#87: How Daniel Yanisse Scaled Checkr to $700M+ and Overcame the Post-Hypergrowth Crisis

The best feedback on a leader is not what I see directly, is what other people tell about that leader. The better feedback of the performance of the leader is what their peer leaders are saying about them. Because you as the manager might not see everything, the employees may not see everything, but the other leaders are seeing up and down. And so that is a very important input. So what a great leader joining and succeeding within 3 months looks like is they join, they assess really quickly the situation, the company. They usually are pretty critical of the things that are not working, which is good. If they're saying everything is great, that's not good because there's always things that can be improved. And usually you hire a new leader because there's problems. Otherwise you wouldn't hire a new leader. And the best leaders, they're able in 3 months to come in, find issues, make the plan, hire 3 new leaders from their network, in a very short amount of time. And lastly, everyone else in the company says, oh my God, they're amazing. From the employees saying we're so inspired by our new leader, even if they're doing hard changes like changing personnel, all the way to the peers and everyone saying this person is great, we're glad we hired them, they're doing all of those things, it's amazing.

Welcome back. This is From Startup to Grownup. My name is Alisa Cohn, and today I'm thrilled to welcome Daniel Yanis to the podcast. Daniel is the co-founder and CEO of Checkr, which conducts background checks to ensure safe and fair decisions on employment. Checkr was founded in 2014 and was super successful out of the gate. They generated a million dollar revenue run rate in just 3 months, and they went from processing thousands of background checks to millions at a lightning pace. Daniel and I talk about the obvious benefits of that, but also the chaos that came up as they scaled from 2 co-founders to dozens of employees in a matter of weeks. More than one new hire quit on his first day. We also discussed the hangover after hypergrowth when Chekr reached a plateau and Daniel had to lead through a downturn with low morale, pressure from investors, and several key executives leaving. We discussed Daniel's specific management challenges and the techniques he learned, such as what he calls fly high, fly low, and how he learned to give straight talk to his executives. It's a really deep dive and a great discussion on what it's like to be up and then down and then to get back up again. And what Daniel learned in the process. So please enjoy my very rich conversation with Daniel Yanis, co-founder and CEO of Checkr. Daniel, welcome to the show. I'm so excited to have you today. And Daniel, you started Checkr in 2014 to do background checks on employees. That was born out of a need that you saw in companies that you'd worked in, and you were very successful initially out of the gate. And so I'm just curious, like, Were you surprised you had so much success so early?

Hey, Alisa, great to be here. Excited to be with you. No, I knew it was going to be successful. They want— no, I'm kidding. Yes, of course we were super surprised. I was definitely not expecting it. It's very rare in a startup that that happens to you so early.

I know. And so how did you relate to this kind of early growth? Were you like, fantastic, let's go? Or were you like, wait, what's going on around here?

No, we're always paranoid, kind of pinching ourselves, you know, wondering, is this too good to be true? We're, for a long time, we were paranoid that this will just go away and there was an anomaly. So very cautious while those customers and growth was happening. We're mostly worried on like, is that going to continue? What happens if something goes south? Because it's not normal.

Yeah, yeah, for sure. So, okay, so you're sort of like cautiously optimistic. I mean, the problem with startup founders, and I would say, I mean, it's so true, like you always have to be like, it's going too well, what's the problem? It's not going well enough, what's the problem? It's always like something to worry about. But I'm just curious, as for you, you were a first-time CEO, you are a first-time CEO, what were some of the unexpected challenges? Like as you started to scale rapidly in those first few years, what were you kind of most surprised about the sort of challenges around scaling?

Everyone from outside would tell you all of those growing pains are good problems to have, right? It's a great problem to have to be growing fast and getting more customers. But it's still hard, right? Like those growing pains, even if they are good things for good reasons, they can still be very stressful, very painful to manage, very high pressure. So it was hard. It was hard to keep up with the demands, to not break things, to hire the right people, to retain them, to, you know, it was not easy, but it's true that growth solves all problems.

Yeah.

Even if things are hard, it's exciting when we're winning, we're succeeding, we're growing. We can use that success and growth to find quickly solutions for the challenges.

Yeah. Can you give some examples of the things that did sort of fall apart or break or careen off course and then how you solved them?

Yeah, I mean, the first year was crazy. So we started, like you said, in 2014, we went through Y Combinator, we didn't really have much of a product or business before Y Combinator, we just launched it and started a few weeks before. And then 3 months later, at the end of Y Combinator Demo Day, we had 60 customers, a million dollar revenue run rate within 3 months, which is pretty impressive.

Very impressive.

And then a year later, we're almost at like $20 to $30 million in revenue. And so we went from doing thousands of background checks to millions of background checks in one year. And background checks are very operational to build. Like you have to find a lot of data sources. It's very operational. It's plugged into the real world. It's regulated. It's not just software. You don't have just to code the product. So that first year period was insane. And we went from thousands of millions of background checks. And we initially had only my co-founder and I, then like 2 or 3 employees. And we had to hire tens of people in weeks to just keep up with the volume of work that was needed. So just hiring 30 people in one week is very hard when you've never hired anyone at scale.

Yeah, totally.

And we called a staffing agency, we hired tens of people, a bunch of them don't even show up on day one. 10 have quit after day 1. It's, I think the team size and recruiting and people scaling was probably the most difficult.

Yeah, I can. So basically just hiring enough people and then like having them work and then show up and do the right thing. I can just imagine it's so ironic because you're, you know, a company that checks backgrounds and you've got all these people and you're like, who, who checked these people's backgrounds?

That must be very challenging.

But I'm also wondering, as you became, so in the, in the years that followed, you probably had a number of employees. You were no longer going from 0 to 30 in like a week. And I guess I'm just curious, like, when you think about the scale that was happening in the years that followed, what are some of the other things that you came up against that surprised you, that kind of broke as you continued to grow?

So, the first 3, 4 years, it was all the first wave of hypergrowth and hyperscaling. It continued to year 3, And that was hypergrowth. And again, good problem to have. We go from 0 to 30 employees to 100 to 300. Each one of those milestones, culturally, it's harder to manage. People talk about it. You need to start putting in place managers, layers, and just kind of organize yourselves into a real company and business. The founder cannot see or do everything with everyone anymore. So I think I went through the traditional, you know, people scaling issues. But again, that was under hypergrowth, hypersuccess. And so that solved a lot of the management or people or cultural challenges. I think for us, what became harder is when that initial hypergrowth wave started to plateau.

Yeah.

Then it's harder because we have very high expectations. We've grown faster than our age. We are not operationally ready to handle that size of business. And at the same time, now we have expectations to continue to grow at that rate. And we don't really know where to grow with what product in what industries. Hypergrowth in the early days is like a blessing and a curse. It's a blessing when the high growth is happening, but then the hangover after that is hard. And we can see it with Zoom success during the pandemic and then the hangover. Or NVIDIA is going through the hypergrowth now, and I hope they'll be able to continue. But when that slows down or even just plateaus, it's painful. And for us, I think The second chapter of the company, once the hypergrowth was over, was harder because we had to quickly mature and grow up and catch up to our scale. We didn't have the right leadership, the right processes, the right maturity, the right product quality. A lot of things needed to improve. And we didn't have the hypergrowth support to solve all the problems. So I would say that was to me the biggest leadership stretch, learning, growing, getting better at what we do was in the days where we had to reinvent ourselves and find the next growth drivers for the company. That was, I would say, 2018 to 2021, like just kind of before and after the pandemic.

So can you bring us back to like the moment, or one of the moments, where you thought like, uh-oh, this is not going to last forever? And like you say, growth solves all problems, but like all of a sudden our problems are not being solved by growth. And kind of what you thought about that and the kind of conversations you have with your team about that.

Yeah, so 2018, 2019, that started to happen. Oh, right. Our growth in marketplaces and gig was slowing down because we already were working with all of the leading companies. So there was not many more to get. And we had started to focus on non-tech large enterprise customers, but that was not working. We'd spend a lot of time, resources, people, and it was not returning growth and it was not successful. So that was, oh, right? Like the growth is slowing down. The new thing we thought would be the big next market for us was not successful. And then COVID hit. And so that was really the oh shit moment where we already were in trouble and then COVID hit and made things even worse because people stopped recruiting and hiring and that had a big negative impact on our business. So to me, that was like the toughest moment in the company where I was worried and I was not sure how we're gonna get back on track.

Yeah, I can imagine. That must have been like a terrible feeling. Did you, were you able to, did you have an executive team at the time that you could engage in this conversations and sort of problem solve? Or what were those conversations like?

Yeah, we had an exec team. Also what happened at this point in time, people start losing confidence into the business. Some of the executives starts to leave. That freaks out people even more.

Yeah.

Then the board starts to put some, you know, pressure and reminder like, what are we going to do? Which they should. And so that doesn't make it easier to keep going, but we kept our heads down. I had some great leaders who were committed and decided to go through the challenge and overcome it. And we worked hard with that team. We made some changes. We pivoted strategies and we got back on track for the next chapter. But 2019, 2020 were pretty tough years, I would say, for the leaders, for myself.

I can imagine. Did you ever feel like this is not worth it? This is not worth the stress. I gotta get out of this. This is not gonna happen.

I mean, you can have those negative thoughts, but I'm an optimist. I always focus on the future, not the past. And to me, there's, I have no other choice, you know, and we knew we built something pretty good. Like we built a great company. It's, you know, at that point, we had tens of thousands of customers relying on us being very happy. It's a mission-critical service for all of those companies, including large companies to operate, you know, you can't operate ridesharing or food delivery marketplaces without the safety and the vetting we provide. So, we also had a responsibility to our customers, my employees, hundreds of people. So, even if it was tough, you just can't give up. We have something important and the only thought to me is like, we need to find solutions and keep going.

Yeah. Did you have trouble recruiting executives at that period or did you, how did you think about sort of recruiting the right leaders for that company? It was a different time. Like you said, it's like a different chapter.

Yeah, lots of difficulty. I would say one of the biggest challenges for me, first-time CEO, and I hear it from other peer founders and CEOs, is really recruiting the right leaders. You can't manage the whole company, it's all through leadership and the leadership chain, and it starts at the top. And so really finding the top right leaders who are the right leaders for that time, and then they work well together and are aligned, that is the hardest challenge. And I made every mistake in the book. Of not hiring or retaining the right leaders.

Yeah.

The last decades, you know, I've hired leaders who are too large scale for our business. They were good for the few years in the future, thousands of people, but not hundreds. Great leaders, but just too big for what we need, not hands-on and not the best for smaller teams. I've hired leaders who are not too small or needed more scale, too operational or too strategic, but not operational. So I've gone through every mistake possible. And it's very painful every time you get it wrong, because painful for them, it's painful for us, for the entire team that reports to them. So, lots of iteration, lots of leadership instability to find the right leader. But after many trial and errors, we started to get better and better and understand what the fit is, what we need. And now we're in a much, much better spot compared to a few years ago.

Yeah, I can imagine. What did you personally learn about how you need to approach hiring an executive and like, what advice and tactics do you have?

So I think the experience and the scale and all of those objective things on the resume are important. You want to make sure it's not too big or too small for you. And they have, you know, relevant experience, especially like if you've never worked in tech, it's a bit tricky to work for the first time in tech when you start up. Never worked in a startup company and you've only worked in very, very big companies. It's quite of a hard cultural shock. Like it's most times it's It doesn't work well the first time you go in a small company. No one's fault, but those are some of the learnings. Most important is not the things that are on the resume, because again, the resume is really not enough. You can have people who worked at amazing companies who are not going to work out for your company. And that actually is almost a problem because sometimes you have people who have the best, most successful companies on the resume, 2, 3 years at this amazing company, then this amazing company, this amazing company. And it's important to know, like, is the company amazing because of them? Or are they amazing because they're in a— they look amazing because they're in a great company. And so I think it's easy to get just excited by the flashy resumes without digging enough to understand what the person has done, because a lot of people were lucky to kind of grow with that company. And so to me, what's important is like tenure in the job, more and more for leadership. If a leader has not stayed more than 4, 5, 6 years in the company, it's hard to really drive impact. At that high level of leadership if you haven't done a long tenure. So people who are there 1 or 2 years or 3 years, to me, it's almost like a red flag. Even if the company is great, even if they have a good reason why, I would be worried. Looking at the most successful leaders, almost like people who have a chip on their shoulder and have maybe not have been on their successful companies are probably the best leaders because it was harder and tougher and they learn more. You learn more from like, failures and tough environments and not successes than when everything goes amazing.

Yeah.

And you're probably going to be more resilient, more committed, more loyal if you've been through tough situation and stuck there. That's a bit counterintuitive. I like to ask them as well, really, what's their deep drive and motivation? Independently of this job and position, what really drives them? Because it is really important to see what motivates people because different times in their life, they might be motivated financially, or they want to learn new things, or they really like to develop people, or they want to work on very specific hard problems. Some people love the mess and the chaos and the very hard problems. They love to solve them. For me, that's great because we have a lot of those. But if you don't like that, maybe a startup is going to be too chaotic and you're going to be overwhelmed. And that's not your happy place.

Yeah.

Really spending time on looking at what they want rather than trying to sell them on why they should join us. That has been helpful to just better align motivations.

Yeah. So, one good answer to that question is, "I love to solve hard problems." What's another good answer to that question about what drives you? And then what's a bad answer to that question, what drives you?

A bad answer to that question, what drives you, is, "I want to go through an IPO." Are people really saying that in interviews? Many people, including leaders, in their list of what's important for them is they would love to go through an IPO.

Yeah, immediate disqualification.

Depending on how high that is ranked in their list and how they really want it, it's almost a disqualification. Yeah, if the answer is like too much focused on financial upside, of course there is financial upside and that's implied, but if that's too high, we want missionaries, not mercenaries. And if you want the most amount of money, you should go to a big tech company, maybe not at Checker. Also the risk appetite. Some people don't want too much risk. We're a mid-sized startup, so we don't, we're not the most risky, but we're not also the most safe place. So I think that's important. The good answers are they're really passionate about the products we do. They're really passionate about the problems we solve for customers. We're working on hard, you know, human people trust, transparency, risk issues, which are complex human and technology problems. If they really are excited about that space and what we do, if they're really excited about the people we have in the company and they want to join and work with those colleagues because they feel really aligned with that culture and the values people have, those are some of the good answers.

Yeah, I love that. You know, you mentioned just now we want missionaries, not mercenaries. One thing about Checkr is that you really have such a solid mission. I'm curious about how that has played into your company culture, to hiring people. What is kind of the upside of that, which is probably obvious, but what's the downside of that too?

Yeah, we are a very missionary company. The first year after starting the company, we set our mission and we really focused on fairness. The industry of background check was only focused on safety and security and risk. The downside of that is that it was a very exclusionary process and most people were screened out of jobs and there was no balance with inclusion and giving people a second chance and understanding the background, but realizing that it's not binary. Like people make mistakes. Sometimes those mistakes can still be a risk, but sometimes people evolve, rehabilitate, and learn from that and are not a risk anymore for the company. So it's a much more nuanced thing. And so we focused a lot on fairness because this was completely absent. And that's also a big opportunity. There's millions of qualified workers who don't have a perfect background, but would be a great worker for the business that they would join. And so we focused a lot on that and that became very core of our mission for the last 10 years, that focus on second chances and fairness. There is a downside to that. And I learned it kind of over the years, seeing how this mission applies to our company, our culture, our customers. And we have been working in the last year on that downside. So the downside, if you're a company that is a for-profit capitalistic company, we are, and any venture business is, If you have a mission that is more like an ESG mission, like environmental, social type of mission, there is a bit of a risk because we are not a nonprofit. We are not a government, we're not education, we're a for-profit business. And if you only have the environmental or social mission, there is a point where there's going to be a conflict between the business and capitalistic needs or the needs of your customers. And that social mission. And so that started to happen to us, basically, that focus on fairness, our employees were extremely motivated about it. That's why people joined Checkr. But then two things happened. Our customers would say, hey, Checkr, don't forget about safety.

Right.

That's great fairness. We love the balance. But first and foremost, we buy you because we want to ensure safety and reduce the risk of our companies, of our customers, of consumers, etc. And that was not represented enough in our mission. And then our employees came back with fair feedback, which is, I'm really passionate about the mission, but I don't see it in my day-to-day work as much as I wanted to or expected to, because I'm working on customers and safety and sales and all kinds of other things, but not only fairness and second chance. And so that is some of the downsides having an only social environmental mission for profit business. And so that led us last year to make an update to our mission for the next 10 years. And now our mission is to build a data platform for safe and fair decisions. We kept that fairness concept, but we balanced it with safety, which— and that's the intersection of what we do. And that is much more aligned with the needs of our customers and being a for-profit business.

Right. And also, it's probably fair to your employees to communicate that.

Yeah.

And then they know what they're getting themselves into. Yeah. Daniel, that's so powerful. I have so many questions for you, but like, I think a lot of times we have a mission. It's like, here's the mission, ta-da. And then even just what you said, you know, we changed our mission, ta-da, here's our new mission. What was that like to change your mission? Was it like a conversation with your employees? Was it with just yourself? Was it like, what was that process like and how did you kind of get to what you considered to be the right answer?

Yeah, changing the mission is a big deal, especially if you're really a mission-driven company that everyone uses the mission as the North Star. We were and we are. So it's a big deal because everyone is very attached to that. And it's almost like changing the culture, changing the North Star of the company. So it shouldn't be done lightly. And you want your mission to be as stable long-term as possible. So first, it took us maybe a year to realize that we should probably do an update and an evolution of the mission. And then we took over 6 months to go through that evolution.

And was that with your executive team? Like when you say we decided, that was who?

It started with a lot of feedback from employees and customers. And then it was a multi-month iterative process with our leadership team, not just my reports, the next 2 levels of leadership under me as well. And so we did offsites, we did conversations, we pressure tested concepts and words and every word matters. So it was, I think, a very thoughtful, you know, change management process because we wanted to nail it. And, you know, that's not something you want to fail when you launch it. So a lot of feedback loops and iteration, and it's been successful. It's been great. The new— I'm surprised how many positive things the new mission has opened. So not only it has, I think, clarified for employees, for customers, what we do, what's our North Star. It also helps us make decisions better because before the mission was not helping make all the decisions. It also helped find new product opportunities of markets and problems that we were not looking at before. For example, we are not looking at risk, fraud, and safety industries or products or customers before at all. And just by making that reframing and adding that one word of safety in our mission, Now we're seeing amazing new customer and business opportunities. We're just not even seeing or thinking about them before. So, it's actually very, very powerful, and I'm glad we did it.

That's very powerful, and I appreciate that you are so articulate about it. And I think for every founder out there, it's like, actually, your mission matters. Your mission matters both to galvanize people, but it also matters, like you said, to open up new opportunities. That's pretty amazing. Is there something in your background, Daniel, that made it so important to have this sort of fairness aspect?

Yeah, 100%. I think to me, the thing in my background is my parents. So my parents are immigrants. My dad is from Syria in the Middle East. My mom is from Romania in Eastern Europe. They're both coming from, especially back in the days, like when they left their countries in the '70s, '80s, Those were, I mean, Syria is still, you know, it's getting a little better recently with the news, but it was in a really, really tough spot, very poor country, dictatorship, like horrible human conditions. And Romania was pretty bad also before the revolution, before joining the European Union back in the day. So both of my parents are immigrant parents, left their country, moved to France, worked their ass off to build a good life for their kids and integrate and succeed. And so you know, have faced racism in France and, you know, being from, you know, Arabs and Muslim and it is not easy to integrate. And so to me, that story from my parents, and then when I moved to the US and I discovered the over-incarceration in the US and the over-representation of Black people and Latinos in prisons and how there's more poverty and more arrests and a lot of people in prison. That's when I connected the dots and resonated. In a way, I want to fight racism. I want to fight for the underdog and the underrepresented populations who don't have the same opportunities as the majority in the country. So that, to me, from my background, made me passionate about the fairness aspect. I still am very passionate about that and proud that at Chekr, we are advancing second chances and fair chances in the country.

Yeah. Do you also sort of live that inside of Chekr? Do you hire people? Also who meet those criteria?

Yeah, absolutely. Yeah, many years ago, we started to better understand the problem by going to prisons, by partnering with nonprofits to understand what happens when people are at the end of their incarceration, when they're released, what training opportunities are there to get back into the workforce, lots of challenges there. And then we worked with employers to understand how they think about it. And so we met amazing talent and amazing people who are extremely motivated to, you know, they do college degrees in prison, and they work very hard to prove themselves that they can be better than the mistakes of the past. And so we have started to hire them at Checkr, and it's been some of our best, highest-performing employees, highest-motivated and optimist employees. And so we want to show that benefit to other businesses. And there's lots of companies who know it, but it's not obvious, you know, it's a bit counterintuitive. And it's a space that hasn't changed much in the past. So, we are definitely big advocates of fair chance hiring, and we balance that also with the safety risk because it's not black and white, it's just a spectrum.

Yeah, that's very powerful. You know, sort of going back to you as a first-time CEO and also as a manager, I guess I'm just curious, what was the easiest part of learning to manage, or what was the easiest things for you to learn to manage, and what were the hardest things learned about management?

I think management has not been easy for me. I don't know if I'm a born manager or not, maybe not, but I had to become a better manager because otherwise I couldn't grow the company. Like, you know, I can't do it alone. Like I need to work with people. The most rewarding things about becoming a manager and learning and improving, and I'm still on that journey and I feel like that's a leadership journey forever. You're never a perfect manager, is work in a team and be part of a team that is winning together and building trust and collaborating and achieving amazing things as a team. And when I actually, I didn't grow up, I didn't do many team sports or things like that. So to me, within Checkr is the first time I truly felt part of a team and being part of a team and winning in this team, whether it's in business or in sports, there's nothing like it. It's pretty awesome. It's bigger than the individual and it's a lot of joy. So that is my favorite part about management. And then there's hundreds of things that are hard.

That's right. What are some of the things that are hard and how did you learn them?

So the hardest things that are hard for me, so my personality is like many founders, but I'm very hands-on. I became a founder because I like control. I don't like to be told what to do. That's why I became a founder and a CEO. Now I call the shots and I also have the responsibility for it, right? So that's my DNA. I'm controlling, which is not best it's something you have to be aware when you're a manager, because if you micromanage and control everything, your employees are not going to have fun. No one wants to be told what to do and how to do it. And so to me, the biggest kind of fight and learning and where I had to improve myself is delegation, empowerment, motivation, listening to the team, and be a good mentor and coach and manager. Without the negative aspects of controlling too much. But that's a journey. In the beginning, I was very controlling, but I was fine because we were growing fast. We were a small team. It was okay. Then, you know, second phase of the company I described, we get to hundreds of people, we don't have the free hypergrowth anymore. Then I have to hire senior executives and really delegate and retain them. Otherwise they're going to leave if it's not a good environment for them. And then I think also classic mistake that many founders do is I almost like over-delegated, I overcompensated. So I was too hands-off and I trusted without being too deep into the details, those leaders, and some bad things happened. And now I think third phase of my life and the company, I'm starting to find the balance of staying, I'm always going to be very deep in the details, very hands-on on everything. I can do a lot of things and keep track of them in my head. And I'm going to dive very, very deep to solve problems. But I also know how to remove myself and leave room for leaders to operate and make decisions. But that balance of being in the— we have a saying at Checkr, a leadership principle that's called fly high, fly low. So a good leader should be able to fly low and get into the spreadsheet, be able to do the smallest tasks themselves better than anyone. But you also need to be able to fly high, run the strategy, set the vision, inspire the people, you know, do the public speaking, and that's flying high. And that balance is, to me, one of the hardest things to master in leadership. And I still haven't.

Yeah, I mean, I can imagine because actually, as a coach, I work with very senior leaders. I work with startup founders. I work with people across the board in terms of seniority. It turns out that like, you know, like you say, fly high, fly low, or what I sort of call zooming in, zooming out. It's one of the hardest things to learn, and even very senior, very experienced people get that wrong. So what advice do you have for other founders in how to learn that important balance of what you call fly high, fly low?

So first, I think it's to maybe think about fly high, fly low and assess, are you more biased to flying low? Are you more biased to flying high? I was more biased to flying low. So for me, it's more to be mindful, okay, I used to want to fly low on everything and double-check everything. And so I had to kind of catch myself a little bit. And I try to ask myself, okay, is it worth it for that thing for me to go all the way in the detail because it's not perfect? So kind of picking my battles, because every time I do, I lose a few points of trust with the leader. I have to do it for accountability. But if I do it all the time on very minor details, it's demotivating. That is still the biggest thing to me. Another one that I've heard from other founders is, okay, it's the balance between positive and negative feedback. I was biased to finding all kinds of problems, only negative feedback, like, I don't know, engineer type of person. That's very demotivating, of course. If you go to someone, you tell them, here is the 10 things you did wrong, zero positive feedback. That doesn't— it sounds simple and stupid when you say it, but It's another thing. So that I'm working on trying to have more positive feedback, catching people doing things right. It means so much when it comes from the CEO to say, great job, that was awesome, this is great. And then trying to have only one area of improvement. And also, like, one thing I used to do is like give a lot of negative feedback to the people who are low in the organization and individual contributors and not giving tough feedback to my direct senior leaders. I was doing it flipped because I don't know, I was in the details with the ICs and giving the feedback real time. But what I, and I'm still not great at it, but it's better to praise the, I'm the CEO, so it's better to praise the more junior people who don't even report to me and of everything they've done right and give the negative feedback to the senior leaders so they can coach the whole chain of management in the right way rather than coming from me. So there was this balancing of how to do this in one-on-ones with leaders versus in group meetings. In group meetings, I should, as the CEO, I should mostly bring energy and positivity to the whole group. Otherwise, it's scary.

Yeah, it is scary. I see you've learned a lot. I see you've learned a lot. I'm curious, how did you learn how to have like, you know, sort of straight talk, difficult conversations with your executives?

Just through lots of trial and errors, mostly through errors. So I also have an amazing executive coach. So thank you to you and all of the professional coaches for helping leaders. This is so invaluable. And so I've had two executive coaches over the last 10 years and I still—

Yay coaching.

Yay coaching. Coaching is amazing because it's just someone independent who helps you without any stake in the game, which is becoming better. So that I think has helped me. And then just having the confidence to have the hard conversation. There is risk, right? Like it might go wrong. The person might want to leave, but it's the right thing to do. And once I'm convinced the right thing to do, I just go and do it.

Yeah, that's great. Given all that, you know, it's always this balance of like giving the difficult feedback and coaching them, but also letting them do their thing and also recognizing they do it a different way than you, but it's still good. But given all that, because there's a lot of subtlety in managing people, how can you tell when an executive is not scaling?

Yeah, I mean, now you can tell it pretty fast. I mean, I've seen it, there's patterns, usually within the 3 to 6 months of a new leader joining, you kind of know.

How do you know? What specific behaviors or what specific actions are happening or not happening?

The best feedback on the leader is not what I see directly, is what other people tell about that leader. So the peer feedback and also that we're implementing that, and I see that in our performance process and everything. The better feedback of the performance of the leader is what their peer leaders are saying about them. Because you as the manager might not see everything, the employees might not see everything, but the other leaders are seeing up and down. And so that is a very important input. So what a great leader joining and succeeding within 3 months looks like is they join, they assess really quickly the situation, the company, they usually are pretty critical of the things that are not working. Which is good. If they're saying everything is great, that's not good, because there's always things that can be improved. And usually you hire a new leader because there's problems, otherwise you wouldn't hire a new leader. The number one leverage for a high-level leader is their talent, is their bench, is their managers. And so usually they start immediately focusing on improving coaching, hiring a better bench of leaders. And the best leaders, they're able in 3 months to come in, find the issues, make the plan, hire 3 new leaders from their network in a very short amount of time. And lastly, everyone else in the company says, oh my God, they're amazing. From the employees saying, we're so inspired by our new leader, even if they're doing hard changes, like changing personnel, all the way to the peers and everyone saying, this person is great. We're glad we hired them. They're doing all of those things. It's amazing. So that's what great starts look like.

Amazing. That's so clear and helpful, and I think it's so true. And I appreciate what you say, like, the CEO doesn't see everything because they're very careful of their behavior about you, but you sort of can take the 360 view of the company and their peers and what they're saying. I think that's very insightful. That's very insightful. Daniel, have you ever experienced imposter syndrome or severe self-doubt?

A little bit, but I'm pretty confident and self-validated as a person. A little bit. Especially in that year, 2018, 2019, when I had like everything going wrong, people leaving, the board putting pressure, I was questioning like, am I the right CEO to do this job? Because it's pretty tough and I'm not sure it's going to work. So I had a bit of doubt then. But now I'm pretty confident. I mean, I'm also in a lot of peer CEO groups. And so I realized that I'm not the only one, like all the problems I will go through, all of the pain, is exactly what every other founder and CEO feels and sees. And I've been able to learn and adapt and get better and better at every level of the game for the last 10 years, from 1 person to 1,000+ and hundreds. And so I do feel like I can overcome many of the challenges, but I do need to stay humble and curious and learning and honest with myself.

Yeah, for sure. How do you continue to learn and grow?

Same as always, like mostly through failures and challenges and overcoming problems with great other people to learn from. I think really over the last years, the quality of talent we've been able to attract and hire is incredible. I've never worked with such talented, smart people. They're just incredible. And so I learned from my team members and everyone has different strengths that are bringing into the mix. So, that's a lot of my learning, working with amazing people who are better than me in many different dimensions, and then continuing to learn from other companies, other CEOs in my network, my executive coach, people around.

Yeah, for sure. Daniel, just a couple more questions. What do you wish you had known earlier on your journey?

So, two things. One on like more like business strategy and one on more the people side and leadership. On business strategy, I think I've wanted to do too many things at the same time. So, you know, too many markets, too many products. And yeah, if I did it again, I think we could have saved a few years and iteration and failures by being a little bit more focused and patient, like really winning, having an amazing product, an amazing market, finding the fits, getting the maximum out of that before expanding to the next one. Easy to say, hard to do, but I think many founders and we want to do it all and really prioritizing and sequencing is actually hard. And strategy is all about saying no to things. And so I still think I said yes to too many things. And we probably lost some calories and some time there. And then on the people side, two things, you know what I said about the mission. So having an only environmental social mission, I would probably not have done that. I would have balanced that more with the customer needs. Day one on the mission. So probably more like customer business mission, because that drives every decision. And also on the culture, one thing I haven't touched about, also iterated around on the culture again, this is my first time, I don't know what's a good culture. So I do think in the early days, I overcompensated cultures that I was in companies before. And so I made our culture very, very friendly, very warm, very welcoming, which is great. But I think we've had now over the years to shift the culture to more high performance, accountability, winning, results, not a harder culture, but more of an excellence and winning culture. I think those are the positive words, winning and excellence. That was not part of the initial culture. And that was fine when you were winning naturally. But, you know, I would have focused more on that excellence and winning and high performance bar from day one.

Yeah. And so it's been a process for you to iterate to get there. And, you know, looking back on it, that was maybe where you would have started.

Yeah.

Yeah. And last question, what advice do you have for other founders as they continue their journeys to grow into leaders?

Just thinking about my founder friends that I'm in groups in, and if you're not in a group of peer founders, I think it's really important to have a support group of peer founders. Otherwise, I mean, it's, people say the job is so lonely. It's so stressful. It's such a personal sacrifice that if you don't have the peer group, you think that you have a problem and like your life is miserable. But if you do have a peer group, you realize that you're not the only one, that it's normal, and that there is a path. And so I hope that everyone can find a path to sanity and some level of happiness and good quality of life because it can be pretty tough.

Yeah. Also, it's a long journey, right?

Yeah.

Yeah. Beautiful. Daniel, thank you so much. What a great discussion. And I just wanna say, I think a lot of leaders and founders are gonna get a lot outta this conversation. So thank you so much for joining me.

Yeah, no, thank you, Alisa Cohn. It was really fun.

Thanks for listening to From Startup to Grownup. If you like what you heard, give it a review on Apple Podcasts so other people can find it. And if you know of a founder or someone else who is meant to be on this podcast, drop me a line through my website, alisacohn.com.