We recently hosted a conversation between Ryan Caldbeck, Founder & CEO at CircleUp, and Chris Guest, Lean Startup Co. Advisor, focused on what it’s like as a CEO to take your company through a major pivot.
All Growth, No Engine
After launching in 2012, CircleUp was thriving as a marketplace where investors could find and invest in consumer companies. With more than 20 months of growth, investors were happy. But founder Ryan Caldbeck wasn’t so sure. He was concerned that they were being driven by something they didn’t understand, and that their growth was a fluke.
After running all types of growth initiatives, they were never able to pinpoint anything that was scalable or repeatable. As Ryan puts it, they couldn’t identify the levers that they could twist to juice performance. During this time, Ryan spoke openly to his board about their fears and the importance of finding answers, but they didn’t mirror his concerns. Some of the investors even told them the growth was enough of an indicator that what they were doing was right.
But Ryan knew what they were doing wasn’t working and it scared him. In 2016, they saw their key metric — GMV (gross merchandise value) — plummet. His fears were being realized. Ryan didn’t think their current business model was working and that things needed to change. He wanted to do something that most businesses don’t even like considering, let alone implementing. He wanted to pivot.“This began to scratch that part of my brain and personality. How could we use these assets to build something either different or totally new?” Click To Tweet
You Can’t Move a Parked Car
The decision to pivot was a difficult, lonely time for Ryan. He knew something needed to change, but pivoting is a taboo subject in the industry. It’s just not talked about. It’s perceived as a sign of weakness and there are very few success stories to reference.
So Ryan was in a position where he knew his company needed to make a major change, but his board didn’t immediately agree, he didn’t have a peer group he could turn to for guidance, and he didn’t know exactly what he wanted the pivot to be. So he isolated himself from everyone and did…nothing.
It’s something he regrets immensely. “Me locking myself in a room and in my own head […] made everything worse,” Ryan says. But he was worried for his company, had no answers or obvious solutions to what was clearly (to him) a major problem, and he found himself in a position that no CEO wants to be in, let alone talk about. He was terrified.
But things started to change when their company moved to a larger office space. He realized that they had people depending on them and a larger lease to pay. They needed to do something. So he opened up to his co-founder and they put together a very basic Google Doc that outlined their company’s strengths and weaknesses. It wasn’t much, but it was something to move the ball forward.
Ryan’s management coach, Ed Batista, has an expression: “You can’t drive a parked car.” The Google Doc helped Ryan “start the car in [his] head” and a way to get his mind moving in a direction. And it worked. They were able to pinpoint some interesting things about their company, they recognized that they had an amazing team working for them, and they had assets at their disposal.
“I like to be resourceful,” Ryan says, “And this began to scratch that part of my brain and personality. How could we use these assets to build something either different or totally new?” One of their identified strengths and assets was their technology, Helio, that finds and evaluates companies. They believed in that technology and tried to figure out the best way to monetize it.
Energized and cautiously optimistic, Ryan set out to convince his board and investors that they needed to make a change and pivot away from the marketplace model. But that in itself was difficult and took time and a lot of convincing. To this day, it’s a source of contention and some investors don’t think the decision to pivot was the right solution. But ultimately, they made the change.
Today, CircleUp is no longer a marketplace but instead, it’s “an investment platform powered by technology.” And rather than putting the companies that Helio finds in front of investors in a marketplace, they raise the funds to invest either equity or credit into those companies themselves.
It’s Lonely at the Top
While Ryan loves his job and recognizes how fortunate he is to be a founder and CEO, one of the biggest realizations that came out of the entire pivot was how isolating and lonely the position can be.
Ryan points out that there’s a contrast between the glorified perception of the role and the actual experience of holding the position. “I think that maybe we’re all suffering from the cult of Steve Jobs in a way that this mythology, that the leader must always be right,” Ryan says, adding, “they must be stubborn, they must create this reality distortion field, and any deviance from that is effectively a show of weakness.” But it also leads to a tremendous amount of loneliness and that, from a mental health standpoint, it’s an incredibly difficult job.
The industry makes it difficult to have a discussion about what is going on. CEOs and investors are afraid to be vulnerable and discuss weaknesses or pain points in their company. CEOs are much more likely to remain silent or even talk about how they are “crushing it” before they have an authentic discussion about what’s going on behind closed doors.
But as Ryan sees it, authenticity and vulnerability in a CEO is something that can breed a positive trickle-down effect on their organization. It helps people relate to you and promotes trust within your team which can, in turn, breed loyalty. Plus, people are more excited to work for someone they trust.
Ryan also believes that the mental health of a CEO is directly related to the value of a company. Having good mental health can allow a CEO to persevere and run their business for longer and to breed a strong, positive culture. Company growth and reduced turnover are things that only help an organization thrive in the long run.
The one possible drawback to being authentic and vulnerable is the chance of alienating people. But it’s not something that Ryan is personally too worried about. “What I have found is that being able to talk about my authentic journey and who I am may turn off some people, but I think it builds loyalty and attracts other folks who want that in their life.”“What I have found is that being able to talk about my authentic journey and who I am may turn off some people, but I think it builds loyalty and attracts other folks who want that in their life.” Click To Tweet
All You Have to Do Is Ask
Ryan recognizes why CEOs resist being openly vulnerable and authentic. The nature of the industry doesn’t readily recognize or reward that type of behavior in the top brass of a company. But, that doesn’t mean it’s something that couldn’t change. “I tend to think that there’s nothing that creates a meaningful pain point that is unchangeable,” Ryan says. He just thinks it’s going to take a long time.
But there are small steps that are already happening in the industry that may help facilitate change. More podcasts and publications are starting to discuss and shed light on more vulnerable issues — like pivoting and mental health — which helps normalize the conversation. Ryan also thinks it’s helpful to find a group of CEOs who have a similar goal to be open and vulnerable. There are existing support organizations like Leaders in Tech which helps bring small groups of CEOs together who agree to be honest with each other about all aspects of their lives, professional and personal. But if those aren’t available to you, you can always start one yourself.
Ryan also believes in both therapy and management coaching. While therapy is good for mental health, it’s not always going to be as helpful for finding business solutions. Therapists aren’t there to give you tactical advice or navigate particularly tricky parts of the job. But a management coach is.
And if you don’t know where to go or what to do? Ask for help. From your board, your peers, your management coach — from whoever you need to go to in order to start talking and to clarify your thinking.
Catch Ryan’s Story in the Podcast Below!
This podcast episode is part two of the conversation with Ryan. Click here to catch part one.
Thanks to Shannon Lorenzen for contributing this piece. If you seek to bring the entrepreneurial spirit to your organization, Lean Startup Co. can help.