Editor’s note: When building for success, there’s nothing like learning from the best. So I talked with Burton Goldfield, who last year was named a Most Admired CEO by the San Francisco Business Times. With a leadership background at Hyperion, IBM, Rational and Ketera, he now serves as CEO at TriNet, an on-demand HR partner for 5,000 U.S. small businesses. In this interview, he shares his top three tips for success for new CEOs, based on his 25 years of experience.
SandHill.com: What do you believe is the most important best practice for CEOs of new companies?
Burton Goldfield: Choose the right market opportunity where you can deliver unparalleled value. I can’t emphasize enough how important it is to make sure you know as much as possible about the market, the competitive analytics around this market, the price points and the cost to serve it before you start building your company.
SandHill.com: What is the best source for that market information?
Burton Goldfield: My recommendation is to spend a tremendous amount of time with the type of customers and prospects that you intend to deal with as you flesh out the company. Spending time and gaining primary data is the single most important thing a CEO can do in building a successful company. It’s great to get data from others, but you want to have that experiential data of knowing who your customers are, what they care about and the problem you’re solving for them.
The people who fund startups spend a lot of time on market analysis. In my first experience, I was a little surprised at how much detail they went into because I just knew in my gut that my venture was going to be successful. But ultimately they were absolutely right.
SandHill.com: You said you were surprised in your first experience at how much time the funders spent on assessing the market. Did they uncover something that you overlooked or didn’t know to look for?
Burton Goldfield: Absolutely. The dynamics of the market weren’t what I expected. I think that entrepreneurs are by nature highly optimistic individuals. An entrepreneur expects the market to react the way he or she reacts. But that wasn’t the case in my experience. I was in the spend management business, which is driven by procurement officers of large companies. I learned that they didn’t have a desire for a win-win relationship with a vendor; they were interested in a win-lose relationship. So the normal alignment of how you would go to market and sell to them was fundamentally different than in many business situations.
The second thing that I learned was that the size of the market was different from what I expected. Everybody who looks at an opportunity from an entrepreneurial standpoint thinks the market size is virtually unlimited. But you bump up against the market size very, very quickly if you are successful.
SandHill.com: What is another best practice for CEOs that you know led to your success?
Burton Goldfield: The second thing is to make sure you’re working with the right group of people. By that I mean pick an amazing team to work with — people who inspire you and that you can inspire to ultimately build a great and enduring company.
I had the opportunity to spend 14 years with Rational Software, which we ended up selling to IBM. I got there when it was very small, and it got to be over $1 billion at IBM. There is a large group of CEOs that came out of that company. There is an even larger group of highly successful people that came out of that company. That group of people attracted other highly successful people. We were absolutely focused on the hiring process and making sure that everybody who came into the company was better than us.
SandHill.com: I often hear that when I talk to CEOs. Tell me how you define what “better than us” is.
Burton Goldfield: “Better than us” is not related to skills and knowledge. It has to do with core values and the motivation because they are the most difficult attributes to change in a business environment. If you hire only for skill in a certain domain, then you have to accept the fact that you’ll be turning over your staff on a regular basis as soon as business changes from one technology to another.
In difficult business situations, you quickly get to know what somebody’s core values are. Are they going to cut corners? Are they going to throw somebody under the bus?
An individual’s motivation is very critical as it relates to constructing a team with high-quality people. For example, if an employee’s goal is to be recognized and compensated for his own personal success and you are building a team environment, then you have a complete and total mismatch. That mismatch can prevent you from achieving your goal. On the other hand, if your goal is to build a startup and sell it in 18 months, you don’t want people that are focused on building a team culture and building a company to last 20 years.
SandHill.com: How do you assess someone’s motivation?
Burton Goldfield: An individual’s motivations are most clearly defined by their track record. By asking them to give a narrative of their resume, you can quickly learn what drove them to certain decisions. The difference in this narrative between “I” and “my team” is very telling. I am a big fan of Stephen Covey’s “Seven Habits of Highly Effective People.” In the candidate’s narrative, if they spend a great deal of time in their “circle of concern” and little time in their “circle of influence,” that speaks volumes about their motivation.
SandHill.com: So in your definition, the “right kind of person” is someone who will stick with a company no matter what?
Burton Goldfield: Absolutely, as long as they can add value and be a productive member of the team. That’s because business is highly non-linear. In a linear experience, the company does well, they grow it and get more funding, the company does even better and then they have some kind of liquidity event. But it doesn’t work that way. A company grows, they have layoffs. The company gets funded, and it may then run low on money. Markets change rapidly.
You never find out what people are made of until the times are bad. Everybody is great in good times. When times get tough and it looks like there’s an easier route somewhere else, it’s easy for people to lose their way — including the CEO. I won’t say CEOs need to thrive in adversity, but it sure helps.
Rational Software is a good example. It started as a software tool for military software development. The entire product line was based on Ada, a programming language which never took off. Additionally the product line was based on a propriety hardware solution. Most people would have said you can’t evolve a company that is based on these two fundamentally flawed premises. However, I was working with a group of people that had to either be crazy or dedicated to figure out how to evolve the solution to a commercial software product, which became a $1 billion software company.
Another dramatic example of how markets changed also occurred during my years at Rational. We went through the dotcom boom, and I lost half my team to startups. Looking back, one of those startup’s stock went to $200 a share. Virtually everybody in that company was a multimillionaire — for about 40 seconds. But not one of those people saw a dime because the stock quickly went to zero in the dotcom bust. But those who stuck with Rational through the boom and the bust made out really, really well when we sold Rational for $2.2 billion.
SandHill.com: You never questioned, never considered leaving Rational in those years?
Burton Goldfield: Correct. That is absolutely the case. At the height of the dotcom boom, I was the vice president of a software company in Silicon Valley and getting offers by startups almost every day. The pitch was simple: You will make millions of dollars very quickly. I was going to ride Rational one way or another and either would be the smartest guy in the world or the dumbest. I had already put a lot of years of my life in it.
It goes back to motivation. In the dotcom boom, somebody would say to me, “I wasn’t looking for something else but I got a phone call.” And I would say, “If you’re not looking for a job, why did you answer the call? If you don’t want this job, then you should market yourself and get the best bite. If you want this job, you shouldn’t answer the call and take an offer.”
There are all kinds of motivation. Some people are motivated to ride on the bus, not drive the bus. Some are motivated to make millions of dollars. To me, motivation that’s worth hiring is someone who wants to have an impact, be part of a team and do something great. The money comes with success, and the right team brings that success.
SandHill.com: You’ve described your top two best practices for startup CEOs. What is the third best practice?
Burton Goldfield: Stick to your principles and execute a plan that you deeply believe in. Every good CEO whom I’ve ever met wins by living to a very high standard for himself and his team. Being a CEO is an incredibly lonely job. Ultimately you have to arbitrate the final decision. Whatever people tell you, in the end, a CEO is entrusted by his team to make that final decision when the time comes. You can take advice from your board and from your directs; but you are called on by your clients, your investors and your employees to make more right decisions than wrong decisions.
SandHill.com: How do you get over it when you make a wrong decision?
Burton Goldfield: First let’s define a wrong decision. To me, it’s a decision that was not optimized. You get over it by quickly making the next decision. Secondly, you learn from that not-optimized decision and try not to make the same mistake twice.
Over the years, I have found that I’ve been praised for things that I know we didn’t execute well, but we were very lucky. I can also name numerous situations where I have been beat up for things where I know my team did an amazing job. Ultimately I have to live by my own confidence regardless of the ultimate outcome.
As a CEO, you can only control X number of variables, and there are about 1,000 times that many variables out there. So grab the ones that you can control, make as many right decisions as you can, and the rest of them will fall where they fall. In the end, you keep on going.
SandHill.com: You said it’s a lonely job. What do you like most about being a CEO?
Burton Goldfield: The fact that I get to have a really big impact. I believe that if I surround myself with the right team and if I’ve figured out the right market, I can have a huge impact on something of my choosing to make me feel good about how I spend my day.
Burton M. Goldfield is CEO at TriNet. He has more than 25 years of experience in sales, operational leadership and technology management positions and has a reputation as an accomplished, goal-driven leader. He is known for driving product innovation and has impacted the TriNet client experience with the addition of 22 new products and services. Since his arrival, Burton has more than doubled TriNet’s revenue and has grown TriNet’s client base from 2,000 to 5,000.