For tech startup CEOs, something magical happens when the line starts to go south: that is, a test of character. Growing is easy. Everybody loves a winner, and betting on long odds is how
legends are made. Shrinking is not so fun, but in online advertising, it is likely.
According to Terry Kawaja, only 150 of 2,000 ad-tech companies are suited for a liquidity
event. Some will grow, but most will shrink. The underlying drivers are relentless: walled gardens with a lock on data, consumers actively rejecting advertising, subscription TV,
overcapitalization, in-house production, etc. Ad tech is particularly vulnerable because technology is fungible, and legal protection for software exists only in theory.
The pathology is
commonplace. A competitor emerges (willing to give away their product, funded by new money), or a critical partner reneges on the promises implicit in their API.
In any case, growth stops
short. The blame game starts. The board steps in, like nervous sheep smelling a wolf upwind. Key talent bails. The bustle of optimism turns to quiet pallor.
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The knee-jerk reactions are nearly
universal: 1) Get Money. 2) Exit. 3) Pivot. 4) Right-size. In a hot millisecond, cowboys (of any gender) get a lesson in emasculation and a unique opportunity to become better managers.
In the
next few years, hundreds of ad-tech CEOs will have that meeting. What they do next will illuminate the true character of their leadership. Will they posture? Abandon ship? Burn the
furniture? Throw a tantrum? Start using words like "journey"? Fail to warn customers that operations might be compromised? Screw the landlord? Some will, but others will have the courage
to call it what it is, and organize a measured response.
When things go well, we don’t usually question what we may be doing wrong. We should, but nobody makes the hard choices in the
halcyon days. Why would they?
When things go poorly, we make the converse mistake: failing to ask what we doing right. These questions, asked and answered, will be at the root of a
turnaround, or the means to avoid having to turn around at all.
There is always hope. Many companies have been on the brink of collapse, persevered, and emerged to become leaders.
Extreme pressure often creates the impetus to do things you should have done a long time ago, but there’s no formula.
Jack Welch told us that only the paranoid survive, but paranoia is a
delusional disorder. More helpful, perhaps, is objectivity, and that’s harder than hope or hubris.
A.G. Lafley told us that the best managers face reality soonest. That's good, too, but
it washes over the difficulty of committing action now to an uncertain future. Indeed, homilies and textbooks might give us clues, but leaders are more likely to find the sustenance they need deeper
in themselves.
The best leaders can role-model urgency, introspection, and clear-eyed analysis in the best and worst of times. The B+ people respond well to bad news, but don’t correctly
anticipate. The laggards stay in denial right up until their board fires them.
So, when the line takes a dive, or seems headed that way, the best option is to embrace it. My friend Dave
says that “aging ain’t for sissies.” Either is shrinking. So, when the day comes, look in the mirror, take a breath, be kind, think hard, stand tall, get organized -- and welcome the
challenge.