If you’re looking for leadership advice for your startup, whether you just launched a product or are now scaling for growth, Mark Mader can probably help.
The SmartSheet CEO joined the Bellevue, Wash.-based work management software powerhouse back in 2006 when there were just six employees. He’s learned a lot in his 11 years leading Smartsheet — the company, for example, nearly hit rock bottom in its early days before raising a “down round” to pivot the business.
The rest is history, as Smartsheet now runs a $100 million business and is valued at nearly $1 billion — one of the few Seattle-area companies hovering around the elusive billion-dollar “unicorn” status.
Mader, who immigrated to the U.S. from Frankfurt, Germany and attended Lakeside School (alma mater of Bill Gates and Paul Allen), was a featured speaker at an event in Seattle on Wednesday hosted by iInnovate Network, a new peer leadership group made up of tech founders, CEOs, and other C-level executives who lead companies that are out of the initial startup stage and ready to scale.
Here’s a recap of some tips Mader shared at the event.
Bouncing back after hitting a wall
As Smartsheet co-founder Brent Frei — also a former colleague of Mader at Onyx Software — explained a few years ago, the company made a risky decision to reinvent its product in the early days.
Mader recalled how Smartsheet raised its Series A investment “on the back of evidence that there was a lot of interest in what we had.” But even though there was interest, the startup seemed hit a wall.
“The problem was, people weren’t buying it,” Mader noted on Wednesday.
The small team at Smartsheet had to make a decision: was the rate at which it was acquiring customers going to result in an outcome that justified the investment?
“That’s a tough call, because then you need to say, do you remodel the house or scrape it?” Mader said. “And we scraped it. But we didn’t scrape the concept — the concept was identical, but the house was totally different.”
Surviving off a $1 million “down round,” Smartsheet implemented key software design changes and made the product more user-friendly. It turned that $1 million and grew the company by 20X — Mader credited supportive investors like Madrona Venture Group for believing in the team and vision. It was also a lesson in sticking with your company’s mission, but staying flexible with the details — something Amazon founder Jeff Bezos also preaches.
Raise capital when you don’t need it
Smartsheet went on to raise a $26 million round in December 2012; a $35 million round in 2014; and a $52 million round earlier this year. The company also won the Next Tech Titan award at last year’s GeekWire Awards.
Mader said the early experience at Smartsheet helped the company gain an “appreciation for spend.” He also said that startups should “raise capital when you don’t need it immediately.”
“It’s so much easier to raise when things are great and metrics are awesome,” he explained. “When you need it, that’s when the barrel shows up. It’s a tough situation.”
Values are just adjectives
Mader starts off new employee orientation meetings by reciting the company’s six values: honest, supportive, driven, innovative, authentic, and effective. And then he tells new staffers that “values don’t matter.”
Of course, they do matter. But Mader believes they are just adjectives until employees actually demonstrate them at the workplace.
“Unless you can exercise those values and put them into motion, I don’t care,” he said. “I’m all about show it.”
Mader, named CEO of the Year at the GeekWire Awards this year, also expects his employees to be highly observant and curious, which should lead to better ideas — though he doesn’t subscribe to the notion that “best idea wins.”
“The best idea that is most effectively recommended wins,” he explained. “If you and I go into a room and your idea is 10 times better than mine, it’s not a pure outcome that you’ll get that. If I connect it to the values, to our customer impact, that’s the one that maybe carries the day.”
Tear tissue to get stronger
Earlier in the conversation on Wednesday, Mader used a sports training analogy to describe hitting a wall, much like athletes often do when they are seemingly doing everything right but can’t find success. He did it again when talking about “tearing tissue.”
“Tearing tissue really hurts, but that’s how you get stronger,” he noted.
Mader, who commutes to work on a SeaDoo, said companies need to constantly reinvent themselves. They must always be in a “training” mode, looking for new ideas or new ways to grow the business.
“We have to double our business every 18 months, and you do not do that by running in the same place you did the previous 18 months,” he said.
Mader added that it’s key for leaders to think of new ideas that are different but complimentary to what’s already been done.
“The leadership team needs to embrace that,” he explained. “That means you don’t ask your team to minimize risk or reduce risk to zero, because that means you’re moving too slow and not challenging yourself enough. And then when something goes amazingly poorly, if they did all the right things to still run that play properly, you have to embrace that. That’s so easy to say; it’s really tough to act that way.”