As every startup founder and CEO eventually finds, it’s hard pleasing everyone. You’ve got customers to keep happy, of course. Then there are your shareholders, who are always demanding cost savings that might threaten customer experience. And employees need to be treated well, too, or else their performance will suffer. Keeping the needs of all these stakeholders in balance can quickly lead to conflict. Here’s how I’ve learned to avoid that.
Meet My “Stakeholder List”
In my experience the best solution is to make a list of precisely whose needs my company looks after first at any given time, and why. Call it a “stakeholder list” or a “loyalty list.” The key point is that everything you do as a company is for the benefit of somebody, and if you don’t know who your most important stakeholders are, you’ll fail to set priorities. You can’t embark on a mission without knowing who that mission serves.
But who your top-priority stakeholder might be depends on the stage of your business and the challenges it’s facing. That means that the list I’ve learned to compile isn’t a static document. I’ve revised it as my video platform Vidyard has evolved. At first, my cofounder and I were the only two employees, so we didn’t have to worry about pleasing other shareholders. That changed once investors and a growing team came into the picture.
Still, you should resist tinkering with your list too often. Once you order your company’s main priorities, you need to act according to them for as long as you reasonably can—that is, until it’s abundantly clear you need to rethink which stakeholders your company is taking care of above all others. In the end, it’s the guiding light that informs all other decisions.
The last time we updated my company’s stakeholder list was at the beginning of the current fiscal year. This is what it looks like now:
- local community
And this is why my company’s stakeholder list is ordered the way it is at the moment:
1. Customers Really Do Come First
Since founding my startup, the number-one priority on my stakeholder list hasn’t changed and won’t while I’m at the helm. For me, customers have always been at the very top. “The customer is always right” may seem trite, but the simple reality is that businesses only exist if they have customers.
Ultimately, without customers, it’s awfully hard to pay employees, give back to the community, or offer a return to investors. There’d be no stakeholders left to list. Our company, for instance, makes a video platform for businesses. From the beginning at Y Combinator, it was drilled into our heads to “make something people want.” Then, once you’ve built something they want, you have to iterate toward building it better.
Where the stakeholder list has proved helpful, though, is in reminding us of that when the going gets tough. In the beginning, it was easy to put customers first. My cofounder and I were there to build a company, and without customers—happy customers—the dream would have ended on the spot. But today, when we’ve got hundreds of employees, multiple investors, and many more stakeholders, there’s a real risk that customers’ needs could get crowded out. This super-simple, ever-present reminder guards against that. One glance at the list and I remember: Once somebody else makes our customers happier than we do, we’re in trouble.
2. Prioritizing Employees
Regardless of what industry you’re in, the way employees are treated has a real impact on whether you thrive or flounder. Even in businesses churning out standardized products, like automobiles for example, or even cans of soda, it’s individual human beings who make the difference between a superior product or experience and something that’s forgettable (or worse).
This is especially true in my field. My tech company doesn’t have tons of intellectual property. We don’t have a bunch of real estate, equipment, or machinery. All we have are the people that come in every day to build something valuable for our customers. Without employees—happy ones–we would have no customers and no business. So if customers top our stakeholder list, employees have to come in at number two.
3. It Takes A Village
In the early stages of Vidyard, it was easy to think of our business as a two-way relationship between our company and our customers. But as we scaled up, it became apparent that our company was leaving an impact on the community we’d settled in. For example, we’d been regularly ordering food from a local caterer who grew dependent on our business. But the relationship went awry, and we later discovered the caterer had to shut their doors. We suddenly understood the massive impact we had on local businesses.
So in May of last year, I realized we needed to add community to our list, just behind customers and employees. Among other efforts, we started a program called Plugin, a series of fundraising-networking events that bring attention to local businesses, raise money for social services, and bring our employees closer to people who live and work in the area. For many companies, efforts like these get sidelined as “corporate social responsibility” programs that are little more than dressed-up PR initiatives. But we’ve found that tuning into our community helps us connect with customers and attract better hires; it directly serves priorities #1 and #2.
4. Investors Aren’t First–But They Aren’t Left Holding The Bag
What about shareholders? Investors provide much-needed cash to look after the first three stakeholders. We owe them a fair return, but make no mistake: Prioritizing shareholder value can destroy a company.
The reality is that many investors simply don’t care about other stakeholders. If they’re first to feed, they’ll leave nothing for the rest. In fact, it’s in shareholders’ best interests to step to the back of the line. That’s why I always share my stakeholder list with investors, so they know where they stand before signing on with us. Those who resist that shouldn’t bother investing in your company. In my experience, you’ll be left with those special few who do share your values and priorities—and reap the rewards as a result.