MARK SUSTER: Live By The Buzz, Die By The Buzzsaw

 
 
 

TechCrunch ran a “Fail Week” series of video interviews with successful VCs and entrepreneurs last week, and Mark Suster of Upfront Ventures is particularly proud of his interview. His lessons can be summed in one motto: Don’t Get Cocky.

Suster tells TechCrunch that “I can’t think of a single mistake I didn’t make” when running his first venture, BuildOnline.com, a content-collaboration platform for engineering and construction companies. Part of the problem was that he was too young to not believe the praise thrown at him by investors, media and the public, particularly in the outlaw-days of the first dot-com boom. He was featured in Time Magazine as a top European entrepreneur, invited to private wine cellars across Europe, and courted by Goldman Sachs executives who urged him to move towards an IPO.

The attention didn’t just get to Suster’s head; it blinded him. He says the company ended up creating too many products with not enough focus, and under-delivered on the press buzz.

The hardest period during his tenure as BuildOnline.com CEO was dealing with the fall-out of a failed merger attempt with another web startup. He gathered his fellow managers together in a European pub and discussed bankruptcy options, before receiving an encouraging call from an investor, and deciding on the next-worst path: firing the majority of his workforce. He ended up slicing his company from 122 employees to 38 in one day.

After this painful lesson, Suster says his leadership style began to click; he eventually led BuildOnline towards a lucrative exit when it was acquired by France-based SWORD Group.

He also discovered a surprising insight:

“Hierarchy matters a lot; companies don’t work well as meritocracies,” he says. The problem with typical “flat” leadership structures at tech companies is a lack of decisiveness and execution. At a certain point, Suster had to revert back to his consulting training, and implement strong corporate governance.