Joe Gatto says the secret to his company’s success can be boiled
down to having a better mousetrap in a market with a lot of money
and mediocre mousetraps.
Gatto is founder and CEO of StarMine, Inc., a 110-employee
investment research firm that has grown 331 percent in the last
three years. Since founding the company in 1998, he has expanded
its client base to more than 400 firms.
Smart Business spoke with Gatto about why it’s important to
have a low bozo ratio at your business.
Q: How would you describe your leadership style?
I lead on product vision by talking with customers and connecting the dots. Everyone can talk with customers, but not everyone
comes up with the same conclusion of what to build.
Vision doesn’t come from a whiteboard. It’s not an abstraction. It
comes from figuring out which of those gaps we have to fill.
That’s leadership, because left to its own devices, an organization
will focus on enhancing products it already has in house. To step out
to a totally new bit of functionality or a new product requires more
active leadership.
You need to help people see the problem experienced by customers, and see the benefits of taking on something else when
those people are trying to get their jobs done.
Q: What pitfalls should CEOs avoid?
A mistake I’ve seen others make is trying to sell technology without there being a problem that it’s solving. If we do this whiz-bang
thing, you’ve got to think, ‘Who will buy this, will they pay extra,
who’s affected, is it one or two users or hundreds of users, what
are their current approaches?’
Not, ‘Wouldn’t it be neat to look at estimates this way?’ No, that’s
not interesting. That’s not compelling enough from a business
case.
Does this allow them to do some bit of work cheaper or faster or
in some way a higher value? The biggest pitfall I see in business
plans is people who have technology in search of a problem. They
don’t have any real value proposition.
You need a group of people with a willingness to pay to step up
and say, ‘Yeah, I’ll buy that.’ Now you may need to show them
mock-ups, but if you get a bunch of yawns, you probably don’t
have a product.
If you get, ‘I need that, that would save me time, how soon can I
have it?’ then you have a compelling value proposition. So, you
need to separate profitable from interesting and neat.
Q: How do you attract and retain quality employees?
It’s like one of our longest tenured software developers — now
he’s our chief architect — told me several years ago. I sometimes
ask people, ‘How are we different than other places you’ve
worked?’
He said, ‘StarMine really manages to weed out any bozos before
they bring down the average. It’s nice to work at a company with
a low to miniscule bozo ratio.’
Having smart people who are performing well around you at an
organization that doesn’t accept mediocrity and coasting, along
with challenging work that focuses on developing or creating new
stuff — people like that environment.
People like to create things and be part of that creative process,
not just fighting fires. They like being acknowledged for what they
do. They like the job to be a good fit for their talents. You don’t
want to put square pegs in round holes.
If you get the right skill set and are surrounded by high-performing peers, it kind of raises the bar. If you were to lower the average
performance of the rest of the team, everyone else would sink
down to that level.
People do better when they’re not working with bozos and not
working on bozo projects.
Q: How do you motivate your employees?
[Knowing the costs and benefits] helps you prioritize. If you’re a
project manager, it’s a lot more motivating knowing you’re working on
a project that — if delivered as anticipated — will deliver a half a million dollars to the company.
By being explicit about the benefits, it gets people motivated.
Just the process itself is very motivating.
It makes sure you’re working on the important stuff, makes sure
you’re not working on the less important stuff, with rigorous cost-value analysis backing it up.
Q: How do you communicate with your employees?
If people here haven’t heard it three times you haven’t heard it.
It’s partly the logistics of a crowded room or conference call where
someone gets distracted. You can’t say something once and expect
that everybody gets it.
Repetition, repetition, repetition is key. In addition to those high-level company updates, then it’s shaped by working with the project team, making sure people are clear on what we’re going after,
why and, to some degree, how.
HOW TO REACH: StarMine Corp., (415) 874-8100 or www.starmine.com