Dick Costolo is no stranger to running a large company during tumultuous times. As the former CEO of Twitter-turned-Managing Partner and Co-founder at 01 Advisors, he’s now investing in and advising a lot of companies during even more tumultuous times. I recently caught up with Dick, who I’m proud to call a great partner to GGV Capital and a mentor to many of our founders.
Here are some highlights from our unscripted conversation:
Jeff Richards: “How are you helping people think through communication with their teams right now? Because for a lot of folks, it's the first time they've ever seen any kind of downturn.”
Dick Costolo: “Be consistent with your team about the way you're leading and the way you're communicating with them—whether times are good or times are bad. Because if you think people are fooled, they're not… The more you hide information from them, don't tell them things, or [say] we're going to update you on this two weeks from now, the more worried they get.”
“The other thing we’re advising most of our leadership teams on now is—and I think this is a mistake that people who are going through a crisis like this or difficult economic times like this for the first time make—is they'll say: ‘You know, things might turn around in X months so instead of cutting off X by X percent, I'll cut it by X percent divided by three and make this small cut now because things are going to bounce back, and I'm going to be ready for it.’”
“The worst thing you can do to a team is [make] incremental changes to the operating plan.”
“People just walk around with the sword of Damocles hanging over their head... So making hard decisions, making hard cuts, communicating to the team that, ‘Look, we're going to make some really hard decisions and hard choices here. Hopefully it's the last time we have to do it, but we're going to do it pretty intensely right now.’ [That’s] the best way to go about those things. It tends not to be the way people do it because of course it's horrible, so they back off from that—but our advice is to not back off from them.”
Jeff: “The other thing I'm encouraging folks [to do] is to lean in on training and development. Lean in on telling people, ‘I want you to grow as a leader. I'm not going to bring in somebody over you in the next six months. I need you to play up.’ Any advice you'd have for folks?”
Dick: “I always felt that all the time I spent as a CEO recruiting even when we were 4,500 people in 2015 was time well spent. So I think that leaders who feel like, ‘Hey, I'm too busy to spend time on recruiting’ should be spending lots of time on closing candidates …"
“I do think that executives and leaders need to be spending more time—not less time—on recruiting even as you're hiring fewer people.”
“Help people understand that their compensation environment has changed, the way it's changed, how you're thinking about it, and the future of the compensation environment—all those things are helpful to people and helping them make their decision.”
“One of the most effective things we were able to do when we were recruiting against all these other behemoth companies was just saying: ‘I understand you got two or three offers. I would expect that given what a great candidate you are. Whatever decision you make—I don't care if you don't come work here—let's just stay in touch… [If] you feel like you made a wrong decision or you feel like you made a great decision but you need a mentor on something else, just text me or call me.’ You may lose that person today, but as you well know from having been through this so many times, all these people come back around. You end up seeing them again.”
Jeff: “Give me a few things you're optimistic about as you look out over the next three to five years.”
Dick: “The pace of innovation isn't slowing down, even as the economy slows down and we're probably going into recession and maybe even stagflation. As you'll remember from both the dot-com bust in 2001 and the 2008-2009 recession when Sequoia famously issued their R.I.P Good Times deck, when things come back, they come back very quick…”
Jeff: “So true. We try to tell our team all the time, 'Guys, I don't know how long it's going to last. I don't know how bad it's going to be, but I'll tell you what—on the other side, it's good. And there's going to be some great companies that come out of this [that] nobody saw coming.’”
