Insights for Scaling Startups from Serial Entrepreneur Lara O’Connor Hodgson
Despite the proliferation of expert advice for scaling startups, nearly 75% of startups fail as they scale. Some experts advocate that establishing policies can help your team through hypergrowth phases. Shikhar Ghosh sat down with Lara O’Connor Hodgson, a serial entrepreneur whose experience co-founding and scaling two successful startups has given her a unique perspective. As CEO and President of her latest venture, NOW Corporation, she doubled the company’s growth twice in four years, serving 150 small businesses in the past year. NOW Corp’s product, NOWaccount®, an innovative revenue accelerator system, helps startups survive cash flow shortages that often accompany rapid growth. As she prepares her team to double in size again, she shares her insights on four areas that you can expect to change during scaling. A lightly edited transcript follows the video.
Insights for Scaling Startups
Lara O’Connor Hodgson interviewed by Shikhar Ghosh on topics related to scaling rapidly, September 2018, at Harvard Business School.
A Knack for Problem-Solving: From Engineer to Consultant to Founder
SHIKHAR GHOSH: So Lara, tell me a little bit about your journey so far. How did you get to the place that you’re in?
LARA O’CONNOR HODGSON: Right. Well, my journey is anything but a straight line. It looks like spaghetti thrown on a plate, I think.
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: You know I started out with a background in engineering, discovered that I love problem-solving more than sort of the direct application of engineering and so I worked in Japan for a while with the Defense Department, came back, and decided to go to business school.
SHIKHAR GHOSH: With the US Defense Department?
LARA O’CONNOR HODGSON: With the US Defense Department. And then came back and decided that I wanted to go to business school. And I was intrigued more about how to apply the problem-solving than just solving a problem.
So I came up to Harvard Business School and that’s really what broadened my eyes to things. I didn’t even know people did some of the things that they did. I met my classmates and said “Wow, that’s a job? People do that?”
And so when I was coming out of HBS, Bill Sahlman had introduced me to another HBS alum, Bill Nussey, who had just left Greylock Ventures to join the executive team at a company called Lexcel. So it was kind of the very beginning of the web development internet days so I went to Lexcel. I was employee number 26, I think. And that was my first experience—
SHIKHAR GHOSH: That must have been way back in?
LARA O’CONNOR HODGSON: It was—well, I graduated in ’98 so it was way back.
SHIKHAR GHOSH: Yeah, 2000. Yeah, I remember Lexcel way back then.
LARA O’CONNOR HODGSON: Yes. And what was great about that is it was the first time that I had been involved in sort of an early stage, really fast-growth company.
Comfort with Ambiguity
LARA O’CONNOR HODGSON: And I loved the pace, I loved the ambiguity, I loved the concept of building. And so from there I actually was hired by one of my clients to start a footwear company with Shaquille O’Neal and Mike Piazza. That was based on the Dell model of manufacturing so I was out in Los Angeles We built a facility in Macao and did just in time manufacturing of footwear.
And then from there, I decided to come back to Atlanta and help start and run a large real estate development company. And then I became a mom, which was my great venture and adventure ever.
SHIKHAR GHOSH: Talk about problem-solving and …
LARA O’CONNOR HODGSON: Talk about problem-solving, right?
SHIKHAR GHOSH: And ambiguity and …
LARA O’CONNOR HODGSON: It was new techniques you did not know. But you know what it did for me was until then I really enjoyed helping other people grow their companies. So I did not have this burning need to have my own business. I was really good at helping other people grow theirs and I liked it. But I think the idea of becoming a mom made it very important for me to have flexibility in my life.
Deciding to Start a Venture
LARA O’CONNOR HODGSON: And I knew that I’m a workaholic by nature so if I was working for someone else, then I would continue to potentially miss the important part of being a mom. And so I said, Nope, I’m gonna start my own business and what I discovered is that I work more for myself than I ever worked for anyone else. But the flexibility of when I worked was key.
SHIKHAR GHOSH: Right. And you can mix all your priorities up and say today my priority is my child.
LARA O’CONNOR HODGSON: Exactly. Right, my son is sick then we’re gonna shift that. But I might stay up until 2 o’clock in the morning to send emails out. But that’s my choice. And so it was really becoming a mom that was my impetus for starting my own first business.
Parenting while Founding and Being CEO
SHIKHAR GHOSH: So how did that change the way you run your business? Because there are many other people who are parents and …
LARA O’CONNOR HODGSON: Yes. You know I honestly think that I’m a better CEO because I’m a mom. I am much better at—priorities are clearer. Because I noticed before I had my son, there were times when I would really struggle with, “well, should I go to this meeting but I need to do this.” And right up until the last minute I would still be stressed about did I make the right decision. Once I had my son, it was very clear. I mean my priorities were very clear. If he needed me that came first. And then everything else just fell into place.
SHIKHAR GHOSH: And my guess was time was very expensive.
LARA O’CONNOR HODGSON: Time becomes much more expensive. But I think what it also allows you to do is you lose. You become more productive because your time is more expensive. So once I had my son, I found that I had very little patience for wasting time.
Parenting Forces You to Optimize Time
LARA O’CONNOR HODGSON: And when I look back on my life before I was a mom, I wasted a lot of time.
SHIKHAR GHOSH: Not only your own—also other people’s.
LARA O’CONNOR HODGSON: Other peoples! You know just even in the office and talking and you know, in between work tasks. Once I became a mom and my time was limited. And I think it’s really because I’ve always said your best ideas happen when you lack resources. I think you’re also most productive when you lack resources.
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: Because if you give me a task and you give me five minutes to do it, I can do it. If you give me fifteen I’ll happily take fifteen.
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: So having that sort of compression—
SHIKHAR GHOSH: And if I give you two hours you’ll get a committee together and—
LARA O’CONNOR HODGSON: And think about it a lot and probably not come up with a better answer then.
SHIKHAR GHOSH: Right. Right.
LARA O’CONNOR HODGSON: So, my best answers actually in the five minutes.
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: So it was really becoming a mom that I think has made me better at leading other people, better at making decisions, better at managing my own time and better at making, helping my team be efficient.
Comparing Scaling Startups to Raising Children
SHIKHAR GHOSH: So you know people often compare startups to babies, they say, “this is my baby.” What do you think of that analogy? Is there any validity to that?
LARA O’CONNOR HODGSON: Yes, yes. I, you know, I do think there’s some validity in that. My company right now is a very awkward teenager so we’re through the baby stage, we’re through the toddler stage. We don’t fall over every time we take a step. But we’re very clunky right now because we’re in that in-between, not an adult, not a child anymore.
SHIKHAR GHOSH: Right. And it’s your DNA that’s in the company in some ways.
LARA O’CONNOR HODGSON: Right, right.
SHIKHAR GHOSH: Yeah.
LARA O’CONNOR HODGSON: And you see a lot of yourself in it. But I think that’s also where a lot of CEO’s struggle because just like with children, we often find ourselves wanting to have our children live our life. Right? Or emulate our life.
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: As opposed to supporting them in living their life. And it’s the same thing with a company. Because sometimes you want it to really be about you and if your company’s going to be more than a lifestyle business, it’s not about you. Right?
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: Your DNA is in it and certainly is reflected in the way the company presents itself, the way people treat each other, et cetera but it’s bigger than you.
SHIKHAR GHOSH: Yeah. At some point.
LARA O’CONNOR HODGSON: And that’s hard for people to realize.
SHIKHAR GHOSH: Right. It’s an adult and it has to find it’s own way and right, you can’t tell it who to get married to, you can’t—
LARA O’CONNOR HODGSON: That’s right, that’s right. Yep. Great analogy. I like that.
SHIKHAR GHOSH: As you’ve been through the various companies. But then started your own, what are the lessons that you’ve learned about things people shouldn’t do but also how to not get into those situations?
Passion for Solving the Problem Matters Most
LARA O’CONNOR HODGSON: Right. Right. You know, it’s interesting. Going from helping other people start their companies to starting my own and now I’m on my third, I think one of the biggest things I’ve learned is that you have to be very careful that your passion or your ego is not in what you do. And it’s very counterintuitive because as a young person growing up, I sat through countless meetings where executives would say you have to be passionate about what you do. And I remember at the time being so stressed out about that. Because I didn’t know what I was passionate about.
LARA O’CONNOR HODGSON: Not because I didn’t have a passion, I have lots.
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: And so I remember sitting there thinking oh my gosh, how do I decide? There’s a lot of things I like. And what I realized by the time I did Now Account, my current company, is that if your passion and your ego is in the “what” that you do, you don’t listen very well. Because if I designed this mug and I showed it to you and said have you seen this great thing I designed. And your immediate reaction is oh well, did you think about this? You could improve that. My immediate reaction is to defend it.
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: Because it’s mine.
SHIKHAR GHOSH: It’s like if your child was there and somebody said oh the child would be better if you change their shirt.
LARA O’CONNOR HODGSON: Right. Your immediate—and it’s a visceral reaction, it’s not something you consciously do—but your visceral reaction is to sort of justify and defend what you’ve done and so inherently you’re not listening. But if your passion and your ego is in the “so what” that you’re doing, not the “what” but the “so what”—which is the impact or the influence—then you’re much more open to suggestions. Because the “what” doesn’t matter.
Ego-Driven Passion vs. Passion for the Problem
LARA O’CONNOR HODGSON: And I discovered that because when I—you know when I started Nourish which was the spill-proof water for children, I really was very proud of the “what.” Everything about the design had a reason, had a rationale and it created a bias for me that kept me from listening to other people.
But when I started Now Account, my passion and my ego is in the fact that when the clients use Now Account they triple their business in less than a year. They hire more people. They grow their business. That’s my so what. So there’s nothing you couldn’t change about “what” we do at Now Account that I would care about. But you can’t change my “so what.”
SHIKHAR GHOSH: Mm-hmm (affirmative) Right.
LARA O’CONNOR HODGSON: And so what I find is that when people come in with suggestions my initial reaction is not to defend, but to investigate.
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: Like, I’m more curious.
SHIKHAR GHOSH: And the objective is: how does this improve the client’s or the customer’s experience?
LARA O’CONNOR HODGSON: Right. How does it do what it’s meant to do? Whether it’s a product that’s meant to serve a purpose or it’s a service that’s meant to you know, impact a client in some way. If you lose focus on the impact and in my case what I call the “so what” and focus more on the “what” then I think you limit your potential.
SHIKHAR GHOSH: Terrific.
Building Your Team: Why Growth Mindsets Matter More than Skills as You Scale
LARA O’CONNOR HODGSON: So I think—you know the other thing that I learned has to do with building teams. With people. Early on when I started my first company, I was very intentional about the skill sets of the people that we brought together.
And I think it was a little bit like going back to my days of putting your study group together at Harvard Business School. Right, I mean everyone comes and the first thing you say is do I have the marketing person? Do I have the finance person? Do I have somebody who knows accounting? Do I have an operations person? And so I kinda did the same thing when I started my first business.
And if you looked at my kinda initial team, functionally it was a dream team. I mean we had people that were great at every function. No area was left untouched. But what I realized is that mindsets matter more than skillsets. And you can have the dream team of skillsets but if your definition of success is different, if your priorities in life at that stage are different, if your personal goals are different then the best skillsets don’t matter.
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: And I also realized that unless I’m doing brain surgery, I can probably teach you to do almost anything I need you to do. But I can’t teach you how to think.
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: And I can’t teach you how to approach a failure or a challenge in a way that moves the company forward. I can’t teach you that. And so that’s been a real learning for me—how to identify mindsets. Because you have to interview completely differently. You have to look at resumes completely differently.
Rethinking Recruiting Techniques as You Scale
LARA O’CONNOR HODGSON: You have to look at references completely differently. But then once you have this unique group of mindsets, how do you maintain it?
SHIKHAR GHOSH: Right. How do you build the trust? How do you build it?
LARA O’CONNOR HODGSON: How do you build it? Because I think what a lot of people do is we intellectually know that a diverse team is more valuable and more productive. And so we hire people that think differently, that look differently, that speak differently. And then without knowing it, we train the diversity right out.
Because the only diversity that matters is the diversity of thought. And if you then bring this group of people together and say, “well you have to do it all this way,” you just got rid of the very diversity that you wanted. And that’s been a hard lesson to learn.
SHIKHAR GHOSH: So when you think about a team there are two models. One is that I want to balanced team.
LARA O’CONNOR HODGSON: Right.
SHIKHAR GHOSH: I want people who are good at finance and product and design and everything else. And the other one is you know, this company needs a super start on product design.
LARA O’CONNOR HODGSON: Right.
SHIKHAR GHOSH: Finance doesn’t matter, marketing doesn’t matter if I have a great product design, it’ll carry everything else. So I can have, you know, regular people on those things. But I’m going to look for the superstar or I’m going to be the superstar on this.
LARA O’CONNOR HODGSON: Right.
SHIKHAR GHOSH: Yeah, do you go for a balanced team, and the balanced team will get you there or do you go for the outlier?
Building a Well-Rounded Team vs Hiring Superstars
LARA O’CONNOR HODGSON: You know, I think we go for a hybrid. Because I tried initially to do a whole team of kind of outliers right? Where you had the superstars. But I don’t know that you need the superstar in every single function all at the same time. Because as the company evolves through its lifecycle, there are different parts of the company that need to kind of you know, step it up.
It’s almost like in my mind, I used to do a lot of sports. And there was always this exercise that we hated, where they would line the team up and you would all run. And then the person at the back has to race to the front.
Right. For that split second, they have to sprint. But the rest of the team has to maintain pace. And it’s a little bit the way fast-growth companies are. Because if the team really wanted to work together, they could all just slow down and walk and make it really easy for the person in the back to get to the front.
But they don’t. They have to keep pushing. But not everybody needs to sprint at exactly the same time. In fact, if you do that, you’d all be going in different directions.
SHIKHAR GHOSH: Right. You’d be bumping into each other.
LARA O’CONNOR HODGSON: You’d be bumping into each other. You’d be pulling on each other. So I think it’s more of a coordinated effort to say okay, right now – so for example, with Now Account, a year ago we did our first bond securitization. So for that year, finance was extremely important to us.
Timing Key Hires
LARA O’CONNOR HODGSON: And so you know, we brought in a real superstar finance person. We didn’t have him before that. But I don’t think we needed him before that. In fact, I don’t know that we could have attracted him before that. Because the problem before him wouldn’t have been that interesting. And had we attracted him too early, he would have gotten bored.
SHIKHAR GHOSH: Right.
Role of B Players in a Scaling Startup
LARA O’CONNOR HODGSON: So part of it is bringing in not only the superstar, but I think the most valuable people in the company are often the kind of the B players, right. The ones that are so consistent, they’re going to keep charging ahead. That if you ask them to step up for a short burst they can, but they’re not really gonna, you know, take you into orbit. And we overlook those folks a lot.
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: So I tend to spend more of my focus there and then we have certain evolutions in the company, you find that kind of superstar role player that you need to take you to the next level.
SHIKHAR GHOSH: Okay. You’ve been through a set of companies, some that have been small and sort of got to medium size and now one that’s really taking off. How has your role changed? And how do you manage to change yourself through the different stages where you just have to do different things and be in some ways a different leader.
LARA O’CONNOR HODGSON: Right. That’s probably the hardest part about scaling. Because I think in a startup, everything is small enough that you can get your arms around it and you can literally kind of be a master of lots of things. You can keep all the marbles together. But as you start to scale, you bring in other experts and quite honestly you have to get out of their way. And you almost become more just the guidelines. But I think that’s also true for the management team.
Adjusting Roles as You Scale
So part of my challenge is even if I do a good job of kind of adjusting my role, I also have to help my team also adjust their role. So I see that right now with my head of operations who, you know, she’s done a phenomenal job but as we scale, how do I help her step back.
Because as I step back, she has to step back too and we kind of all elevate ourselves a little bit. But you know earlier we talked about the analogy of a company being like a baby.
I think the role of the CEO changes very much the role of a parent changes. And I have a twelve-year-old right now so I’m sort of living the middle of that. I realized he’s in seventh grade and I realized that he’s literally in the middle. He’s in the middle of middle school. He’s in the middle of his education.
And when I think about what my role was when he was a baby, he couldn’t survive without me. Right?
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: I mean he couldn’t have gone more than an hour without me. But over time, I have to not only step back and allow him to make mistakes, try some things, find out somethings not comfortable. Which is really hard because you want to jump in and fix it.
SHIKHAR GHOSH: Right.
LARA O’CONNOR HODGSON: But as he gets older, you have to become more of an advisor. You still have to step in sometimes when he’s making bad decisions but the greatest joy of being a parent is seeing your child make a good decision on their own. And I think that’s the same as a CEO.
SHIKHAR GHOSH: Well except that you suddenly feel a little less needed when the company more than the child is young, you were essential. And then you reach a certain stage and you find that people are taking over and it takes a certain kind of person to say that’s great as opposed to I would have done it differently.
Changes in the CEO’s Role: Letting Go & Empowering Others
LARA O’CONNOR HODGSON: Right. And I struggled with that. I mean honestly when I think back a year or two ago, I think there were times when new people came in and they wanted to do something one way and I said oh no, no, no that’s not the way we do it.
And now a year later, I’m realizing that that was a mistake on my part. That, if I have to still do it my way then I didn’t hire the right people. And now that I’ve hired the right people, I know that I can take their input, give them a suggestion, give them my input and then let them go. And the first time that happened, it’s really kind of the proudest moment ever.
SHIKHAR GHOSH: Hmm.
LARA O’CONNOR HODGSON: You know, it is like a parent from the perspective that I don’t feel less needed, I think they need me differently. And before they needed you to make every decision, to be in every meeting so that your thoughts were part of the whole process.
Now I feel like my team can sit in a room, they have my voice in their head, so they know a little bit about what I’m probably going to say. They can develop a perspective, run it by me and in fifteen minutes I can give them sort of direction, that before would have taken two hours of my time. Because I would have to be part of the whole process.
And now I don’t have to be. But I’m not less needed. I think the need is still there, but my role is different. And it allows them to grow, it allows me to grow and it’s – honestly if I don’t do that, the company won’t grow. Because I’m not scalable.
SHIKHAR GHOSH: So when you raise money, in some ways what you’re doing is your bringing in another parent. Or at least a grandparent, or something. Or a neighbor who has a stake in the company.
LARA O’CONNOR HODGSON: Sure.
SHIKHAR GHOSH: How have you found dealing—what’s the best way that you’ve found and mistakes that you’ve made in dealing with them and relating to them? What are some of the things that you do to keep that relationship healthy?
LARA O’CONNOR HODGSON: Right. Well, I think the first question is, who are they? Because obviously if you’re bringing in a large fund versus an individual investor, expectations are probably different. But I think the biggest key is setting expectations upfront. So as we went out and raised capital – and in our case, we raised capital from folks who had funds but we asked them to invest as individuals.
And I did that intentionally because I kind of knew what the life cycle of the company’s evolution was going to be and I didn’t necessarily want it to become a mismatch for a funds life. But what I tell every investor when they come in, before they invest, is I explain how we communicate.
So I explain that we do quarterly management reports that go to all shareholders and it’s a highlight of what’s happened in the last quarter. It’s our goals for the next quarter. So not surprisingly when you get it, the first paragraph mirrors the last paragraph of last quarter’s.
Because that’s what I said I was going to do, now I’m going to tell you if I was able to do it or not. And then we talk about, you know just sort of comparing operational metrics et cetera, and then our goals for the next quarter and then we give, you know, sort of draft financials with a high-level explanation of how we’ve used capital over the last quarter.
So I tell investors that, that “This is what you should expect. We, of course, are always looking for any input and suggestions that you have. But expect to get this from us.” So, I think when you are upfront about expectations, it gives them a level of comfort, and it gives me a level of comfort that if I do what I said then I’ll be delivering on my promise. And it gives them a level of comfort that they don’t necessarily have to call every month to say “What’s going on?”
SHIKHAR GHOSH: And if they wanted more they could talk to you at the time of the investment and you could say, “I’m not sure this works for me.”
Managing Your Board: Setting Expectations for Communication
LARA O’CONNOR HODGSON: Right. Right. Because, of course, you’re balancing. You know, in a perfect world, you’d be available to answer any question at any time. But the reality is, you know, the value of time and you have scarce resources in your folks. Even in this last year when we did our first securitization, we knew that that was gonna add a whole level of burden to our accounting and financial reporting team.
So we went back to our shareholders, at our annual meeting and just said, you know, “For the next year we may not get four reports out because this small team now has an additional burden of public reporting to our bondholders. And we’re gonna have to get that under our belt, and- and, sort of internalize that process before we can get back on our normal cadence.”
So that’s, sort of, investors. Then, I think, you have your Board. And again, the- the most important thing is who you have on your Board. But, I think what I’ve learned is, from being on other Boards when they were well-run and not well-run. And a well-run Board, again, sets very good expectations about how the Board communicates, how information comes out, the cadence of the information, and if you need something beyond that, how do you engage? How do you ask for it? How do you get it?
SHIKHAR GHOSH: And is that the role of the Chairman or you as the CEO?
LARA O’CONNOR HODGSON: So, in our case, I work with the Chairman. I mean, he’s in charge of the Board. But he and I, kind of, set down in detail that what we thought was an appropriate set of expectations. Of course, if the Board wants something different, they’d go to him and he’d come back to me and say, for example, “We have a new Board member, and they wondered could we do a different type of dashboard?”
Okay, Let’s consider that. Let me go back and understand what the burden’s gonna be on the team. Are our systems set-up to do that in a way that’s not, you know, overly time-consuming but accurate before we promise it. I think, you know, for me as the CEO working hand-in-hand with the Chairman on, kind of, translating the Board’s expectations and, then, what can my team deliver? So that we don’t over-promise and under-deliver.
SHIKHAR GHOSH: And so, you set up a process where Board members work through the Chairman to come to you, as opposed to each one calling you directly.
LARA O’CONNOR HODGSON: Yeah. Yeah.
SHIKHAR GHOSH: And that works with venture capital investors, and so on?
LARA O’CONNOR HODGSON: So, now in our case, our Board is—we have one private equity group, and then one, sort of, group of investors. Each of those have a representative on our Board, and then the other members are independent Board members and- and myself. So, I say that ’cause our Board is not dominated by a large venture group, or more than one large venture group. So we’re able to do that. That may not be the dynamic if you have an investor that is, kind of, a dominant force on the Board. We don’t have that.
SHIKHAR GHOSH: When- when things are not going according to plan, how do you deal with that in terms of the Board?
LARA O’CONNOR HODGSON: Quickly. Just like I say, “You should fail fast, and fail forward.” If something goes wrong, the faster you can tell someone about it, the less impact it has negatively on the Board or the business. So, you know, again since we set these goals, we have annual shareholder meetings, we have quarterly Board meetings.
So we set, you know, sort of, our five-year plan, our annual plan, and then our quarterly plans. The minute we know we’re off on a quarter, or if we’re getting half-way through the year, and we think we’re gonna be off on the year, we let everybody know. And then we talk about it. You know, what’s driving that?
SHIKHAR GHOSH: And do you let them know before you have a plan of how to fix it? Or, sort of just let them know and say, “We’re working on a plan?”
LARA O’CONNOR HODGSON: Well, we typically give them a heads-up, but we don’t give all the details. So, “Just to let you know, we’re a little bit off-track. At our next meeting, we’re gonna talk about the plan and how we’re gonna address that.” So we do give them a heads-up so that they don’t walk into the Board meeting and then we put up a slide that says, “You expected us to be here. Oh, by the way, we’re only half-way there.” That’s not a good scenario.
So we will give them a heads-up. In some cases, our Board is great about if we give ’em a heads-up they’ll- they’ll throw out ideas. “Well have you thought about this? Have you thought about this?” If we have an idea on how we’re gonna address it, we’ll throw that out as well. But usually, we’ll tell ’em the problem and say we’ll come back to them with our solutions.
SHIKHAR GHOSH: So, when you think about other CEOs you’ve known or other situations you’ve been in earlier in your career, what are some mistakes that you’ve seen people make, sort of, pretty early when they don’t know how to manage a Board or are not used to that interaction?
LARA O’CONNOR HODGSON: Obviously setting expectations. You know, we all get so busy. And it’s so easy to just put something off another day, and then another day, and then a week goes by. And then, before you know it, it’s uncomfortably long period of time. So I do think that really thinking through the dynamics of your Board, talking about the dynamics of the Board.
But I think that, you know, a lot of CEOs they’re so focused on the plan. And I hear this from Board members that, “That CEO is not open-minded. They don’t listen well. They’re, you know. . . ” I always hear that from folks. And yet I know the person, and I know they’re open-minded. So why it comes across that way, I don’t know.
But, I do think that if you can sit down with each Board member and have a conversation on how you best communicate, then you don’t fall into that trap of them making assumptions or judgments on whether you’re truly open-minded, because all they see you is reacting in Board meetings.
SHIKHAR GHOSH: You do a CEO review? Or does the Board do a CEO review for you at the end of the year? Or do you have some kind of process by which you can hear from them?
LARA O’CONNOR HODGSON: Not a formal process yet, although I think we’re heading that way. Right now, I get feedback after every Board meeting. And what we do is, after the Board meets we typically have all of our employees available too for the Board to, you know, meet them, say hello to them, introduce any of the new players. But we encourage them to stay around afterward, and just informally give me feedback, you know, give me feedback for the team.
We typically at each Board meeting have one of our senior team members come in and- and share a short presentation or perspective on the problem they’re focused on, or their role. So, again, that allows us to get feedback on some of our senior team members. That they’ll, you know, maybe see one functional lead a Board meeting. That helps. But right now it’s more informal I would say.
SHIKHAR GHOSH: You know, there are a couple of Boards I’m in where a first-time CEO comes in, and, he or she thinks that the Board is there as advisors. And so they say, “Here’s a problem, solve it for me,” as opposed to coming with a set of solutions and saying, “give me feedback on the solution.”
When you’re seeking advice, do you go to them with the concrete: “You have three options.” Or do you go to them saying, “How should I do this?”
LARA O’CONNOR HODGSON: Typically, what I do is we will lay out the problem, we’ll lay out two or three solutions we considered, and then tell them the one that we think is the most appropriate. In most cases, they agree with us. But I think it is helpful for them to see that we considered two or three things, and hear the rationale for why we settled on the one we did which I think makes it feel like we’re open to input.
But we’re not—to your point—just saying, “Help,” you know, “Tell us what to do.” But they do like to know that we considered a couple of different things ’cause, you know, I have done it before where we come in and say, “Here’s the problem, here’s the solution.” And their first reaction is, “Well did you consider something else?”
Building Trust as Your Team Scales
LARA O’CONNOR HODGSON: So, sharing with them a little glimpse into the thought process of getting to the conclusion, I think, is helpful. I think it gives them confidence in your problem-solving as well. One of the challenges we had is, as we were growing so quickly, one job became two before you knew it. Then it became three before you knew it.
So we were bringing in so many new folks, and that’s very unsettling. And I remember reading an article that was called “Give Away Your Legos” and so I actually went out and bought a bunch of Legos. And we had the whole team over lunch one day just jump into this bin of Legos, and each person could take some. And we gave them a couple of minutes to just build whatever.
Giving Away Your Legos Builds Trust and Innovation
LARA O’CONNOR HODGSON: And it was interesting ’cause it tells you a lot about the person. Like, our Sales folks immediately set out to build the tallest tower they could thinking that that meant they won something, ’cause it was a contest. I was happy to see that my Risk Team, most of them built these extremely stable structures; They weren’t trying to build something that might blow over, which is good if you’re on my Risk Team.
But what was interesting is—I had them do that. And then, this was before I shared the article with them. And then I went around and said, “Okay, so, in a few days someone else might come in here. And you’re gonna have to give them what you’ve built. Because your job is now gonna be their job. And you’re stepping-up to an even bigger job. And it made it very real to them that they’d just built this tower or boat, or whatever they built, and when you give it to someone else all sorts of things could happen.
Someone could break it, you know, which, “Oh you’re gonna break my wonderful thing!” They’re gonna do it differently. They might put it together differently. They might take it apart. They might change it. And so, we joke, ’cause we all have the Legos on our desk, we each have our own individual, contraptions that we created. But when a new person comes in we have to give them away, and then we have to go build another one.
And so, it was just a very visual way for people to, kind of, not freak-out so much when a new person comes in because I have to give you my Legos and now I’m gonna go build something else. But it also gave you the confidence that. . . . I think a lot of times we’re afraid to give up the role we had because it’s our security, it’s our job security, it’s what we’re great at, we’re the expert.
But it’s a compliment to say, “You’ve done that so well, give it to someone else. Now I want you to go build something else ’cause I trust you that much that I want to give you a bigger challenge.” And that’s hard for people. But if you can give them something tangible that shows that experience, I felt like everyone’s stress level went down. And so, not to mention the fact that our office looks interesting ’cause everyone has Legos on their desk.
A Twist on Achieving Goals
LARA O’CONNOR HODGSON: So another interesting exercise that we’ve done, that has really become part of our company culture is something that I learned from watching a sports movie. I love sports movies, I think there’s always such a great life lesson in there. And there’s a movie called When the Game Stands Tall. It’s a true story about the winning list football team in history. And it’s not an NFL team, it’s not a college team, it’s actually a high school in California called De La Salle High School. This high school won, I think it was a 150-some games in a row which means they had almost a decade of undefeated seasons. And the movie starts with their losing. And now what do you do?
And so this coach now has to go about rebuilding an entire culture that for years had been, sort of, riding the wave of “We’re undefeated.” And now there’s no streak left, and you have to start all over with game one. And so, he did this interesting thing.
Every Monday during the season the whole team would get in a room, everyone would come in with a notecard and on the notecard, they would write one goal that they have for that game on Friday. So if you’re the receiver, your goal might be you’re gonna catch three touchdown passes. One goal that you have for a skill you’re gonna develop that will help the team. And a third is a personal goal, anything, it doesn’t even have to be related to football.
But what was interesting is the team would each come in with their card, put all the cards in a pile, and then everyone draws a card. So, I’m now gonna read the team a card that is not mine, it’s yours. So I’m gonna read your goals for the week, but because I read your goals I’m responsible for you hitting them.
SHIKHAR GHOSH: So my name is on the card?
LARA O’CONNOR HODGSON: Your name is on the card. I’m gonna introduce your goals to the team but I’m now responsible for you meeting your goals. And I was so intrigued by that, that we decided to do that at our company. But we do it quarterly.
SHIKHAR GHOSH: So if my personal goal is losing some weight, you would come in-
LARA O’CONNOR HODGSON: Absolutely. You can bet that I’m gonna watch what you have for lunch every day. And what was amazing about it … So we do that quarterly at our company, and everyone fills out a card, and the first thing you write on it is your goal for your role in the company. So if I’m an Accounts Payable Processor, my goal might be that I’m going to shorten the time to confirmation, you know, by a few seconds. So, I’m gonna get more clients served better.
My second bullet point is a skill I’m gonna develop that is not my role but that will help the company. So it might be that I would like to learn to better understand how Onboarding does what they do. So I’m gonna learn something else in the company. And third is a personal goal. It could be I wanna lose five pounds. Or one person one time said they wanted to reconnect with old college friends that they hadn’t talked to in years. So they were gonna write five letters.
And two things happened. One: The team started to get to know each other better because there’s no telling who pulls whose card out. And someone’s gonna pull mine out, and it doesn’t matter what your title is?
SHIKHAR GHOSH: How deep in the company do you go?
LARA O’CONNOR HODGSON: So when we started it we were still small enough that we did everyone. Now we do it by division. So, like, each division, kind of, does theirs.
SHIKHAR GHOSH: Roughly how many people?
LARA O’CONNOR HODGSON: Well we’re 45 people so, I mean, everyone still does it, but we used to all do it together at lunch. Now we, kind of, do it within our own team meetings.
SHIKHAR GHOSH: So each team meeting might ten people or something like that?
LARA O’CONNOR HODGSON: Right. Right. And so, everyone pulls their card, and for that quarter I have someone else’s card sitting on my desk. And my job is to check-in with them periodically, ask if I can help, make suggestions, you know, help them measure are they getting there? But it really broke down some of the hierarchical lines that were starting.
SHIKHAR GHOSH: That can be anybody, right?
LARA O’CONNOR HODGSON: It could be anybody.
SHIKHAR GHOSH: So you could have the Accounts Payable person telling you to lose some weight.
LARA O’CONNOR HODGSON: Absolutely. And people know in the company who you don’t want to draw your card ’cause there’s a few people that are real task-masters. And they will follow you to lunch, you know, and say, “Wait. You said you were gonna lose weight. Why are you having that brownie?”
We started to learn more about each other. We started to hold each other accountable. So it’s very much, if you think about it, the way, you know, if you ask someone in the military they’re not doing it for themselves. They’re not doing it. They’re doing it for their- their team-mate. And everything you do is for your team-mate. And so being accountable to each other is an important part of our culture.
Another one we do, which is also along the lines of people, is when a new person starts, we have them shadow every department over the first week. And it might just be for 15 or 20 minutes. But each person comes in. They, of course, spend time with their own, sort of, hiring manager learning what they’re gonna do. But then they sit down and they shadow the entire lifecycle of the client. So they shadow Sales to understand how we even find clients. They shadow the Onboarding Team to understand the client’s first experience with us.
SHIKHAR GHOSH: This is everybody.
LARA O’CONNOR HODGSON: Everybody. Everybody does this. They shadow the Operations team just to understand how payments get processed. And, again, it might only be for 15 or 20 minutes but it gives them a real appreciation for how the whole cycle works. How the customer’s experience from day one can go incredibly right or horribly wrong, and what their eventual role is in that.
LARA O’CONNOR HODGSON: And we started doing it because as we got bigger what we found is people were starting to think from a silo. And I was starting to see, you know, Sales say, “Well, why isn’t Processing doing this quick enough?” Or Processing say, “Why didn’t Sales set the expectation?” And so it was a good way to give people a real appreciation for what their co-workers face every day in terms of their challenge in serving the client. And, you know, we’re talking about how we keep doing that as we grow. It’s, you know, we’re gonna use video, and things like that more ’cause we won’t necessarily be able to let every person sit. But, uh, we’re gonna keep it going as long as we can.
SHIKHAR GHOSH: How do you hire people? Do you have anything special about that? Because there’s so much right now that says interviews don’t work, that, you know—
LARA O’CONNOR HODGSON: I agree.
SHIKHAR GHOSH: and that’s one of the most critical decisions that you make.
Shortcomings of Traditional Interviewing Practices
LARA O’CONNOR HODGSON: Yeah. I agree. I actually hire people a little bit backward. And it came from an experience I had at Harvard Business School. When I was here I was doing a field study with Disney, and Disney was hiring for a Financial Analyst. I had no interest in being a Financial Analyst so I didn’t sign-up for the interview.
And the person from Disney that was doing the field study with me came to me during our meeting and said, “Why are you not on the list to interview?” So, “Well I don’t really want to be a Financial Analyst.” And he said, “Well, you know, that’s not very good that you’re doing the field study.” And I said, “Fine, I’ll interview.”
LARA O’CONNOR HODGSON: So I walk into the interview and the person who’s interviewing walks in, and he says … His first question is, “What would you like to do? Tell me what you would like to do?” So I did. It didn’t sound anything like a Financial Analyst. And the look on his face was very confused because he said, “Well, you know, that’s not what we’re- we’re hiring for a Financial Analyst.” And I said, “Well, I know, but that’s not what you asked me. You asked me what I wanted to do.”
LARA O’CONNOR HODGSON: And he actually got up and left the room, which is probably not a good indication when the interviewer leaves the room. But he came back in and said, “I’m gonna be in Boston until tomorrow at noon. And, if you can have at my hotel before I leave, a one page summary of your dream job, I’ll see what I can do.” And my classmates thought that was hysterical. ‘Cause they’re like, “Why would you do that?” And I guess my perspective was I could’ve answered the question knowing what he wanted to hear.
And I probably could’ve gotten the job. And I wouldn’t have been happy, and he wouldn’t have been happy, six months later. So, I would’ve won a prize I didn’t want. And, because of that experience, I completely reversed how we hire. So, I think too many people go make a job description and design this box, and then everyone lines up in a beauty pageant to see who fits in the box. The reality is people don’t fit in boxes.
They can say the right thing to make you think they fit the box you want, but that’s not real life. So everything I do during the day, I’m looking for new employees. I have met the person who bagged my groceries at the grocery store one time gave me such good service, looked me in the eye, was so articulate that I handed him my card and said—he was in school at the time, he was studying accounting—”When you graduate, you’re gonna come and work for us. You need to be on our team.”
LARA O’CONNOR HODGSON: Because I think you see someone’s behavior in their natural environment very differently than when they dress up and come in for the interview. Because some people just interview well. And then the minute they’re through the interview and they’re in their natural habitat again, their real self comes out. So, we really try to find people where they are, not have ’em just line up to come in. Almost everyone we’ve hired, we went out and found them. They didn’t find us.
SHIKHAR GHOSH: If you’re doing a traditional interview, say for a CFO, or something like that, how do you do the reference checks?
LARA O’CONNOR HODGSON: All of my senior folks that we’ve hired so far, I knew someone that knew them, that wasn’t who they gave me as a reference. So, I mean, they give you their references and I, of course, check those and I call and I ask very behavioral questions. But I almost always find somebody that I can triangulate to them that’s not on their reference.
And sometimes when I talk to that person, I don’t tell them that we’re interviewing them. That’s not why I’m asking. I just ask about you know, oh I understand you know so and so, you know, what did they do for you? And it’s not necessarily in the context, ’cause if you tell the reference that they’re interviewing for a job, a lot of times the reference will not be completely honest.
They’ll tell you all the great things and not the negative things. ‘Cause it doesn’t hurt them if you hire the wrong person. I’ve always found there’s way to find out about people just from the circles that they’re in. And what other people think of them from afar. Over and above you know, do they have the technical knowledge to do the job.
SHIKHAR GHOSH: When you fire somebody, how do you go about doing it?
LARA O’CONNOR HODGSON: Hardest day of mine. I don’t like that. It is really something that I don’t—still don’t think I’m good at. I don’t know if I want to become good at it. So I make sure that I hire people that are better at that. Because a lot of times when I fire someone, I feel like I had a hand in that failure. Because I either didn’t hire the right person or I didn’t do what I could have done to help develop them.
LARA O’CONNOR HODGSON: So, part of it I take personally. How I do it is, I sit down with them and you know, talk about what the expectations were that weren’t met. I actually go the extra step and help them find something else usually. For the folks that we’ve had to fire, we’ve had very little turnover at our company. And when we have had it, I’ve actually helped the person. Two of the people that have left, they ended up going to start their own business.
And I think part of why they weren’t successful at ours is because they had other interests that they wanted to pursue, but they weren’t honest with themselves. And I told them that’s what I thought.
SHIKHAR GHOSH: So if somebody’s firing somebody, say two levels down from you. Does their manager fire them? Do you talk to them?
LARA O’CONNOR HODGSON: Yes. Well, the manager fires them, I talk to them though. Nobody leaves the company that I don’t at least talk to. Even if it’s to talk to them about what they want to do next or where I think they might need to you know, develop more skills. I almost always will make a connection for them. So whether that’s you know, I’m happy to reach out to so and so.
We haven’t had to fire anybody that I just honestly was a bad person, that I wouldn’t want to help find something else. In most cases, they were good people in the wrong job. And so, I know that if they find the right job, they actually could be successful, it’s just not with our company.
SHIKHAR GHOSH: What about work-family balance?
LARA O’CONNOR HODGSON: Oh yes.
SHIKHAR GHOSH: You’ve been doing startup so?
LARA O’CONNOR HODGSON: Everyone’s favorite topic, especially women. Women love to talk about balance. So, again, I’m very much a contrarian when it comes to the concept of work-life balance because I feel like people are constantly debating, can you have it? Is balance something that you can achieve or not?
And I think that’s the wrong question. I think that you absolutely can achieve balance, but you don’t want it. Balance is not good. And the reason is, my image of balance is a seesaw on a playground.
If two kids are on the seesaw, and it’s balanced, there are two things we know. One, nobody is having any fun, there is nothing happening ’cause you’re dangling. But secondly, everything’s average. And I have absolutely no desire to be an average mom, an average wife, or an average CEO. And so, long ago I gave up the goal of balance. It’s an amazingly stress-relieving activity to just give it up.
Instead of Striving for Balance, Optimize Your Time
LARA O’CONNOR HODGSON: And instead, my focus is optimization. Because I do think you can optimize your time. If I’m in a board meeting and, you know, a board that I’m on like the local school. I tell people, I’m gonna come amazingly prepared, and for that two and a half hours, you have my undivided attention. You better use it well.
Because when I leave, something else has my undivided attention. And I find that even if I were at home with my son, and I were doing what most of us do, which is think we multi-task, which the human brain doesn’t do by the way.
Then I’m doing nothing well. Right? I’m pretending to engage with my son, but I’m checking my phone. He knows this by the way. And he is insatiable. I cannot make him happy, right? He’s constantly coming back.
SHIKHAR GHOSH: Yeah, someone to prove that to me said, try and read and write at the same time.
LARA O’CONNOR HODGSON: You can’t do it. You cannot do it. You think you are, but you’re fooling yourself. So my son is constantly mom, mom, mom and I’ve now spelled three words wrong in the email that I just fired off without really thinking about it. Now, if you try the opposite. If I sit down with my son, and I literally give him my undivided attention, after about 15 minutes, he is so done with me. He wants no- he’s gone. Right? Great, thanks mom, gotta go.
It’s almost like I’ve filled his need, and so now I can go off and do the email and spell everything right and think about it and form correct sentences. So, I do the same thing at- at work. And it’s really hard today. We are so distracted. It is so hard to focus when things are flying at you, emails, and texts and buzzes and beeps. And I think it really hurts our productivity. Because we go home thinking we multi-tasked, and we did everything only average.
I started Nourish, my last business, really grew out of a need I had with my child when he was a baby. So, I was starting a business while my child was an infant. I’ve subsequently started another business you know, sort of in his late elementary years. And I often hear people say that you- you just can’t do that, right? You either focus on your business and you miss the first years of your child’s life, or you focus on your child, and you gotta wait and start a business later.
I actually totally disagree. And I think part of it is, we, as founders in the ecosystem we live in, we think it’s impressive to kill yourself working on your business. And we’ve caused ourselves to believe that I either have to be 24 hours a day on my business and not see that my child went from you know, infant to age three. Or we have to put the business off. I did both. And it worked great. But part of it was not being subconscious. It’s okay, my investors really do not expect me to be working on this 24 hours a day.
LARA O’CONNOR HODGSON: If they do, then they’re not the right investor. Because let’s be honest, no human being can do that and perform at a high level. You have to have time away. You have to- my best ideas for the company came when I was on the playground with my child. Your best ideas don’t happen in a board meeting. Your best ideas don’t happen in a management meeting. And they don’t happen in a brainstorming session. They happen when you are nowhere near your office.
LARA O’CONNOR HODGSON: But I think our culture says that if you don’t put all that time in, you’re not committed. And I think that’s wrong.
SHIKHAR GHOSH: A couple of years ago we’d done a time study in fact, for the Rock 100. And we tracked CEOs on a half-hour basis for a whole week. And one of the CEOs, on one of the days said, “I was supposed to be at a meeting at 8 o’clock and my child just threw up. And I had to deal with that. And my wife was really you know, sort of frazzled about it. So I just stayed home, dealt with it, and I got to the office late.”
LARA O’CONNOR HODGSON: Yep.
SHIKHAR GHOSH: And they have to classify productive or unproductive time. So at first, he said unproductive. And then he came back and said, that was the most productive time.
LARA O’CONNOR HODGSON: Most productive. Absolutely.
SHIKHAR GHOSH: Because if I had left and gone to the meeting, I’d be thinking about that right through the meeting.
LARA O’CONNOR HODGSON: He is so right. Because, and I do, I think we put pressure on ourselves that says an impressive founder, CEO, has to put the company ahead of everything else. That’s not true. Because if you do that, you feel guilty all the time, you’re not getting 100 percent of my brain and you’re not getting the best of me. And you know, people look at me and they honestly say, how do you do it? How do you balance it all?
LARA O’CONNOR HODGSON: Because not only did I have a small child, I was room mom. I’m the most productive room mom you’ve ever had. And yes, I would drop my son off on Monday morning at 7:30 and I would volunteer at the school for an hour. And I would go in the office at 8:30, and I would have the best day ever. And some of my best ideas happened when I was shelving books at the elementary school.
LARA O’CONNOR HODGSON: But, to not do that, would make me a worse CEO. And I think we have got to give ourselves permission to be true human beings. And it makes you a better CEO. I- I can tell- I’ll tell you a great story. The biggest thing we’ve done in our company in the last year was this, we did a 100 million dollar bond securitization in a way that’s never been done before. I mean, truly historic. And that would not have happened if I had not been at my son’s lacrosse practice. Because he was on the field getting ready, and if you watch an 11-year-old try to put equipment on it looks like a salmon caught in a net.
LARA O’CONNOR HODGSON: And there was another dad standing a little bit away doing the same thing with his son. And he had a Georgia Tech shirt on, I commented on his shirt, and he said, oh I’ve just done an executive MBA program. Really? What do you study, ’cause I taught finance there for a while. We had a whole conversation. Come to find out he did municipal bond securitization. That’s what I wanted to do. And a year later our bond deal got done. That would never have happened in a networking event.
LARA O’CONNOR HODGSON: It would never have happened in a formal meeting. It had to happen at a time when my brain was open to new ideas.
SHIKHAR GHOSH: And his brain was open.
LARA O’CONNOR HODGSON: And his brain was open to new ideas. So, if I had instead sent the babysitter to take my son to the lacrosse field because I was sitting at my desk checking email, my company wouldn’t be where it is today. So you absolutely have to step away. And yes, you can do both.
SHIKHAR GHOSH: Tell me a little bit about how your partner plays into this whole mix of things.
LARA O’CONNOR HODGSON: Yep. So my husband works for Coca-Cola. And I- I tell everyone I don’t think we would be able to do life the way we do if both of us were Fortune 500 executives. Because we match well. So, he has great stability but no flexibility. I have great flexibility, but I’m in a startup, right? So there’s no stability.
SHIKHAR GHOSH: Up and down.
LARA O’CONNOR HODGSON: Up and down. And that match works great because his stability allows me to do a startup, right? To take risks that I might not take, or to go for something that might be a little bit of a stretch, knowing that we’ve got a stable you know, stable income. At the same time though, if he has to be at a meeting, in another city and there are 20 people there, he can’t change it just because our son threw up or somebody got sick. I can. And I can change a meeting on a dime.
LARA O’CONNOR HODGSON: And, you know, when I- the first time that I had to do that, I was so worried because people were like, oh my gosh, you can’t change that meeting. I can honestly sit here and tell you that in the 30 years I’ve been doing a business, I have never lost a deal because I had to change a meeting. I mean, I know we think it’s monolithic and at the time we’re like, oh my gosh, this will kill the deal. It won’t. You can do the meeting tomorrow, you can do it later that day. I have never lost a deal.
LARA O’CONNOR HODGSON: But I think part of it is, you have to have the confidence to do that. So, when I call someone, I don’t start out all apologetic, right? Like, “oh my god, I’m so sorry, my child got sick. I’ve got . . .” because what the other person hears is that I’m a victim of my life.
Instead, I call and say, “I’ve decided that we’re gonna need to move the meeting ’cause I have something else that I need to do.” That’s a very different tone, that tells me this person’s in charge of their life.
LARA O’CONNOR HODGSON: And so, if you are in charge of your life, people respect that. If you apologize and let other people be in charge of your life, then you know, you get what you ask for.
SHIKHAR GHOSH: So, you know, as an entrepreneur, you’re gonna have these ups and downs. Your husband has a relatively stable role.
LARA O’CONNOR HODGSON: Right.
SHIKHAR GHOSH: Do you bring that home? How does he resonate with your ups and downs?
LARA O’CONNOR HODGSON: You can’t not bring it home. I mean, ’cause it is part of you. I do think that’s where having a family helps, because as the engineer in me says, if you add this with stable, you dampen out the peaks and the valleys just a little bit. And so, you know, when I look at some of my counterparts that are starting companies that don’t have a family to come home to, right? Maybe they’re not married yet, or they don’t have children, they don’t have a partner. I see them ride the swings a lot bigger. My family dampens my swings out.
So I come home, and I might be on a high or a low, and you know, your child running up and giving you a hug, changes the whole day. It just puts it all in perspective. And so you just sort of take a deep breath and say, hm, I’m gonna be okay. Right? (laughs).
Now, the question is does my high or low affect them? Right? So they’re helping me, but am I in any way hurting them? You know, I think they do see it, of course they know, you know, if I had a bad day, a good day. And my mother jokes that I only do well if I’m having highs and lows, I don’t do average well at all.
But, I also think that it energizes my family sometimes. Because my son loves that I have my own business. And honestly, he’s probably the only 12-year old that comes home and says, so how was your day mom? You know. Maybe that’s to keep me from asking him. But, he really is curious to hear about the highs and the lows.
And I think it gives him excitement and energy for learning things. And, my husband and I use each other as sounding boards. You know, I’ll come home and tell him, and he’ll have a totally different perspective. ‘Cause he comes from a world that’s, you know, orders of magnitude different from mine. And that’s good. You know, he’ll look at me and say, well did you think of this? I’m like, pff, no. And there’s nothing more frustrating than your spouse seeing something you didn’t.
SHIKHAR GHOSH: So, if your son wants to be an entrepreneur, would you encourage him?
LARA O’CONNOR HODGSON: Absolutely. Absolutely. There’s nothing more gratifying than seeing an idea become real. And for me, there’s nothing more gratifying than seeing, not just your idea become real, but entire families of people able to have a lifestyle because of what you created. And I don’t think all entrepreneurs are that way. For me, I love to see that my employees can grow their lifestyle.
SHIKHAR GHOSH: And your customers?
LARA O’CONNOR HODGSON: And my customers and our investors and our shareholders. To me that is the biggest responsibility I have. You know, I often hear people say, my clients will come in and say, well I hired five new people because of you. And that number five is very different than, I have five fingers, right? Because hiring five people means five families now have a lifestyle potential that they didn’t have before.
LARA O’CONNOR HODGSON: And that, to me, is an awesome responsibility.
SHIKHAR GHOSH: Wonderful.
LARA O’CONNOR HODGSON: Yeah.
SHIKHAR GHOSH: Thank you.
Final Thoughts on Building a Team and the Role of the CEO
LARA O’CONNOR HODGSON: Sure. You know, people often ask me you know, if you’re a startup founder, you’ve got to- you’ve got to spend all your time with your business. You know, you’ve got to go get a nanny to take care of your kids, you certainly can’t volunteer, you can’t be involved in other things. You have to give up your hobbies. And I just think that’s not true.
LARA O’CONNOR HODGSON: I think we- we fool ourselves into thinking that we are so important that we have to be there every day. And I think that actually makes us bad CEOs. Just last week, I was invited to go help another company by you know, working with their employees for a half a day on innovation. And the CEO made the comment that, how could I step away from my company for a whole half-day? And my response was if I can’t step away from my business for a few days, then I’ve hired the wrong people.
LARA O’CONNOR HODGSON: And that’s how I know that I have a great team, is I can be up here in Boston for two days, stepping back and thinking about the company. Thinking about challenges that I haven’t thought about. Meanwhile, I don’t even have to check in every hour. I mean, I know the team is working great. I know that my clients are being served. I know that everything is going fine. And I have ultimate confidence in that.
And if I didn’t, then I probably need to hire different people. Because if you’re- if you’re working in your business 100 percent of the time, then you can’t possibly be working on it. And that’s what the CEO’s supposed to do.
SHIKHAR GHOSH: When a company goes through different phases, you know, at some point, the needs of the company change.
LARA O’CONNOR HODGSON: Right.
SHIKHAR GHOSH: How do you know when you’re not the right CEO? When the company’s outgrown you?
LARA O’CONNOR HODGSON: Right. Right. I, well, I think most of us, sadly probably get told. I’m not sure we know. But I do think, as I think about my different companies and how my role’s changed, I know what I’m good at. And I know what I’m not good at. And if the company grows and its needs become the things that are not what you’re really good at, then you’re not the right person anymore. It doesn’t mean you’re not the right person for the company. It might mean your role should change.
LARA O’CONNOR HODGSON: I think that’s not just the CEO. I think that’s true of the CFO, I think it’s true of that kind of senior executive level, that the company will go through different life cycles. And it will have different needs. It is a living thing, right? It’s not an extension of me.
It’s a living thing. And so, I do know, for example, I tell people this all the time. I am not good at managing the status quo. I know that about myself. If everything is going along just fine, I’m gonna change something anyway. Just because I have this need to build things, to change things. So, I can remember at one point you know, running a business, we had grown through acquisition, we had done 40 some acquisitions, we had you know, my department was thousands of people across 30 some offices.
And it was getting to the point where it really needed a leader that was gonna focus on efficiency, optimization, that is not me. And I saw that coming. I knew it. And- and part of how I do think you know, so there’s an interesting exercise that I do for myself. I also suggest it for people when they’re trying to figure out what they want to do. And, I’m a- I’m a to-do list person. So, every Monday I have this long to-do list.
Hopefully, by Friday it’s shorter. If you look at your list every Friday, for maybe four weeks in a row, the same things are always on it. It’s what you don’t like. It doesn’t mean you’re not good at it. So, for example, for me, I’m an aerospace engineer, I’m great at numbers, right? I’m an analytical person. But, some of the spreadsheet work I have to do is always on my list on Friday. I don’t like it. So, a lot of us think that because we’re good at something, we love it.
And that’s not always true. If I find an hour in my week, I fill it with what I like to do. So, I’ll go meet with a new client, I’ll go meet with a new partner, because my personality is all about revenue growth. I don’t sit down and do the spreadsheet. I don’t sit down and do it early, just because I found an hour. Because it’s not what I like to do. So, I think if you know that about yourself, then as the role needs these different skill sets, you’ll be a little more honest about what’s not you. I know what’s not me.
SHIKHAR GHOSH: Great. Thank you so much.
LARA O’CONNOR HODGSON: Sure.