Bootstrapping in America features Koan CEO Matt Tucker

TastyTrade’s Bootstrapping in America features the most interesting stories from entrepreneurs willing to take an idea and turn it into a business. Koan CEO, Matt Tucker, recently sat down for an interview with hosts, Kristi Ross and Tony Battista. The conversation included commentary on how Koan was founded, the benefits of OKRs, and how combining goals with reflection can make the biggest impact for organizations. Here are a few highlights from the interview:

Q: Kristi Ross: This isn't your first rodeo. You co-founded Jive Software and then later it IPO'd. What was that experience like and what did you learn about yourself during those 15 years or so you were there?

A: Matt Tucker: Jive was an early pioneer in taking some of the ideas from social software in our consumer lives, like MySpace, Twitter, and Facebook, and applying them to business use cases as a better way to collaborate internally. We were working on this before social software was a thing, but we found ourselves starting this company, in New York just after September 11 with the implosion of the dot-com bubble. So it forced us to really think about how to build something that is incredibly valuable and do it in a very scrappy way because there's just no other choice. 

We bootstrapped the company for six years before doing our first fundraising round and then that was just a crazy rocket ship. Throughout that growth, I kept having these “insights” and having those around me look the way we're doing something and ask, “have you ever thought about doing it this way?” One of those insights was that we should write down our goals and have metrics to measure the business progress. 

Q: Tony Battista: The name Koan, can you tell us what it means? 

A: Matt Tucker: I know I'm a big believer that name (and logo) should have real meaning. Koan is actually a Buddhist Zen practice, where the Zen master poses a question or a riddle, called a Koan. And only through the process of reflection, the Zen student discovers deeper meaning. Very loosely, this is an analogy for good leadership in the sense that it starts with asking great questions, and the idea of reflection leads to constant progress and improvement.

Q: Kristi Ross: Five years ago you started Koan. What led you to create the company?

A: Matt Tucker: I'm definitely a believer that most of us start companies to solve our own problems, and that felt like the case for Koan as well. While I was at Jive, I had this visceral realization, of “wow, even our company, as long as we've been working on this, as much as we've tried to mature, we're struggling with how to set goals and achieve them and not just get buried in all the tactical firefighting.” It became a mission of helping every other entrepreneur with this problem and leveraging software to help every team become more aligned the way that the world's best teams and companies do. I just became convinced that that would be an important thing to do that would also lead to a big business. 

Q: Kristi Ross: If I'm correct, OKR is the backbone of the company. Tels us what it is and why you believe it's so important to the success of a company?

A: Matt Tucker: OKRs are a simple goal-setting framework. You have an objective that’s measured by key results, and the associated key results are how you’ll measure whether you achieve the objective. It was invented by Andy Grove, back during the early Intel days, and became a big thing in Silicon Valley. With Google and LinkedIn and many other huge internet companies really embracing this as a goal-setting framework, it has now it's spread all over the world. One of the best things about OKRs is that if you go and talk to most companies out there, they're trying to figure out how to set goals using this framework and it's just basically a simple set of best practices about how to do it. 

Why this is important? It turns out if you don't write down what you’re trying to achieve as a company or as a team, it gets really hard to get your whole company moving in the same direction. If you want alignment, you need to actually do a pretty good job of knowing what your goals are, and having a process where you’re talking about those on a regular basis.

Q: Kristi Ross: Why is it hard for people to set goals?

A: Matt Tucker: Setting the perfect goal is much less important than the behaviors and the habits that you start creating around actually using your goals because you can turn this into a kind of a virtuous cycle where you just keep getting better and better at it. 

There's a bad version of goal setting and there's a good version of goal setting. The bad version is to use goals in order to just tell every employee exactly what to do. That’s not really goals. It's just this giant list of tasks, and ultimately saps employees of autonomy and drive. 

The best version of this looks very different: leaders define what success looks like and that empowers employees to go accomplish it. Rather than telling you how to do it, leaders are saying that if we accomplish these outcomes, ask what we would do to reach those goals. It's a way of making the work environment ultimately more fulfilling for all of your employees so they know what's most important to work on. They know that what they're doing has an impact, they're given the trust and autonomy to go figure out how to accomplish that, rather than being micromanaged. That is just a more purposeful and better way of doing work.

Q: Tony Battista: Do you think that a person or a group should be accountable to someone outside of themselves when they set goals? Is accountability an important part of this whole equation?

A: Matt Tucker: There's a lot of data that people do better work when they feel accountable and when a manager helps to hold them accountable. But it doesn't have to be performance management, like where you're giving people reviews and formal feedback and bonuses -- that can be an effective process but it can also feel kind of dehumanizing. 

Goals within the team context should allow everyone to be open with one another about what are we trying to accomplish, and who's on the hook to accomplish it. At Koan, we're having discussions all the time about what's going well, what’s not going well, and if help is needed, it’s okay to ask for it. As soon as you start formalizing these processes and adding some structure, you're forcing a very regular practice of how you're checking in with one another, creating accountability inside of the team to support one another, so people want to do their best work. That practice is really what helps. 

Q: Kristi Ross: How do you employ positive collaborative methods within a company? 

A: Matt Tucker: The number one fail case for goals is what we call ‘set it and forget it.’ People spend a whole bunch of time thinking about them, they write them down, maybe once per quarter, and then nobody talks about the goals again until it's time for the next planning session. This happens at so many companies. It turns out the most important thing you can do is create a regular cadence of actually practicing using the goals and incorporating them into work. For example, if you chat with an Olympic athlete and their pursuit to win a gold medal, ask how they’re going to win and what that is going to look like. It’s the practice every day. It’s putting in the time and the work. In addition to setting the goal and thinking about how to achieve it, collaborating around the goals, talking about them every week, measuring whether we're making progress. It’s this act of reflection. That's the backbone. That's how you actually get better as a team. 

Q: Tony Battista: I'm a people person. I love collaborating with everybody. Your headquarters are in Portland, Oregon, but most of your employees are remote. Are there any positives or negatives for collaborating, or because of Zoom, and all the other virtual ways to meet, it doesn't really make a difference?‍

A: Matt Tucker: The most interesting thing about this whole remote experiment is that it's forced us to find new ways to collaborate because there's no other choice. Unless you're one of those panicky bosses mandating surveillance software, monitoring when employees are working, and taking screenshots of people's screens. We have to be outcome-focused. Life is more flexible, kids might run in and start screaming. And so instead of listing out all the tasks, instead of being output-centric, we have to define the outcomes, and those might be goals, and then give people flexibility about how to do it. It’s just an amazing thing that we've all proven to ourselves that this is possible. 

Q: Kristi Ross: You have some pretty big clients. Why do you think people like using your software?

A: Matt Tucker: Turns out, setting goals and creating good habits around how to achieve them is something that is universal. Even if you're a tiny startup, you should be doing these practices as well. This is not just something for big companies, and we love working with startups, but we're lucky to get to also work with large customers and our favorite way to get adopted is one team will adopt our software, and then it'll just spread naturally inside of the company. 

I was chatting with the CEO of a unicorn company (one that's private but valued at over a billion dollars), and one thing he said is, “I absolutely love doing my weekly reflection in Koan because it’s a way of connecting the work to the goals, seeing the progress everyone is making, and learning what everybody else is working on. It feels like we’re working with more intention.”

Q: Kristi Ross: How much of your software is psychology driven?

A: Matt Tucker: If you want to change something in your life, it's all about the habits that you establish just setting the goal doesn't necessarily do much for you. Just like the Olympic athlete, if you actually want to make change, it's all about the daily and the weekly habits and small tweaks that you do. If you keep doing those small things, they add up to massive change. And that essentially is what we're trying to do in our product. We’ve taken all the best practices, the good habits and behaviors around how to talk about goals and think about the progress you're making, make it really easy for everyone to follow those habits, and that will lead to great things over time. Reflection plus goals. That's where you get that steady progress.

To watch the entire interview, visit tastytrade.com.