Strategic Officer of BizRate.com, March 17, 2000

W = Wharton   M = Farhad Mohit

W:   What are three ways that leadership in e-businesses differ from leadership in traditional bricks and mortar businesses? 

M:   It really differs in the sense that you're doing something brand new, and most of the people involved, the leaders, are new so there are no fixed paradigms that you look to and can really play off of.  I think one is the pace of change, the competition for human resources, and the amount of hands on sort of leadership that needs to be taking place.  It's not a command and control type of environment where you make your orders and your underlings perform or they’re out of here.  The other side of it, quite frequently in our case, is many, many managers that came in are older than myself for instance as a leader, and so you have the experienced managers coming in and reporting to inexperienced founders.  That poses some interesting challenges as well.

W:   Could you elaborate a little on that? 

M:   The bottom line is that the leader understands the technology and the environment and is capable of dealing with uncertainty a lot better than the manager that's coming in.  However, the manager understands management and has a lot of experience that actually can help the person in the leadership position.  So it's much more collaborative, or should be in an ideal sense, more collaborative than in traditional environments where the leader used to be a manager and used to be an associate and have worked their way up. However, just simple facts of a 50 year old guy reporting to a 25 year old guy causes problems sometimes. 

W:   How do you handle those situations?

M:   The way you handle it is by sticking to what you're good at and not trying to overextend yourself.  As a leader in the new space, if you do not use all of the people around you effectively for everything that they're worth you will lose very quickly.  You cannot afford to learn from your own mistakes, and that's something that effective leaders realize very quickly.  You have to learn from everyone else's mistakes as much as possible because you're moving so fast that you can't screw something up and then hope to recover with, "Next year we'll get it right."  That does not happen.

W:   So it sounds like there's a lot of lateral communication between what would be traditionally thought of as superiors and subordinates.

M:   It's much more collaborative and less structured, at least in the early stages.  I think over time, as you start to become larger and larger of an organization, reporting hierarchies start to appear by necessity.  But at the initial stages, and through the stage that we're at, it's much, much flatter than an organization would be in the traditional space.

W:   Okay, from point zero, from you when it was just you and now with a head count of 150, were there distinct inflection points where you saw the organization shifting to a more formal structure?

M:   Yes.  Between seed stage where we were self-funded and the first round of venture funding, one layer of formality was in the management.  Suddenly I became treasurer and eventually became a secretary, and there were assignment of titles that come along with reporting that was needed to a board of directors that was established.  The next major step really took place early this year where I started to realize that the company was growing beyond my scope of management capability. We needed to bring in a CEO to take it the rest of the way, a real executive with management experience.  We were about 100 people at the time and we brought in Chuck Davis, the president of e-commerce for Disney.  He had about 1500 people under him and had grown that staff from five people.  Before that he was with TV Guide and Sports Illustrated, so he has a lot of background as an executive.  So him coming in and the CFO coming in really marked another maturing point for the company.  We're moving toward much more of a stratified structured company, which is good because it brings order in and it's different at the same time.  That poses some challenges because we're not the happy go lucky organization we were even six months ago.

W:   As a leader, what are your top three priorities?  

M:   The number one priority in any company in the new space is people -- getting them, keeping them, and having them work.  It's all intellectual property.  The new economy is based on information, it's not based on manufacturing or clients or anything like that.  So the number one priority breaks down to recruiting and retaining key people and important people, and growing that base very quickly and scaling. The other thing is to make sure that the business is going well and that you're keeping your eyes and ears open.  It's a 24-hour a day job just staying on top of the space itself and making sure that your vision is still correct and leading in the right direction.  Hopefully your vision has a one-year window or two-year window before it expires, but you can't even be sure of that.  Think of yourself as guiding one of these smart missiles trying to hit a fast-moving target.  So both things are moving very fast and you've got to be continuously adjusting to be able to nail the target.

W:   How have you built your leadership team?

M:   I think the core of what we look for in our leadership team, and in all the employees, is driven off of what I hope are the things I hold up as my core best attributes:  Honestly, intelligence and passion.  Those are the three things we look for.  Notice that experience isn't necessarily part of it except for if you want to restrict to leadership.   Now, we need some management experience as well because experience is important.  As a manager you need to know how to handle situations.  But the core of it really is honestly, intelligence and passion.  Honesty means that you can be part of this organization.  If you're not, you’re out of here.  Intelligence means you have the tools with which to work under the fast paced, uncertain environment.  You have to be able to continuously process information that's coming in that's new, and make intelligent assessments and conclusions and go from there.  Passion means that you're on board with the mission of the company, you're able to get excited about it and devote an inordinate amount of energy and time into the task at hand, which is what's required in this space.  Everyone is running at a million miles an hour, and if you can't do that because you lack the motivation or passion, even if you're intelligent and honest you're not going to cut it.

W:   How do you integrate new people into your company?

M:   Every new employee gets introduced at the monthly employee address after which time we all go out for beers and a happy hour.  So the whole company gets to meet all the new guys and it's a very loose kind of environment.  We ask if you were going to get convicted of a crime what would it be, that kind of question to break the ice.   So first off, the first interaction with the company that they feel is one that is open, informal and fun.  We encourage people to be opinionated.  It comes from the top down.  A hundred times when I've shown to be wrong I'll actually get up and say, "Thank God you proved me wrong there.  I'm glad I'm paying for something.  If I was always right then, well, you know, you're all fired."  That's sort of the attitude that people that come on board have as well.  We stress heavily to people that nobody's politics are really not liked at all in the company and shunned.  In fact, egos are only useful if they're tied to company goals, not tied to individual goals.  The idea of what your title is isn't as important as what you're doing.  The idea of being wrong isn't as important as having the right decision made.  So I think that's the way we welcome people in.  We basically talk about how we value honesty, intelligence and passion, and in everything else we encourage people to be as different as possible.  That's, again, my philosophy.  If those three points match, you're compatible with bizrate.  The more different you are, whether it's race, interests, capabilities, skills, sexual orientation, or religious affiliation, the more different you are after honesty, intelligence and passion, the better it is for the company because we cover more area.  That's communicated to everyone and permeates the company so people feel very welcome and open in the company.  We will not let it become oppressive or bureaucratic.  People will not be treated like employees.  We're one big team.  Everybody has stock, another thing that's very important so that everybody feels a part of the same group.

W:   What kind of things is diversity able to do for your company. 

M:   I think that the number one thing you have to understand is that with the new economy you're dealing with a very quickly changing but largely unknown and untested area.  Whenever you're in that type of environment, you never know the kinds of skills, kind of background, kind of thoughts and things that are going to be useful.  In that type of an environment, the advantages of diversity are magnified. Think of it in terms of biology.  If you're all the same strength, then one virus..  if you're all the same exact thing then one little virus can kill the whole lot.  Nobody's resistant so everybody makes the same mistake and we all die.  However, if you're a diverse ecosystem, no one virus can wipe out the entire thing.  So the important thing is to have a lot of diversity, but then have an intelligent, capable leadership group that can make a decision and ultimately one guy on top that can make the yes or no decision.  The other side of diversity is that never is everyone going to be happy with any one decision.  Some people, rightfully or wrongfully, are going to be on the side that doesn't believe that's the right thing to do.  But if you have an effective, open leadership to hearing all the diversity but it's also clear that somebody has to steer the ship, then I think you have the right makings for a very successful company. 

W:   How do you motivate and retain your talent?

M:   Number one is the work environment.  The work environment has to be one that is challenging and open and fun.  You can't even work eight hours a day.  If you do you're out of business.  People have to work 16 hour days, 14 or 12 hour days regularly and in order for people to do that they have to really enjoy being at work and in the work environment.  So in addition to pay and salary and stocks, make the work environment something that is enjoyable.  To that end, what we've done is we have a recreation room that has a pinball machine and a foosball, a soda machine that's free.  We have valet parking for our employees when they come to work because it's too hard to try to find space in our parking lot.  If you car pool, we give free lunches.  If you're staying more than ten hours, dinner is on the company.   You can order in or go out, whichever you like.  Our benefits plan I'll explain to you in a nutshell. The benefits lady was here and she starts going through all the different types, "We have HMOs and we have select your own provider, and we have this and that."  She starts going through these things and I'm like, "Hold on, hold on a second.  Here's how I want to do this.  Please tell me what's the cheapest, crappiest benefit I could possibly get away with for giving my employees?  I would like that on an employee per month count.  I want to know how much it costs per employee per month for the crappiest."  She says, "I've never heard of that."  I respond, "No dental, no eye, no nothing at all.  Just the lowest of the low."  She calculates it and she comes back and says, "$150 a month per employee."  I said, "Well, what about the most expensive, crazy deluxe, unbelievable plan that I can walk around and confidently say I have the biggest badass employee plan out there?  How much is that?"  She went into the same math, "$300 a month per employee."  I said, "Okay, I can't possibly go with the lowest of $150.  So something like $200 a month or $300 a month."  That's a $100 bucks a month per employee. In total, that’s $15,000 a month right now.  But guess what?  I can walk around and say, "I have the biggest, baddass benefits plan of all and the reason I have it is because I love you all!"  To me the idea of $180,000 a year at this level, and you average it out over the two or three years it's much lower than that, it's like $100,000 a year, it's well, well, well worth it.  We raised $50 million last week for the third round.  The idea is to put the employees first.  People in general love the environment so they put a lot of hours in.  That's the way you do it.

W:   Could you elaborate on how you set the challenges for the employees.

M:   The challenges are really set by the marketplace.  We have a big task we're trying to accomplish.  Everybody is trying to become everybody in this space and the successful companies are ones that accomplish goals.  So you set milestones, you set goals, and you manage through them.  By the way, it's not all fun and games.  It's only fun for people who are on board and really are putting in the hours.  You want to blow off some steam, that's great, but we need to get our X, Y, Z done by this time and the X part of it has to come in three weeks so that the Y part can come in and so the Z part can come in.  You miss X and okay, that's bad.  You've got to work doubly hard.  You miss Y and hey, you're already fired.  We don't have time to sit there and figure it out.  So it's a cool environment as long as you're performing. 

W:   Given the capabilities that you've described as being essential in leading on e-business, how have you, yourself, been able to develop and acquire these skills. 

M:  I guess it starts with believing in the thing yourself.  I'm deluded to an extreme point about my company.  I really believe, beyond a shadow of a doubt, I'll always believe that we are one of the most important e-commerce companies out there. We will change the way people buy and sell because we bring truth to the consumer.  I think that the number one thing that I've learned is how to really communicate that more and better to the people that work with me and get them all pumped up. I cannot lose faith myself because if I do the whole thing falls apart.  To a large extent, you are creating something that is a self-fulfilling prophesy.  If you believe in it, then others will believe in it as well.    Customers will start believing in it and using it, partners will start believing it and partnering with you.  Your service becomes more real and comes into being.  It all starts with you and being able to communicate that.  I think I've become very good at realizing that's a core strength and then developing the ability to convince people of it.  Another skill is to realize where your limitations are and to pull in people that can complement you. Throw away your ego in a sense.  This is an extreme example of it, from my perspective, is bringing in a CEO, right?  It's my baby.  I want to take it all the way, but I realize that I'm not an executive.  I am not built for the day-to-day management of the company.  I'm good at the vision, I'm great at negotiations, I'm great at motivating on a large scale, but I'm not good at managing the day to day operations of the company.  So you need to bring somebody in very quickly who can do that with you.

W:   You had the leadership skills, it was really the managerial talent that you were hiring.

M:   Yes.  The broad skill that I've developed is to figure out what I'm good at and what the organization is good at, and then bring in other people or bolster up areas that we're not good at without getting tied into egos or titles or anything else.  If it's not working perfectly then you've got to bring in somebody that can help you there.  That's another sort of developmental thing.  And then the other side of it, again, comes back to hiring and keeping good people, just to make sure that the culture is continuing to grow.  I hired around a core set of beliefs that I held myself, this honesty, intelligence and passion. But you've got to make that as the company grows bigger and bigger and bigger you're communicating all the way down the ranks. 

W:   What criterion do you use to measure your leadership success?

M:   Well, there's several.  The measure of a business is its financial viability.  Otherwise it's not a business.  It can be a cult or a charity or something else, or a group or friendship or something.  If it doesn't make money it's not a business.  The other thing that's very important is the satisfaction of people working here.  We're creating value and having some fun and enjoying ourselves doing it.