Source mentioned in Tim Ferriss’ new book

It was exciting to see Peter Koenig’s Source Principles mentioned in best-selling author Tim Ferriss’ new book Tribe of Mentors (thanks Jonny Miller for alerting me to it.)

The passage is in an interview with Graham Duncan, founder of East Rock Capital who explains that it’s a mental model he is increasingly using in his work with entrepreneurs.

The excerpt begins with a nice introduction to the source principles. For anyone working with founders (like investors) it’s incredibly useful to break through the notion that co-founders started a business together, and instead acknowledge which of the group is the source – the one originating founder. That individual will have a different and special intuitive connection to the initiative which plays an enormous role in the vitality of the initiative as it grows. As Duncan recognises, this is also incredibly important during a succession process when a founder-CEO leaves a business they started and hands over the reigns.

There’s an important aspect that Duncan doesn’t get quite right. He mentions a study which showed that companies perform better when an outgoing founder-CEO completely leaves the board and doesn’t hang around to mentor their successor.

I wouldn’t dispute the data here, however I would reframe the insight. Firstly, it makes no difference whether or not a founder remains on the board formally, or if they mentor their successor. What does matter is whether or not there has been a succession of source from one to the other. This is the deeper level of succession beyond the formal artefacts like job titles and share certificates. Metaphorically, it’s like ‘passing the torch’ for the initiative – a heartfelt handing over of full authority, responsibility and power. If this has happened, a new relationship can be established where the old source can help the new one however needed which could be through mentoring or serving on the board, but the new source will have fully assumed the natural authority that the original founder once had.

I would bet that in the companies where performance suffered after a founder-CEO handed over to a successor yet still stayed around, the real problem wasn’t that they stayed on the board, but that they hadn’t completed this deeper level of succession. Perhaps they didn’t truly want to leave. This leaves the new CEO weak and lacking the intuition which only the source has. So the solution to a situation like this isn’t just to remove the founder from the board, but to make sure that the succession process is completed.

It’s interesting that Duncan mentions Microsoft as an example of this. It’s a story that Peter Koenig, Charles Davies and me have been following with interest. Our take on it is that when Steve Ballmer took over from Bill Gates, he assumed the formal title of CEO, but the role of source was never passed on. Creatively, Microsoft went into decline. Eventually Gates (who from a source perspective had never left) took full responsibility again and this time around there does seem to have been a full succession to Satya Nadella. The company seems to have a renewed creative energy and Nadella seems to have the full, natural authority of a source. Meanwhile Bill Gates is still apparently involved in Microsoft, but now in service of Nadella, not the other way around. This will also be a big help to Gates in freeing up his own creative energy for his foundation (for better or worse.)

Larry Page: The source of Google

Written by Charles Davies. Originally shared by email.

Really amazing article about Larry Page and Google.
It reads like a perfect case study on source.
The only missing bit is an understanding of source.

I’ve gathered together some of the most pertinent quotes below.
I really recommend the whole article tho.

There’s a great bit about Larry Page basically having to leave Google (where his ‘sourceness’ was crushed), turn the Android operating system into a massive success outside the building, reconnect with his ‘sourceness’ (like Jobs did at Pixar) – and then come back and wipe the floor with everyone who was telling him he couldn’t have his own way before he ‘left’. The article attributes it to Page maturing and gaining ‘confidence in his executive abilities’, but I think it’s a far more compelling explanation to see it as him reconnecting to his creative source.

Larry Page is the source (and no one at Google knows what that means)

“Page, then a 22-year-old graduate student at Stanford, was struck in the middle of the night with a vision.”

“By August 2001, Schmidt … became Google’s CEO — so-called adult supervision for Page and his co-founder, Brin. And for a long time, Larry Page was very unhappy.”

“Google hired Schmidt. He joined as chairman in March 2001 and became CEO in August. Page went along with the arrangement but wasn’t happy about it. He fretted about his place in the new hierarchy — his title would be president of products — and even began to wonder if he’d become unnecessary to the company he’d founded.”

“Larry Page is the Steve Jobs of Google… Like Jobs, Page has a co-founder, Sergey Brin, but Page has always been his company’s true visionary and driving force. And just as Apple’s investors threw Jobs out of his company, Google’s investors ignored Page’s wishes and forced him to hire a CEO to be adult supervision. Both then underwent a long period in the wilderness. Steve Jobs’ banishment was more severe, but Page also spent years at a remove from the day-to-day world of Google.”

“Everyone inside Google still regarded Larry Page as their ultimate boss. He approved every hire, and it was his signature on the day of Google’s initial public offering, Aug. 19, 2004, that turned hundreds of people into millionaires — and Page himself into a billionaire. But gradually Page became a more distant, remote figure. To use a metaphor from Google’s earlier years, Page was no longer driving the van. He’d hired a driver and was daydreaming in the back.”

“Google incorporated on Sept. 4, 1998 — two years after the idea of ranking Web pages by their inbound links came to Page in a dream. He made himself CEO, and his best friend, Sergey Brin, was named co-founder.”

“While Google is often thought of as the invention of two young computer whizzes — Sergey and Larry, Larryand Sergey — the truth is that Google is a creation of Larry Page, helped along by Sergey Brin.”

And when the role of source is really working….

One day in late 1998, Google’s first HR boss, Heather Cairns, walked into the company’s garage office and caught Larry Page and Sergey Brin playing with Legos.

“What the hell are you doing?” Cairns asked, in her brassy but congenial way. The contraption on the table in front of Page had robot arms with rubber wheels at the end of them.

“We’re trying to figure out how to turn a page of a book without a human hand,” Page explained. “Someday we’re going to put every publication in the world on the Internet so everybody has access to it.”

“Sure,” Cairns said. “Sure.”

Not long after that, Page spent an entire day driving around Palo Alto with a small handheld camera. He’d drive for a few feet, and then stop and take a few pictures. Then he’d drive another few feet and do it again. He came home and uploaded the pictures to his computer. What he saw convinced him his latest big idea was feasible. Google could put a number of cameras on a number of cars and drive every street in the world, photographing all the way. The result would be a digital, searchable representation of the entire physical world — or the most relevant parts of it — available online.

During the Schmidt years, both the books and the photo project would become popular Google products. Google Books, launched in 2003, has come to encompass 20 million volumes, and it continues to grow. Google Street launched in 2007, and by 2014, made every thoroughfare in 50 countries viewable from almost every Web browser on the planet.”

Here’s the full article.

When a source sells out to a money story

This video is painful to watch!

Here’s the story: A source (founder) starts a company with a beautifully simple vision: “send one engaging email to users each day.” It’s a roaring success and they sell the company for $125M. The new owners start sending eight emails per day and then chasing each new money making online marketing fad.

The company drifts from its vision and eventually the new owner shuts down the company. The Source says ‘The new owners didn’t realise they were buying a brand.’

Watch the video and notice how the passion was drained out of the initiative by chasing the money, not the vision.

Businesses start with vision & passion, not money: 50 founding visions

One of the source principles is that nobody ever starts anything with money. The source (founder) always starts with a personal need. The need unpacks into a vision (even a blurry one) for a future where the need is being met, and they have passion for it, which provides the energy that compels them take the first risk. It’s the vision and the passion which attract other resources, like money and other people to help.

If you have any doubts about this principle, here’s a wonderful video where 50 wildly successful entrepreneurs share their founding vision.

Jeff Bezos – Amazon – 0:00
Steve Jobs – Apple – 0:12
Pierre Omidyar – eBay – 0:33
Michael Dell – Dell – 0:59
Sergey Brin – Google – 1:16
Biz Stone – Twitter – 1:35
Gary Vaynerchuk – Wine Library – 1:50
Daniel Ek – Spotify – 1:58
Kevin Rose – Digg, Tiiny – 2:29
James Altucher – “Choose Yourself” – 2:55
Robert Greene – “Mastery” – 3:21
Guy Kawasaki – Apple – 3:35
Steve Wozniak – Apple – 4:06
Mark Cuban – Broadcast – 4:26
Sam Altman – Loopt – 5:01
Tony Fadell – Nest – 5:12
Danae Ringelmann – Indiegogo – 5:26
Simon Sinek – book author – 5:46
Seth Godin – Marketing guru – 6:25
Evan Williams – Blogger, Twitter, Medium – 6:52
Reid Hoffman – LinkedIn – 7:13
Jack Dorsey – Twitter, Square – 7:45
Kevin Systrom – Instagram – 8:08
Drew Houston – DropBox – 8:34
Brian Chesky – Airbnb – 8:53
Peter Thiel – PayPal – 9:04
Elon Musk – Tesla, SpaceX – 9:14
Alan Schaaf – Imgur – 9:36
Chris Sacca – Baller Investor – 9:56
Paul Graham – Y Combinator – 10:18
Dennis Crowley – Foursquare – 10:40
Eric Ries – The Lean Startup – 11:11
Leah Busque – TaskRabbit – 11:25
Anthony Casalena – Squarespace – 11:44
Alexis Ohanian – Reddit, Hipmunk – 12:03
Jason Fried – Basecamp – 12:21
Palmer Luckey – Oculus Rift – 12:42
Kamal Ravikant – AngelList – 12:52
Ben Silbermann – Pinterest – 13:19
Tony Hsieh – Zappos – 13:43
Andrew Mason – Groupon – 14:14
Richard Branson – Virgin – 14:39
Andrew Ljung – Soundcloud – 15:08
Justin Kan – Justin.tv – 15:30
Jessica Livingston – Y Combinator – 15:59
Mark Zuckerberg – Facebook – 16:14
Marc Andreessen – Andreessen Horowitz – 16:15
Dustin Moskovitz – Facebook – 17:22
Tim Ferriss – 4 Hour Work Week – 17:47
Emmett Shear – Twitch – 18:24

Hat-tip to Inc. Magazine.

Twitter and Jack Dorsey’s story through a source lens

This post is based on an email exchange between Charles Davies, Peter Koenig and Tom Nixon.

Here’s some fascinating insight into Jack Dorsey, co-founder of Twitter, and founder of Square. If we look at his story through a lens of the source principles, it’s much easier to understand the tensions and events which have unfolded.

Dorsey has had an awkward (to say the least) relationship with Twitter. This makes sense since Ev Williams was the source of the company in which Dorsey came up with the idea for Twitter. But Dorsey is clearly the source of the Twitter product itself. It looks like Williams and Dorsey never reconciled this.

My hunch is that Dorsey’s passion (which we can see he has in spades from the energy he has put into Square) was stifled at Twitter. This is normal when a source is not recognised as such or doesn’t stand in their full authority.

A huge contrast at Square where he has been an absolute demon of authority, although it looks like he is doing it the difficult way – through absolute control and micro-management rather than providing a very clear brief for others to follow.

Meanwhile, Williams founded his next company, Medium, using Holacracy as the ‘operating system’. Holacracy is a wonderful model, but with some fundamental flaws in how it handles creative authority. Perhaps, having had such bitter experience with his and other’s authority at Twitter, he is rejecting authority, and decentralising it to a group. It’s likely this will cause problems for Medium in the future as it drifts without a clear owner of the vision. We might also see Williams lose his own passion for the enterprise.