That’s the number of technology companies that sought an IPO in the first quarter of 2016. It’s a staggering statistic, emblematic of the sea-change that is occurring in the American technology epicenter, Silicon Valley, where unicorns – companies valued at over $1 billion – were once seemingly a dime a dozen. The money is drying up, perks are disappearing, and everyone is waiting with bated breath for the bubble to burst.
While those in Silicon Valley cower for cover, the Chicago technology industry resolutely turns out companies that embody that humble, Midwestern ethos: that more users at all costs pales in comparison to a sustainable business with actual revenue. In this time of great uncertainty, all organizations can benefit from the wisdom of these businesses.
The Moxie Awards, brought to you by Built In Chicago, honor Chicago’s tech superstars each year. Here are five important lessons from the five nominees for CEO of the Year:
Use data transparency to help your customers address their inefficiencies
Brought on by serial founders Brad Keywell and Eric Lefkofsky, the former Cars.com CTO has spent the last year helping DRIVIN reach year-over-year transactional value growth of 1,037 percent by “helping used car dealers address inefficiencies in the used car industry.”
It didn’t take long for Grau to convince the hosts of Bootstrapping in America of the value of a data-driven, transparency-focused business. “This is the fun thing about running a data company. We’re very transparent with the dealer,” he explains, rattling off a variety of metrics DRIVIN gives to their customers for free. “We want to be in this space, and try to make [the dealers] efficient and profitable.”
Grau is able to illustrate how they achieve that on the show, with an example, with realistic numbers. Recognizing and addressing inefficiencies so tangible they can be pegged to a dollar amount forces you to be realistic about your business, empowering your sales force, and making your value clear to all existing and future stakeholders.
Think of every expense as an investment
Not everyone would be able to connect the dots between farming and IT software, but not everyone is Tim Handorf. The leader of G2 Crowd, a community-driven reviews and rankings site for business software, recognized an opportunity when he noticed that the online world offered user reviews of pretty much everything, except costly enterprise software solutions. When you’re trying to grow a business, you need all the information you can get your hands on, because you often can’t afford to make a wrong decision.
It was one of many lessons Handorf learned living on his father’s farm in Iowa, citing a number of early experiences that explain why farmers such as him are natural entrepreneurs. He argues “if you don’t spend your money wisely in agriculture, you’re probably bankrupt,” and that making sure you get a good return on every investment – not just the ones designed to make you money – is critical to success.
Make sure your hiring process actually reflects your business objectives
Over the past decade, Morris has transformed the $10,000 he won in a University of Chicago Booth School of Business student entrepreneurship contest into a multi-million dollar Internet marketing company.
As with most businesses, Rise’s path to the summit wasn’t a constant…rise. In an interview for Forbes, Morris noted that, in the early years, they let go of 50% of new hires, noting that candidates from traditional advertising backgrounds didn’t have the data analytics understanding his company required.
The solution? An hour-long test – “GMAT meets digital marketing” – that challenged candidates to look at data, understand it, and draw meaningful conclusions. By making the application process more closely represent the work Rise was doing, they increased employee retention to 90%.
Understand, communicate, and fight the existential threat to your business
ContextMedia didn’t become the largest and fastest-growing company in health technology, consistently driving triple-digit growth in revenue, headcount, and distribution, without shrewd leadership and a strong organizational ideology.
Thankfully for us, Rishi Shah gave a Technori keynote speech in which he explained the rise of his company, detailing the lessons he learned that, in retrospect, were fundamental to their success. First among them? “Hold the existential threat in your hands.”
“In our business, we saw early on that the existential threat – the thing that would kill us – was that we could not sell advertising to monetize the footprint,” he clarifies, “I wanted to own it, not because I could necessarily solve it, but if we were going to go down, as a founder, you want to go down owning what killed you.”
As the leader of your organization, it is your responsibility to have the focus to understand and wrangle the very specific problem that threatens your business. Having your vision informed by very clearly defined constraints allows you to communicate that vision down the chain more effectively, and make it easier for every employee to commit to tackling that threat.
Provide empowerment through empathy
When your business is talent acquisition software – and your business is one of the fastest growing Chicago tech companies, with 70-plus Fortune 500 clients – you’re bound to have thoughts on how leaders can attract talent and transform them into empowered evangelists.
The “you” in question is Jason Weingarten, who shared some of those thoughts in an interview for Chicago Creative Space’s FIVEinSIXTY video series. Two tips stick out in particular: “Lead by Example” and “Trust your Team”. To trust your team, you need to understand them – and to understand your team, you need to empathize with them. While effective executives foster an environment where they don’t (and don’t have to) micromanage, it’s still important for those at the top to understand the experience, joys, and pain points of every aspect of their organization.
Weingarten often talks about how, even in a company with around 100 employees, he still is willing to roll up his sleeves and QA the product, or perform any other task that needs doing. “Leading by Example” means understanding and valuing the work every person in your organization does, and Weingarten sets a great example for other leaders to follow.
Regardless of who wins this year’s Moxie CEO of the Year award, every nominee has something to offer in the way of leadership advice. Transparency, honesty, empathy, and understanding are principles that Chicago industry leaders consistently embody, and leaders inside and outside the Chicago technology space can benefit from.