Leading a Tech Startup in China
Interview with Steve Mushero
Founder, CEO, & CTO, ChinaNetCloud
Leaders Speak Series
Steve Mushero is Founder, CEO, and CTO of ChinaNetCloud, a leading global provider of Internet Managed Services. Headquartered in Shanghai, China, ChinaNetCloud is a private company founded by Silicon Valley technology entrepreneurs, with a team of system experts and support staff in Shanghai and Beijing. ChinaNetCloud offers server management and cloud computing, running mission-critical servers for over 150 Chinese and international customers. The company specializes in complex, multitier architectures for Internet-facing businesses, including e-commerce, gaming, SNS, new media, Web 2.0, mobile, and other web sites and systems.
Steve Mushero has over 25 years of technology management experience across a wide range of industries in international contexts. He previously served as CTO at Tudou (China), Intermind, New Vine Logistics, and Advanced Management Systems, as Chief Architect or advisor on many global projects, including the World Health Organization, Grameen Bank Foundation, and Fortune 500 companies.
Steve Mushero, ChinaNetCloudMushero has a Bachelor’s of Electrical Engineering degree from Rensselaer Polytechnic Institute (RPI) and an MBA from RPI and International University of Japan. He holds numerous patents in digital data exchange and has written a book on Globalization and Trade.
Here are excerpts of our interview with Steve Mushero for Triple Crown Leadership:
How would you describe the leadership approach at ChinaNetCloud?
Mushero: We are a China-based company, but as Silicon Valley guys, we try to structure it like a Silicon Valley company, which sets us apart from local companies here and other places.
Silicon Valley is about “open door,” service, merit, honesty, teamwork, and much more. We are certainly all of these things and relatively informal. We’re also still a small company, as we now have 75 people, but we started from nothing.
When did you begin?
Mushero: We sketched our ideas in the summer of 2008 and started raising money in the fall, just as the world economy fell apart, which was a lot of fun. We really got going with employees, customers, offices, and revenue closer to the end of 2008.
Tell us more about your culture: is it hierarchical or more collaborative and participative?
Mushero: I think it’s a mix. Chinese culture tends to be fairly hierarchal and structured. For example, people really don’t like to work for more than one boss or matrix. In fact, I’ve had employees practically quit because, “Oh my God, I have two people telling me what to do and I don’t know what to do.” A flat structure can sometimes create real problems here.
So, we’re sort of a mix, still trying to be collaborative, but also we’ve got a lot of young people and very junior staff that we’re hiring and training, so we also have to be a bit of, “I need you to do this. Here’s the right structure. Here’s the process. Here’s the procedure. We sort of need you to follow it. Obviously, give us feedback. How can we improve it?” A little bit more structure, I think, than a typical startup would have because of the nature of the workforce and also of our work in the managed service sector.
It sounds like there’s a fair amount of a tailoring of your leadership approach both to the Chinese culture and to the particular workforce you have. Is that fair to say?
Mushero: Yes. We’re a service organization, so we’re very customer service-oriented. We’re also very process-oriented. In that sense, we’re very close to a bank in many ways. In a bank, certain things have to happen a certain way or things get lost–money and so on.
We’re very similar to that, but I think we’re much more open and flexible than a bank. It’s definitely not a “sit around on bean bags, have coffee and dream about writing software for the latest iPhone” type of business. It’s much more structured and, I suppose, a little more hierarchal than that.
We also have to build for scale, since other companies in this space, such as Rackspace, have 5,000 employees and we’ll get there eventually, too, in several countries around the world. So like them, Starbucks, and McDonalds, without structure and process, we’ll never be able to scale or reproduce our services in the ways necessary to properly serve our customers.
What are the most important results that the organization strives to achieve?
Mushero: The measure when you think about results is customer success. We’re a service business so, just like a hotel, you want happy customers to come back and pay us. We want customers to be happy, to have a good experience, and recommend us to other people. We have a direct impact on their success, so their success is our success.
On the technical side, we’re a server management company, so we want stable, high-performance, efficient servers and infrastructure, because that’s what they’re paying for. So, two parts: technical success first, which then leads to customer success. That’s really how we think of success going forward.
How do you think about financial results?
Mushero: Well, we have no competitors, and we have a huge market. Thus we broadly assume that, if we do well with the customers, financial success follows. Our business actually is fairly profitable on a per-customer basis. If we do everything right, financial results flow naturally. Broadly, as we start off, we want to grow and do well and do well for our investors.
How do the leaders there ensure those results are achieved?
Mushero: A lot of it is making sure people understand the goals. Since we’re in a fairly technically demanding and detailed business, it’s just working a lot of the details or seeing a lot of things personally early on. And then training and growing teams and people as you grow and get bigger and need to delegate. What we do is fairly difficult, and trying to figure out how to have the right amount of pressure and personal involvement and/or expert involvement is an on-going process.
Is there anything distinctive about how you approach training?
Mushero: China is a big country, so most people outside are surprised to learn about shortages of people. In many cases, there aren’t enough people to do a number of jobs. That includes most professions, because there aren’t enough sales, marketing, legal, and some of the technical people to go around, as a lot of these things have only been around for ten or so years. Therefore, you can’t very easily get a twenty-year veteran of anything. Thus finding people is hard. Plus, people who have done this work for a long time have bad habits that you have trouble with.
So we tend to hire people who are young, often right out of school. We have some unique intern structures here in Shanghai that help feed people to us. And then we train people intensely for a month and then weekly for additional months. We don’t actually care that much about their technical skill initially as much as we care about their thinking, trouble-shooting, and overall trainability. And then we add training and process / procedure on top of that.
Has the organization documented its values?
Mushero: Yes. Here they are:
- Customer service: that’s very important, the customer and remembering you service them.
- Communications, because we’re a big team environment and it’s very important to communicate across a lot of things, inside and out.
- Teamwork, for the same reason.
- Being proactive, because we’re a service organization, and we have to proactively deal with issues and avoid them because we’re paid to avoid them.
- Discipline, because you have to do the right things in the right order and the right sequence. Otherwise, it gets all screwed up.
- Quality, for the same reason, because if we don’t do a good job, we’ll have a lot of problems.
- And being efficient, because we need to do all of the above in a way that’s cost-efficient and that we can make money.
So, it’s Customer Service, Communication, Teamwork, Proactive, Discipline, Quality, and Efficiency.
What do you do to inculcate those values? Do you build it in training? And what do you do to make sure they’re actually upheld in practice with your staff working with the clients?
Mushero: They are covered in new employee training, and more broadly in soft skills training. I think we should do more about more formally conveying them, though of course a lot boils down to how management and leadership actually acts on a daily basis, since if we don’t do these things, no one will. They will be integrated as screen savers. We have them on the walls, on posters around. We have a quality department. A lot of these things are built in.
Have you ever encountered a breakdown in the values, where you had to take action and address it somehow?
Mushero: Yeah, a lot, actually. Like any growing company, and with relatively young junior people in a multicultural environment, you can imagine these relatively high aspiration values are a problem sometimes. I’m pretty sure we’ve had problems with every one of these. So, sure, sometimes we don’t provide customer service. Sometimes communication breaks down. Teamwork is pretty good. On a bad day we can’t seem to do any of these things.
We actually track a number of these. We had a process on the weekend that broke down, and the engineer didn’t do what he was supposed to do. So, he gets to write a report about that, essentially an After Action Report (AAR), something like the military: what happened, how we got there, how can we improve, what were the issues, what were the missed opportunities and all that.
He asked me a little while ago, “Am I being punished? What’s wrong?” I said, “No, this is really about how do we understand the situation and find out where we can improve it.”
It’s not about punishing. Our leadership values are not about punishing people or blaming people. It’s really all about identifying improvement. Because if we don’t continuously improve, we won’t get where we need to be.
We have no competitors, and that’s because what we do is very hard–and very challenging to scale. So we really have to focus on that continuously, including driving ourselves since no one else will do it.
Have these kinds of instances been handled individually and discretely, or do you feed it back so that the whole company or a large group gets exposure to the issue?
Mushero: We do that a lot. In China, you really have to watch out about losing face. But we do that a lot. We try to draw general conclusions. I had a meeting today with a manager about this and I said, “Find me three good examples for the operations plan this week and put them up there. Give them face and make them look good and feel good, and also show what we’re asking to be done really can be done by new people in the right way. At the same time, find me three bad examples and take the names off those and show where this is a problem and why, showing where there can be improvement.”
We’re trying to do more of that and think in that vein.
How do you address the tensions in a startup between short- and long-term issues?
Mushero: Our need to grow is particularly acute for us. The way our business is structured, that is extremely difficult because we’re providing semi-customized service to a very wide array of customers. And though eighty percent of what we do for our customers is the same, twenty percent is different.
And we try to do that 10,000 times. And so it’s not all standard for all customers in the middle, which is a very hard place to be. Because of that, we have to continuously think about the systems, process, procedures, and training to get it there because no one else really does this. To us, that’s the long-term issue.
I am constantly telling people, “Today, we have twenty engineers and two hundred customers, but in a few months we’ll have double that. In a year, we’ll have five times. When we have five hundred engineers, how are we going to do this?” The natural tendency is to think short term and solve today’s problems, I spent almost all my effort dragging toward the long term: How are we going to grow? What are the systems, processes, and training we need to get to scale?
Actually, sales is not our problem. We have more sales than we can deal with in most cases. It’s: How are we going to handle all the work?
We’re going to have a hundred people, then a thousand, then ten thousand. If you don’t think about that continuously, when you get there, you’ll just explode.
The more junior people tend to think, “What do I need to do to get through the day?”
I actually have full-time people whose only job is to plan for the next six months or year. And that’s not strategy. Big companies have a strategy person, but I have people who are just full-time process and improvement people. Their job is really to think about a month, three months, six months down the road. They have no day-to-day responsibilities at all. In a small company, that’s not that common.
I had a conversation with one of my managers who’s working half-time on day-to-day issues. Even in that job, he’s supposed to be thinking, “How do I improve this? How do I get this better? How do we scale this?”
It’s really drilled into people’s heads, because we won’t succeed if we can’t do that. And remember, we need to succeed on a big scale. So I think we’re much more long term than that because my partner and I are always thinking process, standardization, growth. None of that stuff helps you tomorrow. It’s a pain in the butt. But it helps you in two months, three months, and a year.
Are there others in the organization who also serve as a kind of steward of the long term? Your business partner? The senior management team?
Mushero: I’d say that it’s my partner, partially. However, his responsibility is sales. Of course, he’s trying to close deals every day. And so that’s fairly short-term focus, as it should be. But at the same time, hiring people to manage that and take care of it so he can have the time to think more. I have that luxury because I have more staff in Operations. But if he does too much of it, we’ve got no money. So he’s just transitioning to that focus on longer-term.
Beyond that, we try to teach people and the more senior engineers: “How do we do this correctly? How do we think about this long-term?” I think we’ve been reasonably successful in that.
What is particular about leading a startup?
In a startup, you have to be everything as a leader. Often, it’s your idea, and so it’s very much your baby, plus you’re responsible for taking out the garbage, cleaning the bathrooms, doing everything from the beginning. And our job is really to get everybody else to do that in a scalable way.
Any final thoughts about leadership at ChinaNetCloud?
Startups need to scale and change a lot over a relatively short amount of time, compared to a larger organization. Getting bigger is the number-one problem. That requires more long-term thinking.
Number two is technically following up and doing a good job. And number three is sales and marketing process and all that.
This is the first time we have managed in China. You kind of feel your way through and sort out how to do that. Just trying to match all the Western leadership approaches onto something that can work here is a never-ending journey.
You need to scale really big–well, China can do that–but in lots of ways that are really complicated and with inexperienced folks. It’s a significant on-going challenge.
Bob and Gregg Vanourek, father and son, are authors of Triple Crown Leadership: Building Excellent, Ethical, and Enduring Organizations (a 2012 U.S.A. Best Book Awards finalist), based on interviews with leaders in 61 organizations in 11 countries.