AlleyCorp’s Kevin Ryan on Traits of Great Business Leaders

What qualities do the best CEOs share? Kevin P. Ryan, founder and CEO at AlleyCorp, has launched dozens of highly successful tech companies. A company’s success, Ryan emphasizes, relies less on the idea than the team who executes it. Within AlleyCorp, Ryan conceptualizes new businesses. As the company begins to take shape, he handpicks a CEO with the skills and the mindset that aligns with the company’s unique needs at that stage. Regardless of industry, he’s learned that great startup leaders possess three core traits. In an interview with Shikhar Ghosh, Ryan defines those traits and shares his strategies for hiring an outside CEO or head of product.

Interested in learning techniques to help you find the right co-founder? “Choosing a Co-Founder? How to Find the Right Person,” features tips and methods used by Ryan and other entrepreneurs, including Dinesh Moorjani, who co-founded Tinder and nearly a dozen other startups, that can help you evaluate potential co-founders.

Core Skills Required for the Company's Success

Kevin Ryan: I’m looking for two things. One, I want to find out what is the most important skill for this company. What’s the core skill? So in Mongo, it would be technology. Biz Insider it would be journalism. In Zola, it would be product. And so I want the CEO, ideally, to come from that background.

Shikhar Ghosh: Consumer product, right?

Kevin Ryan: Consumer product, yes. Not the physical product, the consumer product. Building the website, the features, things like that. It’s got to look beautiful. And in all three cases, that’s the person that I went for. So they had that core skill. No CEO has all the skills. But, hopefully, their core skills are the most important skill.

Relevant Experience & Pattern Recognition

Shikhar Ghosh: So there’s this choice. If you have a thousand employees, do you get somebody from a division of IBM or some big established company, or do you get someone who’s taken a small company and grown it if you’re gonna replace the current CEO? When do you bring in someone from a big company whose career has been at a big company?

Kevin Ryan: I still would rather have someone else who has taken a company from a small company to a company our size, but was known as a good manager. Like the person I hired has exactly that profile, he had not managed 10 thousand people, he had managed a thousand from a company he started. He took it public, sold it and so has not managed 10 thousand. But I believe someone who manages a thousand can manage 10 thousand, and I don’t always believe that someone who has managed 10 thousand can manage thousand. That past record of success is helpful.

My challenge is when I hire a CEO for a new idea that no one’s done before. No one has had the particularly relevant experience. So that’s why it’s a bigger leap and it’s hard. Hiring is never easy and we make mistakes all the time.

Kevin Ryan: I think a lot of it is really, though, judgment and execution. Seeing things quickly. I think some of the CEOs in the companies would say that, in retrospect, I saw some problems coming, even before they did. Because I’ve just seen it more than they have. And so that, hopefully, adds some value.

Shikhar Ghosh: So in the hiring process for a CEO, what’s your sense of how much time or how much weight you put on sourcing with the interviewing, with the reference checking, all of that?

Kevin Ryan: So for me, the most important thing is the reference checks. I need to know that this person was successful in their last company. And what I mean is that people who worked for that person wanna work for that person again.

Shikhar Ghosh: I just want to go a little bit deeper into what causes the record of success. That there’s pattern recognition. Is there anything more specific?

Charisma and Ability to Attract Talent

Shikhar Ghosh: If you think about all the CEO’s you’ve hired, particularly the ones that you admire through longer periods of time, are there characteristics that come up that seem consistent across them?

Kevin Ryan: Yeah. They’re hard-working, they’re ethical. No one wants to work for someone who’s not. The direct reports are gonna feel like the CEO cares about them personally. They care about their performance, but they also care about them personally and that makes a big difference. They have really good executive functioning skills. They could be an engineer, they could be an introverted engineer or an outgoing salesperson. They get back to people, they understand … They’re juggling many, many, many different things. There’s just no way around that, so they’ve got to be able to manage the different projects. They’ve got to be able to delegate those.

Kevin Ryan: If they can’t delegate, they explode. And so, you’re forced to do that. I saw that at DoubleClick very early on. I had to start pushing things off and that’s good for two reasons. One, your direct reports want you to delegate more. That makes their job more interesting. Secondly, if you don’t you are gonna slow everything down. I would start to say, “Look, if I don’t get back to you in 24 hours, whatever you asked me is approved.” I cannot get in the way of what you’re doing, so it’s my burden to handle that problem-

Shikhar Ghosh: Literally, you had that rule?

Kevin Ryan: Yeah, because otherwise you can’t be sitting there and saying, “Look, I lost someone we’re trying to hire, because you didn’t get back to me and give me an approval.” If I can’t get back to you that’s my problem. In the beginning, I needed to interview every single person. Then you get to a certain size where that’s a terrible rule. You have to have the authority to do that. In the beginning, I signed every check, and then, pretty soon, it’s only over $10,000. Then pretty soon, I’m like, “No, $100,00.”

You have a track record. If you make bad decisions, then we’ll deal with that when we do. I also don’t have a vacation policy and no expense report policy. I think it’s insulting for me to go to you and say, “You can’t spend more than $50.00 for dinner.” Right? Meanwhile, you’re someone who’s making decisions for the company that is worth tens of thousands of dollars. Whatever you think you should expense, put it in there. I’m gonna look at it. We may discuss it, but I have to trust your judgment on this.

If you decide that Wednesday you want to take two hours because you want to go smell the flowers in central park? You manage your own time. I don’t micromanage that. I know you worked on Sunday for a couple of hours, you didn’t punch in … We’re not hourly workers, so I don’t track that. I don’t want to track that.

Shikhar Ghosh: So you’ve got a template for how you hire the CEOs. Do you, CEOs now hire other people, do you give them some advice on … this is the way you should think about hiring your team?

Kevin Ryan: You know, I give them advice but it’s a different thing because when you’re looking for a functional person, you’re looking for a Head of Sales, they’re going to look for someone who’s been in sales. And who’s been in sales ideally in a similar type industry/ company as close as possible that’s relevant. Ideally, they know the customer base, so it’s a much easier hire in some ways.

Shikhar Ghosh: That seems to be a refrain that keeps coming back. Are you able to hire people and keep people and having them want to keep working for you?

Kevin Ryan: Yeah. This is not the military. In the military, you can’t quit, and so you can be difficult. The CEOs here can not. It’s very important. And you can see it, you can name companies out there today who are losing senior executives all of the time, and have enormous turnover, and that’s a bad sign.

Zola has never had an executive quit, we’re five years in. One person moved to London because her husband was transferred and had to go, but that’s a good sign. I feel good about that in judging how they’re doing.

So yeah, when anyone who is gonna be at Zola, I would say, “Go ask around the New York market, and ask whether your friends have friends who like working at Zola, and I know the answer is gonna be yes.” And they like the senior management team.

Shikhar Ghosh: And you have formal metrics?

Kevin Ryan: We definitely get scores on the customer side. You can only do culture survey results once you get to a certain size. You probably need at least a hundred to two hundred employees, and that’s something we look at religiously in managing the company. So at Mongo, we check it every six months, at Gilt, we did it every six months, and at Zola we’re starting to do it.

Kevin Ryan: Before that, I have to have a general sense. I have to have my finger on the pulse, I wanna know what’s happening. I have a sense generally in my company, as soon as they get to 20 employees whether employees are happy and they feel good. But I’m asking around to get that information all the time.

 

Kevin Ryan: The second thing is over time, they have to be the person that can build a team and so, do people want to work for this person? Have they had a track record? By now, they’ve managed people and they have to be a successful manager whether it’s in technology, in finance, in sales.  If they’re going to be CEO, they need to be someone other engineers want to go work for and then once it’s a company with salespeople and things like that, if the salespeople need to work for this person too.

They have to have those generic leadership skills that are going to attract other people. It is brutally competitive to hire people in the internet today. You know, it’s a fantastic market. Everyone has choices so you’ve got to want to work here and it’s because of the idea

Shikhar Ghosh: How do you know that others want to work with them? I mean, how do you test these things generally?

Kevin Ryan: The only thing that would maybe require some testing that way would be the technical skills but I don’t need to do that. This person has been managing 10, 20, 30 engineers before. People who worked for him or her know whether they’re technically good or not. And let’s not forget, they’re not a single contributor technology expert. It needs to be someone that engineers respect and want to work for. And so they have already established that reputation or they haven’t at this point. I don’t need to make the ultimate judge on that. They’re not winning a competition in technology. They have to … other engineers have to feel very good about it.

Kevin Ryan: So the CEO has to be hiring people, making good decisions and raising money. And if they can’t do that, then they can’t do the job. And that’s what I’m looking for all the time. Keeping good people, retaining them, being able to raise money. You have to raise money every year, if you’re expanding, you’re raising money every year; every year and a half.  I will get the feedback from all the VCs and I’ll see it. Do they believe in it as well?

Shikhar Ghosh: In the category of raising money comes business performance, you have all of that, in order to raise money.

Kevin Ryan: Absolutely. So that’s the most important thing they look for. They will actually back someone who’s kind of a jerk if the company’s doing incredibly well. But I’m just looking for all those things, it’s very disruptive to change CEOs, so you don’t wanna do that unless you really feel it’s the right decision.

Kevin Ryan: But I did that at WorkFrame, which is a company I started three years ago. I did that at Gilt, and so it happens. And I did that actually at Mongo. We had a CEO for three and a half years who did a good job taking it from a hundred thousand in revenue to 40 million. But I could see that he wasn’t gonna take it from 40 million to 500 million, and so I hired a CEO who had managed a publicly-traded company, a thousand employees and was gonna be a better CEO for the next phase, but I think he can take it all the way.