand. If you're building software for, say, police departments, it's highly likely that most of your engineers will never have worked at a police department. There's nothing wrong with this. Their job is to build software. You want people that are great at building software, not great at enforcing the law. But that means that there is an inherent lack of empathy for the user that has to be dealt with proactively. That's why I love DoorDash's decision to get product managers and engineers out in the field to really feel what their Dashers feel. There's no doubt this will result in a better product.

One exercise I'd challenge b2b software companies to work through is to take stock of how many employees they have that truly have been in the user's shoes. Using the example above, it's worth asking how many employees inside the company have worked for a police department or have had a job where they "could've" used the product they're building? Lots of companies wouldn't have a great answer to that question. And that's ok. But those companies have to make proactive moves to drive empathetic product development.

DoorDash's policy is an excellent step in that direction.

The Operator Shortage

Howard Lindzon described the current state of startups really well the other day on the Animal Spirits podcast. I’m paraphrasing, but he said something like:

There are lots of good ideas. There are lots of founders that want to pursue those ideas. There’s lots of cheap capital for founders to raise and build companies around those ideas. But there’s an extreme shortage of qualified operators to go and execute on those ideas.

There aren’t enough high-quality operators that have actually built companies from the ground up. As a result, we’re seeing significant wage inflation across almost every function inside of startups. The ability to recruit and retain top talent is more important than it has ever been in tech (Apple just offered $180k bonuses to engineers to get them not to leave and go work on the metaverse or crypto). Good companies won’t have a problem raising capital, but almost all of them will struggle to hire the best people.

Build a brand that attracts both customers and potential employees. Hire managers with high levels of followership.

Be a company that people want to work at with leaders that people want to work for. Nothing is more important in this market.

Execution, Execution, Execution

Most sales teams don’t need more TAM to sell into, they need to get better at executing against the TAM they already have.

Most product teams don’t need more ideas, they need to get better at executing against the ideas they already have.

Measuring ROI In Enterprise Software

One of the main topics I talk to founders about is how to measure the ROI of their product and how to communicate that ROI to a prospect. This topic almost always comes up in sales conversations, and it’s important to be able to lead this conversation with clarity and authority.

I like to use a simple framework for how to think about a product's ROI, using three broad categories of measurement:

1/ Product usage and engagement. Registered users, monthly active users, transactions, data delivered, etc. Depending on the product, this can be more or less impactful. This is a useful way to think about ROI for a product that doesn't need to be used by a user (like an employee discount program or coaching software). This is not a very effective way to measure ROI for things like expense reporting or benefits management where users are required to use the product to accomplish something.

2/ User satisfaction. This is a bit of a step up over usage metrics in that it measures not just whether or not users use a product, but whether or not they like it. This can be an effective way to measure the ROI of an enablement tool where usage is not optional and financial gain is difficult to measure. NPS is a good measurement for this but I love the way Superhuman tracks this using this question: 1. How would you feel if you could no longer use Superhuman? A) Very disappointed B) Somewhat disappointed C) Not disappointed. There’s a great First Round article on this topic that’s worth reading.

3/ Revenue/Cost savings. This is of course the most impactful way to talk about ROI. It’s especially effective when a company is trying to create a category. In the early days of selling Zocdoc (an online appointment booking software for healthcare clinicians) revenue generated from the service was a crucial part of the ROI conversation. Most doctors didn't feel like they had to put their schedules online, so the only way they'd buy is if they were comfortable that they'd make money. While this was always important, it became less so over time. Online appointment booking became a standard. They had to do it. So other metrics and measurements became more important (e.g. does the staff like using it?).

Depending on the stage of category creation for your product as well as its competitive dominance, it’s important to understand where your product sits in the framework above. Some products need a hard financial ROI, others don’t.

The canonical example of the latter is Salesforce.com. A few years ago, I asked a Salesforce sales rep how they talk about ROI with their customers and he looked at me like I was crazy. The CRM category has been created and it’s now quite mature. Almost all companies of a certain size need a CRM. It’s sort of like calling Verizon and asking them about the ROI on your cell phone. At some point, you just need it. So Salesforce doesn't need to convince you that your sales teams will make more sales because you're using Salesforce, they just need to convince you that everyone uses it or uses something like it and that you need it too. They can validate their ROI by showing usage stats (the bottom of the stack). And if your team isn't using it, that's likely your own fault because you haven't done enough training or promotion to get employees to use it. And of course, they'll be happy to sell you a service that will do that for you.

When taking a product to market, it's important to recognize where your product sits on this stack. Are you selling something that will only be purchased if there’s a crystal clear ROI, or are you selling something that is required to keep the lights on?

___________________________________

Footnote: If you’re interested in learning more about category creation, I highly recommend the book Play Bigger by Al Ramadan.

Footnote 2: Generally, when talking about ROI you have the buyer and not the user in mind. However, it’s important to understand how both are thinking about assessing the ROI of your product.

Footnote 3: Eventually, all ROIs come down to dollars and cents. As an example, user satisfaction might lead to better employee retention which saves your customer money. But don’t go there if you don’t have to. ROIs generally have lots of assumptions that are easy to disagree on and challenge. Striving to show a financial ROI when it’s not needed can complicate/undermine the story you’re trying to tell.

Learning How To Learn

Perhaps the most valuable skill one can have today is the ability to learn new things. The world is changing so fast. Static, top-down learning and development programs are quickly becoming outdated and irrelevant. 

The good news is that there is so much information available for free. Any self-motivated individual can learn almost anything on their own — assuming they know how to learn in a self-directed way.

In my mind, there are three steps to being proficient at self-directed learning:

1/ Identify what you don't know that's important to learn.

2/ Find resources to learn about the things you don't know.

3/ Do the work to learn about the things you don't know. 

Identify what you don't know. This is the hardest part. Because often you don’t know what you don’t know. This is where it's helpful to have mentors that can help identify your blind spots. It's also helpful to have a network of other people who are doing your job or the job you want to do. 

For an aspiring sales leader, here’s a list of things they should be learning as they climb the ladder from individual contributor to a sales manager to an executive.

Individual Contributor:

Sales tactics (discovery, outreach, access, presenting, proposals, objection handling, creating urgency, closing, etc.).

Understanding your buyer and your buyer's industry (business model, competitors, motivations, priorities, org chart, decision framework, regulatory, etc.).

Sales Manager:

Management (hiring, firing, employee engagement, giving feedback, setting priorities, territory management, performance management, etc.).

Sales strategy (forecasting, OKR management, customer segmentation, prioritization, leadership reporting, etc.).

Executive:

Management against industry metrics (e.g. in SaaS - CAC/LTV, Rule of 40, Payback period, growth rates, gross margins, etc.). 

Company strategy. Setting mission and vision. High-level qualitative goals and financial goals. 

Thinking like an investor. Understanding how financial metrics, storytelling, and a long-term plan connects to a company’s valuation. Understanding the mindset and motivation of investors that would invest in your company. 

Find resources. This is relatively easy these days. Use Twitter to follow experts in your areas of interest. Setup a Feedly account to get a feed of blog posts related to the interest area. Setup your podcast feed to receive daily podcasts on the topic. Read the best books on the topic. Join communities (such as Pavillion or SaaStr) to interact with peers. Leverage your investor networks (First Round Capital has a great one). Find a coach. Find a mentor.

Do the work. Once you've identified the learning area, start to obsess about it and immerses yourself in content. You'll quickly identify areas that you didn't know you didn't know. Learn about those things. Create habits that force you to keep learning. Listen to one podcast per day. Read 50 pages per day. Set a goal of having coffee with at least one mentor or person that does the job you want to do each month. Repeat. 

Discipline In Company Buildling

I love this Tweet from Dan Hockenmaier.

It's very common for early-stage startups to over-title people to get them in the door. Often they don't have the clout or the cash to get great people, so they use a senior title as a way of convincing someone they like to join the team. This is a mistake and causes all kinds of issues down the road. When the company is finally able to recruit people that are legitimately at the Director or VP level, those people are going to look at their peers and demand a higher title.

The company will then have a similar problem at the VP or C level. It will result in a disjointed and confusing org chart that will need to be blown up. And if the company wants to hire above the person they over-titled, they may have to let that person go or give them a demotion (which will likely cause them to leave). The hard work will have to happen at some point. Over-titling people in the early days just kicks the can down the road. In his book, the High Growth Handbook, Elad Gil points out that, in the early days, Facebook and Google gave employees the lowest titles possible (VPs that came over from Yahoo! or eBay came in at the Manager or Director level).

With all of that said, the much more significant implication of Dan's Tweet is less about a decision around what title to give someone, and more broadly around the topic of discipline in building a startup. Startups are so hard to build and there will be all kinds of temptations to cut corners, delay hard decisions, and take the easy way out. Some examples:

• Give away free pilots.

• Build one-off features to close a deal.

• Agree to overly flexible payment terms.

• Hire an experienced person even if they're not the right fit with the team.

• Delay terminating an employee that is damaging culture.

• Partner with a well-known brand even though it doesn't align with the company strategy.

• Raise more capital than is needed.

• Pivot product roadmap based on a few customer requests.

I could add 100 more things to this list. The startups that consistently resist these temptations are the companies that win. Eventually, a lack of discipline will catch up to the startup and will make success even harder than it should be.

When joining a startup, look for signals of good discipline. You might not get the title you want, but that’s a small price to pay to get a seat on a rocket ship.