The Toilet Paper Theory
We have been working the past couple of months on the onboarding process of our portfolio founders. We are now helping each one of them to set up and track the most relevant data of their activity including their key metrics, people, cash in the bank.
This 1 hour process is crucial for a seed stage company and it allows us to observe which founders are consistent and disciplined toward their responsibility of keeping a clear eye on what’s going on in the organisation.
A company like Save for instance, has been growing tremendously in 2015 and struggled to control in details its metrics. Consequently, it has failed at detecting and identifying the bottlenecks, issues and failures within its organisation. This rookie mistake could have led the company to a tragic end, and the CEO has learnt an expensive mistake from which he will never fully recover. As investors, we are lucky to have backed Damien Morin, because in this struggle, we are witnessing his full potential at building and running a lasting company in a huge market. Very few entrepreneurs could fly into the storm he is in right now.
The magnitude of these events varies depending on the company, its trajectory, its equity story. When companies like Zenefits or Fab are in the spotlights for the scandals we’ve all read in the press, one should just remember: don’t let your founding CEO fall into a similar situation, never. Every time a founder fails at his mission of mastering the path of his company through a detailed, regular, relevant set of data & information, the two responsible parties are the CEO and the Board.
Everybody is partying, pink glasses, tanned skin, cocktails and a three hours get together every two months during which people sometimes rise concerns that nobody really listens, even themselves. A “too little too late” syndrome that we have all experienced.
And suddenly everything falls apart. No one has stopped the music to prevent people from dancing, turned the light on and firmly said: guys, we must now stop every single discussion we’re having and move we’re making, right now, until we figure out how to master and control this company.
It’s already too late.
You can for sure hire another chief executive or operating officer, the captain america of finance, the hulk of organisation or the Ironman of turmoil… But the truth is, the wheel is in the founder’s hands, it’s his company. We expect this person to navigate her boat, no one else. It’s way too difficult to jump into a sinking ship and take control of the crew.
So here comes the toilet paper theory
The natural extension of tracking, measuring and analysing relevant metrics on a regular basis, is that it spreads over the entire organisation and impact how you manage it. This is just fundamental.
Go to the bathroom. Look at the toilet paper. Do you know where it’s stored ? Do you know how it got there ? Who bought it ? From which supplier ? Why this one ? How much does it cost ? This is not crazy, this is called attention to details, it is an indicator or your self-awareness. Take the habit to dig into small details like this one to keep your mind clear of all the fuzz around you and stay aware of what is happening in your company.
If at any time you feel like you don’t know or can’t find the answer to a simple question, stop everything you’re doing and make sure you go get the answer.
Just set up a bi-monthly reminder: Toilet Paper.