Small Business

Leadership: Not Too Salty, Not Too Bland


Defining qualities of the best leaders, what makes Internet startups tick, when CEOs perform too well, cash awards for student entrepreneurs

Make Leadership Not Too Salty, Not Too Bland

The best leaders are neither too aggressive nor too meek, say organizational behavior professors Frank Flynn (Stanford Business School) and Daniel Ames (Columbia Business School), in a paper due to be published in the Journal of Personality and Social Psychology. They examined three years' worth of business school students' self-assessments along with assessments of their bosses. "Again and again, the issue of too much or too little assertiveness came up in evaluations," says Flynn.

"The analogy we use is that assertiveness is like salt in a sauce: Too much spoils the dish, but too little is equally distracting," Flynn says. Interestingly, at the "just right" point, assertiveness disappears as a leadership quality, either positive or negative. When everything goes right, no one notices.

What Makes Successful Internet Startups Tick?

A combination of factors ranging from sizzle to substance, says the blog, Startup Review. It uses a case-study approach to focus on companies with impressive growth, fund-raising, and exit strategies, and bases its profiles on interviews with existing employees. Thus, Rotten Tomatoes is profiled because it "is a great story of a company that started out as a hobby, raised a little funding ($1.01 million) during the boom, hunkered down during the bust, and managed to make a nice return for its founders and investors."

And even though "Flickr's sale to Yahoo (YHOO) was not a huge success, at least by VC standards, Flickr got a lot of loyal users in a very short amount of time with no marketing spent, and that's something that many Web entrepreneurs are interested in understanding." The site's founder, Nisan Gabbay, appears to have caught the startup bug—earlier this month, he announced he left a VC firm to launch his own Internet company.

Venture Founders: Doing Badly by Doing Well

Recent research from Harvard Business School assistant professor Noam Wasserman shows this interesting paradox. "When founder-CEOs do really well, that also increases the chances that they're going to be replaced." The problems come when the company achieves important milestones. "Now, the product has to be sold: You have to create a sales organization, manage multiple functions, deal with customers, handle more complex financial issues," he says.

It's at this point that venture investors typically appear on the scene, and sooner or later pull the trigger to fire the founder (see BusinessWeek.com, 8/3/06, "Before You Accept VC Funding"). Adding insult to injury, the non-founder replacement on average earns $30,000 more in annual cash compensation than the founder. Wasserman's academic paper on compensation issues was just published in the Academy of Management Journal.

Catch Them Young

Mercedes Benz Financial has its eye on students who have started businesses as undergraduates. It is sponsoring an awards contest to bestow $16,000 in cash on three winners to be announced at a gathering in Chicago Nov. 2-3. It had better get hopping to generate buzz, though. The blog associated with the event has no postings beyond the initial welcome message.

David E. Gumpert covers business/health issues and also writes the biweekly What Entrepreneurs Need to Know column.

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