Many folks make the observation that it’s challenging to run a fast-growing technology start-up. I personally think that’s a dramatic understatement. It’s the hardest thing I’ve ever done…as well as the most rewarding.
I’d had very modest experience actually running a business when I got to eBay in 1999. Most of my management experience had been in running functional groups within organizations, such as being the CFO of The Disney Stores. I had a very brief stint running a business as CEO of Reel.com, the now defunct movie superstore that Amazon steamrolled once it expanded beyond books. But that doesn’t really count as it wasn’t really a business—for example, no viable business spends something like $40 million in marketing to sell something like $40 million in DVDs at a gross margin loss. Reel.com went from filing to go public in December 1999 to being closed down in June 2000, ostensibly a casualty of the end of the “Bubble”. I saw the writing on the wall and left as they were preparing to file.
But Meg Whitman was willing to take a chance on me in spite of this lack of operating experience. Meg had been my hiring manager at The Walt Disney Company in 1990 when I joined their Strategic Planning unit. Nine years later, after we both had departed Disney, she reached out about my joining eBay. Frankly, my impressions of eBay going into those conversations was that it was a quaint website that sold lots of collectibles like Beanie Babies, and it was already public so that most of the potential upside had already been realized. But Meg is quite compelling, and she successfully disabused me of those notions and convinced me to join—no small feat given the Bubble was still alive and well at that point and I had lots of other offers (companies in the Valley in the late ‘90’s were hiring anyone with a pulse!).
My first role at eBay was managing a fledging “Services” unit whose charter was to develop partnerships with companies to facilitate trade on eBay, such as bulk auction management tools or electronic postage. And she gave me a whopping two employees to manage, one of whom it turns out was plotting to start a Baja Fresh franchise and soon left.
But I had joined eBay as part of a management “bench”, in the hope that a bigger job would materialize down the road. And one quickly did when Meg decided to split eBay into two divisions with the launch of the International unit, and in early 2000 she appointed me as head of the legacy eBay North America business. Fast forward, I ended up running that unit for about five years during its period of hyper-growth. During that time I championed eBay’s acquisition of PayPal, and in 2005 I moved over to head PayPal during its hyper-growth period. Having started my eBay career managing effectively one person when I joined, seven years later I was managing something like 5,000 people. What a ride!
Over the course of my seven years at eBay, I discovered the experience and requirements of successfully running a hyper-growth business changes dramatically over time. The best analogy I have for it is a sports analogy:
Employees = 1-10. Player:
When I first started managing eBay North America, I recall I was managing about a half dozen people. At this scale, I found myself involved in pretty much every decision. Heck, I found myself making pretty much every decision. It felt like I was on the field of play during a high stakes game, my adrenaline pumping as the action crashed all around me. It was unbelievably exhilarating, and it seemed to be working—the business was growing like crazy!
Employees = 10-100. Coach:
…Until it wasn’t working any more. It turns out the number of decisions to be made scaled tremendously, seemingly even faster than the business. The line of people outside my cube waiting for decisions kept growing longer, and it quickly became obvious that the old M.O. wasn’t going to scale. I found I needed to hire talented people to supplement my efforts and delegate more and more decisions to them. And I needed to manage these daily decision makers as a team, giving them high-level direction and coordination but watching from the sidelines as they executed the plays. I had to become a coach. I found it a bit less exhilarating, but it scaled a whole lot better and at least I was able to make it home at night.
Employees = 100-1,000. General Manager:
And then almost just as quickly coaching wasn’t working any more. The business continued to explode, and the folks I was delegating the daily decisions to soon found out they couldn’t make all of the decisions themselves either. They now also needed to become coaches, building out their teams and delegating their decisions to their players. And I found I now needed to coach these new coaches differently. I still needed to give high-level direction, but other tasks soon became required such as setting high-level organizational goals, coordinating their efforts, and tuning the organizational relationships of these rapidly growing groups. I had to become the general manager of this rapidly growing team.
Employees 1,000-10,000. Commissioner:
By the time I moved over to manage PayPal, the size of the team had grown into the thousands. And I quickly discovered that I needed to supplement my just discovered and nascent general manager skills substantially. The organization was so big that the players on the field were now two or three levels below my direct reports. I continued to set high-level direction, but I quickly found that the organization performed best when I executed a set of administrative tasks that I came to refer to as the “-tions” (pronounced “shuns”) such as vision, motivation, communication, organization, simplification, and coordination. If I performed these “shuns” well, then the team was freed to devote most of their energies to the game. With my sports analogy, I’m not sure now whether I was the team owner or the commissioner of the league, but I do know that I felt like I was in a Sky Box near the top of the stadium, squinting down trying to see what was happening on that distant field of play.
The most important discovery I made in this process was the recognition that I needed to quickly and continually develop entirely new sets of skills to manage the business effectively as it very rapidly scaled. And given the rate of scaling, that required massive learning and adaptation at a ridiculously fast pace. And given eBay/PayPal was a high profile business and I had a high profile role, any failures on my part to deliver would be widely known. This was really, really hard work that needed to be done at a break-neck pace amidst very high levels of stress, much of it self-imposed.
I heard G.E. chief Jeff Immelt speak to a small group of executives during this time. He said something that stuck with me, that leadership requires high levels of self-awareness and requires an intensive journey into knowing oneself. Becoming a great leader requires you to know yourself, your strengths, weaknesses, and idiosyncrasies. And it requires you to understand how others experience you, perceive you, and respond to you.
In looking back, I think he was precisely right. Here are some of the tools I used on that journey to self-awareness that enabled me to scale from managing one to thousands of employees:
- Periodic 360 feedback from the organization. It’s really quite straight forward: If you ask people for feedback and typically respond to it in a constructive way, then they will typically give it to you. I usually awaited this periodic feedback with a sensation somewhere between dread and abject terror each time it was coming. But done right this feedback was almost always constructive, and it invariably gave me a roadmap for what was working as well as what wasn’t, which led directly to the new skills I needed to develop.
- Working with a talented coach that I trusted. My buddy John Donahoe, the current CEO of eBay, turned me on to the concept of using a coach in a session during my eBay tenure when I was pulling my hair out in frustration. He observed that if world-class athletes like Tiger Woods (recall this happened last decade) utilized swing and strength coaches, why shouldn’t executives who aspired to improve use a management and leadership coach? I ended up using a number of coaches over the years and one that helped me tremendously was a wonderful woman named Jane Creech. Jane’s efforts in helping me develop my management and leadership skills made me better…and probably had an indirect impact on improving the lives of thousands of people at eBay and PayPal!
- Find a mentor or mentor(s). I eventually made the realization that I wasn’t the first person who had gone through this situation. One of the things that makes Silicon Valley unique is that it’s one of the few places in the world where hyper-growth companies are spawned with fairly high regularity. So over time I developed a few close relationships with people who had “been there, done that” that proved very helpful to me. John Donahoe was one of these people, as were a few members of my Young Presidents’ Organization who were in my forum.
The keys to success to using these methods are a hunger to learn and improve, a willingness to be vulnerable and share weaknesses as well as strengths, and often owning up with your organization to shortcomings that you’re working hard on improving. And for me, these were the heavy-lifting parts of the process.
That said, it was an incredibly gratifying journey to be able to scale effectively from running a small start-up to leading a huge organization. Personally, I found the early days to be a whole lot more fun. I recall a conversation late in my eBay tenure with Scott McNealy about how I was becoming more effective but having less fun over the years as the business scaled. He said something to me along the lines of “You idiot, don’t you realize that your job is to do the shit stuff so that everyone else in the company can be productive and happy?” I didn’t then, but I do now.