John and me at the Kleiner Xmas party
John and I met with the Airbnb leadership to teach them about OKRs
The BetterWorks team at the time!
I was born into a goal-oriented family in Australia, the first of two children. When I was five years old, my dad took a job in the chemical industry and moved us to Houston, Texas, where he saw more opportunity. He started his own chemical firm, then sold it to a public company. Our dinner table talk was about work and ideas, building and creating–the challenges of running and leading a business. From a very young age, I was inspired to be an entrepreneur.
By age 29, I’d worked at more than half a dozen early-stage startups in and around Silicon Valley. I’d seen a few successes and my share of flat-lined failures, but all of them had one thing in common: a vague sense of direction. Companies in the Valley, it’s often said, succeed in spite of their management. They’re like rocket ships punching through the atmosphere into orbit, even with the drag of unfocused leadership. Which made me wonder: What if you combined a big market opportunity with disciplined execution? Wouldn’t you grow even faster?
For the flameouts, the ones that failed to achieve orbit or even make it off the launchpad, there was a common fatal flaw. When startups have poorly defined goals, they flail in too many directions at once. They waste precious calories without a plan to monetize their users into a sustainable profit stream. Meanwhile, their capital gets drained twice a month for their biggest expense: their people. Next thing you know, their seed funding is depleted. At cash zero day, they’re done.
I needed management experience in a larger, more established organization, even if it meant starting at the bottom. In 2003, I was hired as a sales rep at WebEx, a web-conferencing firm with 300 employees. I planned to put in three years and then leverage my seasoning into a successful startup.
I stayed three years and a half. I was named rep of the year, and then manager of the year, and by the time I left I was running the enterprise sales team. But my biggest takeaway from WebEx was something unexpected. My boss and the head of sales, a laser-focused leader named David Berman, came from ADP, the much larger payroll and benefits management company. He brought in a system called “Gs & Cs,” or goals and controls. Your goals were what you planned to achieve each quarter. Your “controls” (admittedly not the best word choice) were how you’d follow through to get there.
I didn’t yet know it, but I was about to be schooled in the fundamentals of OKRs. Dave’s system built in clear expectations, open communication, measured outputs, and alignment up and down the line. Goals and controls were objectives and key results by another name. The core concepts were identical.
In traditional business environments, goals are set once a year as top-down mandates. They give short shrift to the what and ignore the how. With no upfront understanding of why an objective matters or how best to reach it, people’s tactics will be disorganized or flat-out wrong. Employees can be dancing as fast as they can—and still be out of step with the organizational band.
At WebEx, only management engaged in structured goal-setting. It wasn’t pushed to individual salespeople; it wasn’t super-transparent. We used old-world PowerPoint slides, making it cumbersome to share what we were doing. But Dave was brilliant at focusing the sales team with holistic thinking and concrete, collaborative goals. His system penetrated every function of our department, from hiring to leadership development, and went light years beyond basic sales quotas. Dave encouraged us to base our goals on inputs: “Open the healthcare sector market”; “Launch an upsell process for existing customers.” In turn, each objective was tied to several quantitative “controls,” which linked to output. That two-sided approach made all the difference.
Everybody could see that Dave was running a more accountable, goal-oriented operation than the rest of WebEx. We had tremendous internal buy-in and results to match. But with other departments resisting Dave’s approach, our sales organization became a silo in a sea of silos, with no strategic cross-alignment. We no longer spoke the same language. I’ll never forget when someone in marketing told me, “This is just a regular day for us. There’s nothing special about it.” It was the last day of the quarter, which sales treated like D-Day. I was shocked.
Dave’s system just seemed like common sense to me, and I took to it like a pit bull to a pork chop. Why wouldn’t you write down your goals and share them with everybody in the organization? Why wouldn’t you measure what you wanted to accomplish?
People can be really busy—with emails, conference calls, instant messages, meeting requests—without doing anything. They get lost in the weeds; they can’t see that they’re running in place. To determine who is really moving the performance needle, companies need reality checks. They need unfudgable data to measure the what and the how, to see who’s aligned with the big-picture objectives–and to keep them there. Is Charlie spinning his wheels? Is Susan grinding like crazy but counterproductively? What if they had tools to track progress? How much more productive and empowered would they be?
I find hard data exciting. (If I weren’t in technology, my dream job would be running a factory.) Granted, knowledge workers aren’t widgets on a conveyor belt. Still, there’s a lot we can learn from the operational side, where output isn’t up for interpretation. How many hours does the sales team need to invest for each customer success? How many marketing dollars do we need to support each salesperson? What do the numbers and ratios show us? Without data, management is guesswork–we’re left in the dark.
Thinking Like a CEO
After WebEx, I used a quarterly goal-setting cadence everywhere I went, from Palantir to Socialtext. In 2010, I co-founded a software company called Badgeville, which used gamification techniques to enhance customers’ brand loyalty. In my first stint as a CEO, I set quarterly goals from the start, even in our startup whirl for survival. I grafted them into every department, into every level. I wanted to guarantee that everyone knew the three to five things they were doing to have real impact on the company. (More than five goals spread people too thin, but one or two seemed too few, especially with higher-risk projects that might hit a wall mid-quarter.)
At successful startups, each individual contributor is enabled to think like an owner. I tried to nurture that mentality at Badgeville–not just with stock options, but with an accountable, teamfirst, high-freedom environment. As we taught people to create their own goals and find the best way to reach them, they stopped thinking like employees. They began asking big-picture questions: What am I working toward? What do I need to deliver for us? Owners feel that extra obligation in their bones, and it goes way beyond checking off a list of tasks.
Everybody at Badgeville was CEO of something, with full responsibility for their domain. Say you’re the CEO of product documentation; you own it. If you don’t set ambitious objectives, would the work get done? Probably, because products need to be documented at some point. But are you pushing to create a new process to make our publishing more efficient? Are you seeking a way to drive maximum value? Owners take those initiatives as their personal priorities.
Though Badgeville became the market leader in its space, our manual goal-setting process required too much effort. We were hamstrung by PowerPoint and Excel. People uploaded their goals on a Salesforce Chatter wall (a company intranet with employee profile pages), but soon forgot them. All the most important things they were supposed to be doing—gone! Then they’d remember two weeks before the end of the quarter and scramble to get everything done, with predictable inefficiency and slippage.
Making matters worse, our goals were pretty much invisible. If you cared enough, you could dig up your colleagues’ objectives and see how they were doing. But though our goals were nominally public, PowerPoint made it difficult to find them, or even to update our own progress. Slides were cluttered with tangles of goals and controls. Information got buried in sub-sub-folders. People can’t see what they can’t reach.
Like many companies, we tried to modify our goal setting process to meet our needs. We used traffic light symbols to indicate progress: green for on track; yellow for at risk; red for failing. But these gauges were subjective. Since “controls” weren’t pre-negotiated, an individual might say, “I’ve only made two of ten cold calls, but that feels yellow to me.” I had no way to tell whether the goals managed up to me were in sync with what people were managing down.
Organizations drift out of alignment for a lot of reasons: emotional, political, technical. Despite our best intentions, our goal-setting process wasn’t transparent or accountable. It definitely wasn’t agile. The process had transformative potential, but the facilitation was just too crude. It was like trimming your hedges with a sledgehammer. Swing as hard and as long as you liked, it was still the wrong tool for the job.
By 2013, when we reached 100 employees and three layers of direct reports, I knew we needed more structure and support. I scoured the web for a better goal-setting solution, but came up empty. The system was broken, and we seemed to be stuck.
In our office was on the bay in Redwood City, a couple miles north of Palo Alto, I had a nice view of the water from my second-floor window. One fall day, a little after noon, I glanced into the outer office and noticed a bunch of empty desks. The place seemed half-deserted. I went to the window and looked outside. That’s when I saw them—20 or more of our people, in groups of two or three or four, walking around our building. Some forged ahead in straight lines. Others were milling sort of aimlessly. A few minutes later, in the hallway, I bumped into a middle-aged game designer named Steve Sims. Steve was terrifically likable and optimistic, with a special interest in the psychology of behavior. He wasn’t a fitness buff, just a regular guy.
I said, “Steve, what’s going on? Why is everybody out walking?” And he said, “Oh, I’m on the Fitbit thing.” He showed me the strap on his wrist. “I’ve decided that every day going forward, I’m walking 10,000 steps. You should try it!”
I’d heard that some or our people had set up a Fitbit step challenge, and then it slipped my mind. Fitbit sounded like a high-priced digital pedometer, and I didn’t see much point to it. But once I saw half our staff competing week to week in a friendly but spirited way, I got intrigued.
So I tried it, and it took me one day to get hooked. Fitbit was a lot more than a pedometer; it was a new social network. Soon colleagues were “cheering” or “nudging” me on a regular basis— more nudging at the start, when I barely logged 5,000 steps a day. But it was all in good humor, and I found it wildly engaging. I loved the continuous feedback, the clear and transparent measurements. Most of all, I got a kick out of my steady progress. Wow, I thought, this is really powerful.
If there was a genesis moment for BetterWorks, that was it. I’m about as competitive as the next entrepreneur. When I saw how much walking my colleagues were doing, I felt motivated to match them—I wanted to get healthier, too. The cheers and nudges, amplified on Facebook, egged me on. Within a week I was up to 10,000 steps a day, Fitbit’s default setting. I was checking my progress in steps and burned calories every hour. (Never underestimate the power of progress bars–it’s almost Pavlovian.)
A week or so later, I left on a business trip to London and Amsterdam and a few other cities. My meetings would be spread out around town, and I stopped taking taxis. I built to 18,000, 20,000, even 25,000 steps per day–a calorie bonfire! Five thousand miles away, Badgeville cheered me on over the network, spurring me to more success—a virtuous circle, for sure. (The exception was the person who accused me of strapping my Fitbit to a dog. For the record, it wasn’t true. My dog was at home.)
Back in the Bay Area, I felt disappointed whenever I fell short of 10,000 steps. I wasn’t reaching my potential. Worse, I was letting down my Fitbit cohort. We’d entered a kind of social contract; we’d grown mutually accountable. Encouraged by my colleagues to get back in the saddle, I lost 10 pounds and felt more vital at work. It’s well established that wellness enhances productivity. I’d noticed more laughing at Badgeville, more energy, an upbeat vibe. And I thought: How could a social platform make our goal system more transparent and compelling? Why wasn’t there a Fitbit to help people “win” at work?
When I couldn’t find a good answer, I decided to create one.
In September 2013, I left Badgeville and we incorporated BetterWorks. We had three people, two desks, and a shared office space. Plus one very ambitious mission: to help companies use collaborative goal-setting to drive engagement and performance.
Our first job was to size up the market: What was already out there? I found two cloudbased enterprise systems that built software for work processes, mainly in human resources. Both were trapped in HR org charts and old-world permissioning. Goals were private, non-collaborative, and driven exclusively from the top down. And there was no way to measure progress.
In the fourth quarter of 2013, my kickoff OKR for BetterWorks was to explore the market for a better goal-setting system. One key result was to “meet with 30 larger prospects to learn about goals and progress.” After more than 80 mostly cold calls, we got 37 meetings. We had met our objective; the market opportunity was real. There were so many companies that aspired to excel but knew they needed a better software platform. We brought on a handful of strategic customers as initial deployments to jump-start our company.
One day in November, I entered a small conference room at Kleiner Perkins. (I didn’t know it then, but it was the same room where Larry Page and Sergey Brin made their famous pitch, 14 years earlier.) I was booked to see Bing Gordon, the firm’s general partner and chief product officer. Before going into venture capital, Bing was a creative force at Electronic Arts, the number-one gaming company. Though he’d passed on investing in Badgeville, I had a feeling we’d work together one day. Thanks to Joe Lonsdale, the Palantir co-founder, BetterWorks had already raised $2 million of our $2.5 million seed round. I thought Kleiner might come in for a couple hundred thousand dollars, a small bet for them, if only for the option to invest more in the future. But that’s not why I wanted to meet with Bing. Mainly I wanted his take on our concept; he’s a guy who puts a fresh light on things.
“So show me what you’re working on,” Bing said. I launched into my pitch—Fitbit for the workplace—and took Bing on a spin of our prototype. Despite its limited functionality, the demo conveyed what we were about. It showed how users could create public, measurable goals and related “milestones,” then “check in” to record real-time progress and make sure the work stayed on track. Bing leaned in toward my laptop. Ten minutes in, he held up his hand and asked me to stop. “We need to show this to John Doerr,” he said.
Bing went next door and grabbed his partner, who took a seat on the couch. We’d never met, though I knew of John’s investments in Google and Amazon and other iconic companies. “Show him what you showed me,” Bing said. So I started again from the top. To be honest, I wasn’t familiar with the Andy Grove legacy or objectives and key results, per se. Our mission statement at BetterWorks was to modernize “goals” and “milestones.” But that didn’t faze John. (He probably figured he’d win me over to OKRs soon enough.) When I finished, he jumped to his feet and said, “Why didn’t we think of this?” Then he said, “I want you to come back tomorrow and meet with the rest of our team.”
That was more than I could have hoped for. The next day we convened in a larger room with ten people. I went longer, about 45 minutes. The partners asked some tough questions and thanked me for coming in. (They never give you an answer at the pitch meeting.) But later John called to meet the next morning at Il Fornaio in Palo Alto, where half of Silicon Valley has breakfast.
Kleiner Perkins is one of a handful of elite VC firms in the startup world. When you walk into Il Fornaio with a senior partner, all eyes are on you. I hadn’t worked with a top-tier outfit before, and it was heady stuff. John didn’t hold me in suspense. As soon as we ordered (medium poached eggs on toast for me, oatmeal and mixed berries for John), he said, “I’ve got some good news for you.” He slid a term sheet across the table. The first line blew me away: The amount that we’d like to invest is $15 million….
“We’re going all the way on your idea—we love it,” John said. “And Bing and I want to show you just how serious we are.” Even adjusting for inflation, it was John’s largest series A investment since Google. I was flattered and shocked, hardly knew what to say. John talked about his passion for OKRs, how he’d brought them to dozens of companies since leaving Intel. And how we could be the vehicle to drive adoption worldwide.
That was a game-changing moment for BetterWorks. Kleiner’s vote of confidence would finance two full years of operations. We could leapfrog the bootstrapping stage and think bigger than before: more engineers, a larger space. We’d also be facing new pressures. John didn’t have to tell me that he and his partners expected our company’s valuation to continue to grow. Ready or not, we were in the big leagues.
But we wouldn’t face those pressures alone. A second page was attached to the term sheet: “Seven Kleiner Perkins Commitments to Help BetterWorks Win—Big!” It was a menu of how’s, in specific, measurable detail: “Recruit Great Talent,” “Open and Help Close Defining Accounts,” “Help Establish Market Leadership,” and so on. In less than 24 hours, they had drafted the ultimate OKR to grow our company.
In the Valley, lots of entrepreneurs shop term sheets around, to see what other firms might offer. But I wasn’t shopping this one. I knew I’d found the perfect partner.
Colin’s Home Run for OKRs
As a husband and father of two boys, I’ve encouraged my family to incorporate structured goal-setting into their own lives. Two summers ago, my older son, Colin, was 13 years old and struggling in transition from Little League to Babe Ruth ball, the next step up. He’s a great team player, thoughtful and considerate, with a high baseball IQ—he understands the mechanics of the game. But he was one of the younger kids on his squad, and didn’t yet have the core strength and coordination of some of his teammates. There’s a lot of uneven development at that age.
In Babe Ruth, they put the biggest, strongest athletes on the mound. There’s more scrutiny than in Little League, and real crowds. Colin’s strong fielding kept him in the lineup, but he wasn’t getting hits. All the players track their batting averages, and I could tell my son was frustrated when he couldn’t come through for his team.
As I’ve said, we’re a goal-friendly household. I set OKRs to spend more time with my family. My wife, Leah, has used them for home projects. Our younger son, Aidan, has set and met objectives to master the trumpet and make new friends. When assessing key results within the family, we use emoticons instead of a one-to-ten scoring format. At quarter’s end, we sit down together and rate our performance on each objective: smiley face, neutral face, sad face.
Early that summer, Colin declared a new goal, something he’d never yet done in organized ball: “I’m going to hit a homerun!” He came up with his own key results. Since he’d already tried extra batting practice and it hadn’t helped, Colin chose to focus on outputs over inputs.
Hit the ball over the fence.
Hit the ball to the outfield; Hit the ball to the warning track; Hit the ball over the fence.
Maybe those incremental targets helped Colin relax at the plate. Maybe he stopped trying or swinging too hard. A game or two later, my son hit a fly ball to medium-right field. A game or two after that, he drove it to the warning track in left. While he didn’t celebrate those milestones (they were still outs, after all), he carefully checked each one into his iPhone. I could see his satisfaction in making progress and hitting his marks.
The payoff came mid-season. With two on and one out, Colin took a sweet, measured swing and rocketed the ball over the right-field wall. His home run didn’t clinch the pennant, or even the ballgame, but it was special to my son. He’d delivered on a challenging objective that he’d aspired to and planned for and charted. Tracking his performance—just as I’d built up my steps on Fitbit— made the achievement even more meaningful. Measuring made it more real.
For me, the best part was when Colin rounded third base. He threw his arms up in jubilation and shouted to the crowd, “I’m checking this in!” I cannot tell you what a gratifying moment that was for me. It showed how OKRs drive results for the team and the individual’s sense of purpose, all at once.