20VC Four Criteria to Assess Great Founders, Why and How the Best Leaders Make the Wrong Decisions 40% of the Time, Lessons Scaling King from 100 Employees to 2,400 and Making $1BN of EBITDA with Stephane Kurgan, Venture Partner @ Index Ventures

Summary Notes


In a masterclass episode of 20VC, host Harry Stebbings interviews Stefan Kurgan, a renowned European operator celebrated for his leadership at King, where he drove growth from $65 million to $2.4 billion in bookings, expanded the team from 100 to 2400 employees, and led a $7 billion IPO before its acquisition by Activision Blizzard. Kurgan, now a venture partner at Index Ventures and executive advisor at Technology Crossover Ventures, shares insights on leadership evaluation across four dimensions, the importance of trusting data over intuition, the Swedish model of labor relations, and the necessity of making decisions and embracing failure as a manager. He also discusses the challenges of maintaining company culture during rapid scaling, the significance of diversity in teams, and the role of luck in business success. The episode is interspersed with promotions for productivity tools Coda and Navan, and an investment opportunity with Public.com.

Summary Notes

Evaluation of Leadership Performance

  • Steph evaluates leadership across four dimensions: operational performance, organizational maturity, contribution to corporate agenda, and personal leadership journey.
  • Operational performance is about whether leaders are meeting or exceeding their financial targets.
  • Organizational maturity assesses if leaders have built a strong team, developed effective processes, and ensured succession planning.
  • Contribution to the corporate agenda examines leaders' involvement in broader company objectives beyond their department.
  • Personal leadership journey looks at whether leaders are role models, thought leaders, and how they are advancing in their personal development.

"The way I evaluate the performance of the leadership team is I look across four dimensions."

This quote outlines the multi-faceted approach Steph uses to evaluate leadership, emphasizing a holistic view of performance that goes beyond just financial results.

Importance of Decision-Making in Management

  • Making decisions is a key part of management and leadership roles.
  • A good manager is defined by Steph as someone who makes 55% good decisions, while an exceptional one makes 60%.
  • The acknowledgment that leaders will make mistakes, but it's essential to make decisions nonetheless.

"The job of, you know, most managers and leaders is to make decisions. If you, as a manager, if you make 55% of good decisions, you're a really good manager. If you make 60%, you're exceptional."

This quote highlights the importance of decision-making in leadership and sets a benchmark for what constitutes good and exceptional managerial performance.

Rapid Growth and Scaling

  • Steph's experience includes scaling a company from 100 to 2400 employees in three years.
  • The company achieved significant financial success, making almost a billion dollars of EBITDA the year before IPO.

"We went from, you know, 100 employees to 2400 employees in three years. We were hiring 100 employees a month. We made almost a billion dollars of EBITDA the year before IPO."

This quote provides evidence of Steph's credentials and experience in managing rapid growth and scaling in a corporate environment.

Steph's Background and Achievements

  • Steph is recognized as a top operator in Europe with a successful track record at King.
  • Under Steph's leadership, King experienced significant growth in bookings and employee numbers, culminating in a successful IPO and acquisition.
  • Steph currently serves as a venture partner and executive advisor, sharing his expertise with other companies.

"Steph is widely considered one of the best operators in Europe. During his tenure as co king, King went from 65 million to 2.4 billion in bookings from 100 to 2400 employees, and did a $7 billion IPO before being acquired by Activision Blizzard."

This quote summarizes Steph's professional accomplishments and his reputation in the industry, establishing him as a credible source of insights on operational excellence.

The Role of Data in Decision-Making

  • Trusting data over intuition is a key lesson from Steph's time at King.
  • Data can often provide insights that contradict initial product intuitions, requiring humility and adaptability from product teams.
  • Data-driven decisions are critical in environments where there is a wealth of information available.

"Trust the data, not your intuition."

This quote underscores the importance of relying on data rather than just intuition when making business decisions, especially in data-rich environments like gaming.

Swedish Model of Labor Relations

  • The Swedish model of labor relations is praised for creating resilient companies.
  • Generous parental leave policies and the ability for employees to take sabbaticals contribute to a robust and cooperative workforce.
  • The model encourages a balanced lifestyle, which Steph believes is exemplary for other countries.

"The Swedish model of labor relations is fantastic. You build incredibly resilient companies."

This quote reflects Steph's admiration for the Swedish approach to work-life balance and its positive impact on company resilience.

Personal Journey and Parental Relationships

  • Steph shares his personal journey of overcoming a difficult relationship with his father.
  • He emphasizes the importance of reconciling with one's parents to improve one's relationships with their children.
  • Steph's experience with his father has likely influenced his approach to parenting and leadership.

"For a long time, I was running away from my father. I had a very difficult relationship with him."

This quote offers a glimpse into Steph's personal life, illustrating how personal experiences can shape professional attitudes and behaviors.

High Performance in Leadership

  • High performance in leadership involves excelling in operational success, team building, corporate contribution, and personal development.
  • Founders may vary in how they meet these criteria, with some spiking in certain areas and less in others.
  • The ability to assemble a great team and provide direction is crucial for founders.

"I look across these four dimensions to assess leadership performance."

This quote ties back to the earlier theme of evaluating leadership performance, reiterating the four-dimensional framework Steph uses to assess leaders.

Common Challenges for Founders

  • Founders may not always align with the framework used for professional executives, particularly in the early stages of a company.
  • The framework is more applicable once the company has matured and the focus shifts from tactical navigation to strategic management.
  • Founders' success often depends on their ability to build a strong team and lead effectively.

"You will find the founders spiking exceptionally on some of these and maybe less on some others."

This quote acknowledges that founders may not fit neatly into traditional leadership performance metrics, highlighting the unique challenges and strengths of entrepreneurial leadership.

Analyzing Founder Development Rate

  • Evaluation of founders includes assessing their listening skills, motivation, objectives, self-awareness, vulnerability, and ability to build a team.
  • Age varies among founders, with successful ones often in their early forties.
  • Key traits like self-awareness and vulnerability are not age-dependent.
  • The presence of a supportive team around the founder is an early indicator of their leadership potential.

"And so obviously you apply a slightly different evaluation grid at that stage. But it's really, what is the appetite to listen? What drives them? What is really their objective?"

This quote highlights the importance of understanding a founder's motivation, objectives, and willingness to listen as part of the evaluation process.

Effective Executive Behavior

  • Effective executives work in service of their team, acting as a multiplier of the team's time and effort.
  • Preparation and focus on critical issues are essential for productive meetings.
  • Role modeling disciplined behavior can create a more efficient organization.

"I think you need to do the work. I think you are the service of your team. And that means that you should not be a consumer of their time, but you should be a multiplier of their time and their effort."

This quote emphasizes the role of an executive as a facilitator who enhances the productivity of their team through diligent work and preparation.

Scaling Organizations: Communication and Decision Making

  • Communication is a persistent challenge in scaling organizations, often perceived as insufficient by employees.
  • Effective leaders must be prepared to repeat key messages and ensure thorough communication throughout the organization.
  • Decision-making involves consulting data and stakeholders, syndicating decisions when necessary, and sticking to them once made.

"90% of scaling organizations is communication and decision making."

This quote summarizes the speaker's belief that the majority of scaling a business revolves around the effectiveness of communication and decision-making processes.

Trust and Communication

  • Trust is foundational for effective horizontal communication within an organization.
  • Trust can be lost due to politics or misalignment among leaders, leading to communication breakdowns.
  • Trust is given the benefit of the doubt initially, but deeper trust is earned over time.

"It's when trust breaks down, because horizontal communication is also very important."

This quote connects the breakdown of communication to the erosion of trust within a team or organization.

Goal Setting

  • Teams should set their own goals to increase engagement and ownership.
  • Leaders should challenge teams if their goals are not ambitious enough.

"What's very important is for teams to set their own goals because that's how they're going to be engaged and that's how they will stretch methods."

This quote suggests that when teams are involved in setting their own goals, they are more likely to be committed and strive for excellence.

Communication Breakdowns

  • Founders may struggle to find the right balance in communication, either over-communicating or withholding information.
  • Board members and investors require a certain level of transparency to be effective.
  • Direct conversations are necessary to address communication issues.

"For some of them, it takes time to find the right balance."

This quote acknowledges the difficulty founders may have in finding the appropriate level of communication with various stakeholders.

Personal Communication Mistakes

  • Hasty decisions and communication can lead to mistakes.
  • Communication should be structured and well-thought-out to effectively convey the intended message.
  • Apologizing for communication errors is acceptable and necessary.

"Decisions made too fast and communicated too fast."

This quote reflects on the speaker's own experience with communication errors, emphasizing the need for deliberate and thoughtful communication.

Feedback and Transparency

  • Feedback should start with positive aspects and then address areas for improvement with specific examples.
  • Radical transparency can lead to high trust and engagement but may require adjustments to protect sensitive information.
  • Feedback should be actionable, and challenging feedback should be delivered at the right time.

"Always start with the good stuff, positive feedback to start with."

This quote outlines a strategy for giving effective feedback, beginning with positive reinforcement before discussing areas for improvement.

Decision Making Framework

  • Making decisions involves looking at data, consulting with others, syndicating decisions when needed, and being consistent.
  • Failure is an accepted part of decision-making, and repeated mistakes should be addressed.
  • A framework for decision-making should involve data analysis and broad consultation.

"Look at the data, consult widely. And when you make a decision, if you have to syndicate it, syndicate it."

This quote describes a structured approach to decision-making that relies on data and consultation to inform and support the decision process.

Decision Making and Organizational Paralysis

  • Making decisions and sticking with them is crucial to prevent paralysis within an organization.
  • A bias for execution should follow decision-making, executing decisions quickly and effectively.
  • Reversing decisions frequently can lead to indecision and stagnation.

"You make a decision and then you come back on it the next week, and then the following week, and basically drives paralysis in your organization."

This quote emphasizes the negative impact of indecisiveness on organizational momentum and highlights the importance of being resolute in decision-making to maintain forward progress.

Handling Incorrect Decisions

  • It's acceptable to change a decision if new facts emerge.
  • Changing decisions without new information can lead to a culture of inconsistency and indecision.
  • Most decisions, if made through due process, will be correct.

"When facts change, I change my mind. If there are no new facts and you change your mind on a whim, that kind of behavior will cascade down the organization and you will paralyze it."

This quote underlines the importance of basing decisions on facts and data, and the potential organizational harm caused by capricious changes in decision-making.

Speed of Execution

  • Speed of execution is linked to achieving product-market fit.
  • Iterating quickly on decisions is vital in the modern business environment.
  • Slow iteration can hinder a company's ability to compete and innovate.

"Speed of iteration is very important... Just can't afford to have these cycles in months anymore."

This quote stresses the necessity for rapid execution and iteration in business processes to stay competitive and responsive to market demands.

Recruitment and Decision Making

  • Unanimity in recruitment decisions can lead to better hiring outcomes.
  • Lowering hiring standards can result in poor hires, which can be detrimental to company culture.
  • Recruitment is critical during scaling, and making the wrong hire has significant long-term consequences.

"There is nothing more important when you scale than recruitment."

This quote signifies the critical role of recruitment in scaling a company and the potential risks associated with making suboptimal hiring decisions.

Management and Employee Lifecycle

  • Employees may go through cycles of fit with the company as it scales.
  • Honest conversations are necessary when an employee's fit with the company changes.
  • Values and culture must evolve as the company grows to encompass new employee cohorts.

"Nobody has failed. It's just the way things are."

This quote reflects the natural progression of employees within a scaling organization and the need for both the company and employees to adapt to changing roles and environments.

Company Values and Mission Statements

  • Values guide expected behaviors within the company environment.
  • Balancing values, such as being supportive but demanding, is key.
  • Mission statements should be clear and articulate the company's purpose, especially in early stages.

"The leadership and the employees to abide by when they are in the company environment."

This quote discusses the importance of company values in shaping the workplace culture and guiding employee actions.

Diverse Teams and Gender Diversity

  • Diverse teams perform better and are beneficial to all stakeholders.
  • Achieving diversity, especially in technology, is challenging due to unequal recruiting pools.
  • Developing and retaining diverse leadership is a continuous effort, likened to the myth of Sisyphus.

"It's the challenge of our generation. It's obvious that diverse teams, over time, perform better."

This quote acknowledges the importance of diversity in teams and the ongoing efforts required to develop and maintain diversity in leadership positions.

Loyalty and Leadership

  • Leaders are responsible for creating a culture of loyalty within the company.
  • Retaining top talent, even in executive positions, is a reflection of the company's leadership.

"Clearly we failed. There's something that was missing."

This quote conveys the accountability of leaders in retaining their top talent and the necessity of fostering a loyal company culture.

Compensation and Hiring

  • Compensation frameworks become important as companies scale.
  • Consistency in compensation is necessary, though market conditions can affect hiring strategies.

"There is no good answer there. As you scale, at some point you have compensation frameworks."

This quote addresses the complexity of compensation in the context of scaling a company and the challenges of maintaining consistency while attracting talent.

Founder Decisions on Selling

  • Founders are best placed to decide when to sell their company.
  • External circumstances and investor expectations can influence the decision to sell.

"I would never advise a founder on when to sell."

This quote emphasizes the autonomy of founders in making critical decisions regarding the sale of their company, while acknowledging the influence of investors and market conditions.

Liquidity for Investors

  • Investment funds have a finite lifespan, requiring eventual liquidity for investors.
  • Going public or selling the company can provide the necessary liquidity.

"Investment funds have a lifetime, it's typically ten years, and there can be extensions."

This quote explains the time constraints of investment funds and the need for companies to provide liquidity to investors, which can drive decisions such as going public or selling.

Luck in Business

  • Luck plays a role in business success.
  • The concept of luck can be seen as an 'elixir' that aids in achieving favorable outcomes.

"Luck is important in business."

This quote acknowledges the element of chance in business, suggesting that luck can be a contributing factor to a company's success or failure.

Luck and Opportunity

  • Luck is defined as a combination of opportunity and preparedness.
  • Being prepared means accumulating skills, knowledge, and network.
  • Preparedness allows seizing opportunities when they arise.
  • Steph had a "dry patch" of ten years between successful ventures.
  • Despite previous successes, finding opportunities in Europe was difficult after a failed venture.

"But what, you know, going back to the Greeks is luck is a combination of opportunity and preparedness. And you have to be prepared."

This quote emphasizes the importance of being prepared for when opportunity comes knocking, framing luck as something that can be influenced by one's readiness and actions.

Challenges and Resilience

  • Steph faced challenges after a large exit with a company called EnBs, or NBA Plc.
  • The deal with Telephonica and BBV was blocked by Spanish regulators.
  • The litigation ended in a settlement, but the company had to close operations.
  • Steph struggled to find new opportunities in Europe after this setback.
  • He founded a payment company that failed and joined a software company that was affected by the 2008 financial crisis.

"I had a dry patch. I mean, for ten years, I was pretty much in the desert, right?"

This quote reflects on a period of struggle and lack of success, highlighting the challenges faced even after previous achievements.

Relationship to Money

  • Money provides freedom and spontaneity but not happiness.
  • Liquidity eases life, especially in large urban centers.
  • Money should be spent, given, and invested to contribute to the economy and support others.

"I mean, it buys you freedom and spontaneity, but not happiness."

The quote succinctly captures Steph's perspective on money, acknowledging its benefits but also its limitations in terms of achieving happiness.

Transition to Venture Capital

  • Transitioning from an executive to an investor involves a slower feedback loop.
  • Investment firms are sophisticated and operate like high-performance machines.
  • Decision-making in venture capital is complex and involves many subtle criteria.

"So you go from one day to 3000 days."

This quote highlights the drastic change in feedback loop duration that Steph experienced when moving from an executive role to venture capital.

Working with Founders

  • Venture capital requires a long-term view and restraint in decision-making.
  • Steph brings executive experience to the table but must balance being helpful without being overpowering.
  • The goal is to be a sounding board and support founders in building their companies.

"And so you have to think really hard about whether you want to do something or not."

This quote reflects the careful consideration required in venture capital when deciding to take action on potential investments.

Influence of King on Working with Founders

  • King's environment helped Steph work with both analytical and creative individuals.
  • Steph values the ability to work with "mathematicians" and "magicians" alike.

"And I think before I went to King I could work with mathematicians, but since I've worked at King I can also work with magicians."

This quote shows how experiences at King broadened Steph's ability to collaborate with a diverse range of talents.

Quick Fire Round Responses

  • The most impactful content for Steph was a book called "The Tao of Coaching."
  • Steph has recently reduced alcohol consumption and found it beneficial.
  • The kindest act he experienced was receiving heartfelt emails from colleagues at King.
  • Steph would choose to be CEO of SpaceX for its innovative nature.
  • His biggest weakness is great sushi.
  • Biggest insecurity is not being able to keep up with his wife's fitness level.
  • The secret to a great marriage is loving both the qualities and imperfections of a partner.
  • Parenting advice: enjoy every moment with your children.
  • In the next five to ten years, Steph plans to work on a "kick-ass side project" and continue working with founders.

"It's a very simple small book called the Tau of Coaching."

This quote reveals the book that has significantly influenced Steph's perspective on managing work relationships and becoming a good coach.

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