# Four Criteria to Assess Great Founders Why and How the Best Leaders Make the Wrong Decisions 40% of the Time, Lessons Scaling King from 100 Employees to 2,400 and Making $1BN of EBITDA with Stephane Kurgan, Venture Partner @ Index Ventures 20VC · Jul 28, 2023 · 49 min · 10,205 words Speakers: Stephane Kurgan, Harry Stebbings Source: https://www.996.fm/episodes/20vc--ep-3ab1c5e8/ ## Cold open **Stephane Kurgan** [0:00]: The way I evaluate the performance of the leadership team is I look across four dimensions. I think it's great to fuck up. I think you have to fuck up. The the job of, you know, most managers and leaders is to make decisions. If you as a manager, if you make 55% of good decisions, you're a really good manager. If you make 60%, you're exceptional. We went from, you know, 100 employees to 2,400 employees in three years. We were hiring 100 employees a month. We made almost $1,000,000,000 of EBITDA the year before IPO. ## Intro **Harry Stebbings** [0:27]: Welcome back. This is twenty BC, and today's show is a master class with one of the great Stephane Kurgan. Steph is widely considered one of the best operators in Europe. During his tenure as COO of King, King went from 65,000,000 to 2,400,000,000 in bookings, from a 100 to 2,400 employees and did a $7,000,000,000 IPO before being acquired by Activision Blizzard. Today, Stephane serves as a venture partner at Index Ventures and more recently as an executive advisor at Technology Crossover Ventures. But before we dive in the show today, ## Sponsor read **Harry Stebbings** [0:57]: you know all those mind numbing tedious tasks that seemingly take up half your day. Well, Codat is here with their new AI powered work assistant that helps you and your team not just finish tasks, but make progress. So your product team can bring a feature to market faster by using Codat AI to tag customer feedback, draft PRDs, suggest target audiences, summarizing product discussions, and more. 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Plus, there are no minimum hold periods. You can access your cash at any time with the flexibility of a bank account, of course, to receive the full guaranteed yield, of course, to receive the full guaranteed yield, you do have to hold to maturity. But here's the thing, these are t bills, which means your investment has the complete backing of the US government, making one of the safest places to park your cash. Go to public.com/20vc to lock in a historic 5.4% yield on your cash. Three, **Unknown** [3:41]: two, one, zero. You have now arrived at your destination. ## Conversation **Harry Stebbings** [3:48]: Steph, this is such a special episode for me. We were talking downstairs and I was saying I've been hearing about your operational excellence for years from Fred Destin. So thank you so much for joining me. **Stephane Kurgan** [3:57]: Thank you so much for for having me. I've known you for for a long time. It's still a surprise to be here today. Of course, it's a great honor. You know, if I'm not sure I'm I'm worthy. It's very exciting. So thank you. **Harry Stebbings** [4:08]: Well, I so appreciate that. But I was obviously, you know, doing my work before the show on you. And the thing I wanted to start on is how did you make your first foray into the world of startups? What was that entry point? **Stephane Kurgan** [4:17]: Yes. So I wrote my final paper at university with a professor who founded the the first commercial CD ROM company in Europe. So he he had seen in The US a product called Disclosure, which was a business database for for US companies. And the CD ROM at the time was revolutionary because, you know, you couldn't store that much data on a floppy disk. Right? It was a it was a huge revolution. And so he built that company and he bootstrapped it, and it became incredibly successful. It's a company that was called Bureau van Dijk, which was sold to Moody's for more than €3,000,000,000 a few years ago. And so he hired me because he thought, you know, I I sounded like a good sales guy, and then he sent me cold calling all over the the world on banks to try to sell them the the software and the data. I started with Northern Europe. I went to Russia and Eastern Europe in '91. I went to South America, you know, Colombia during the the NARCO Wars. I I went all over the world for four years. I would leave the CD on trial. I was carrying CD ROM readers. I would open the computers. At the time, they were AT or XT computers. I would install a card inside the computer. I had a vacuum cleaner with me because these were all computers. They were incredibly dusty, so you had to clean them up before you could install the card. Yeah. So I basically had my suitcase, my CD ROM drives, and I went all over the place for for five years. I love this. I'm just pitching **Harry Stebbings** [5:36]: kind of narco wars in Colombia and the CD ROMs coming around. It's it's so hard for me to ask questions like this next one, but I I have to. It's just like eight years at King is such an incredible time at such an incredible company. If If you think about one or two of the most non obvious lessons from that time, what do you think one or two of the most non obvious lessons from that time are that really impacted how you think? Sure. **Stephane Kurgan** [5:57]: The first one is trusted data, not your intuition. You know, King was always pretty data driven, but it was an incredibly data rich environment. I mean, the beauty of free to play on Facebook and later on mobile is that it provides you faster and a higher quantity of data than almost any any other business. And very often, we had product intuition in terms of features or whatever where, you know, the team would think, okay, this is what we need to change, and the data would give you a completely different answer. I mean, it's been a great lesson in humility for product people. You have to be ready to be wrong. You have to, you know, read carefully the data and and act upon it. That's one thing that's really important. And the other insight is the Swedish model of, I would say, labor relations is fantastic. You build incredibly resilient companies. So it's a bit of a shock when you get there because you have very generous parental leave policies where both parents can leave for six months, and you have anybody can take a sabbatical at any time for, you know, another three months, and then they all take their holidays at the same time for five or six weeks. They vanish for the Swedish summer from midsummer to early August. As you arrive there as a foreign executive, you wonder how are you gonna be able to operate a business with that. And then essentially, you you create all these backup and support systems and labor mobility. The company you have then is is much more robust than resilience to shocks because you have very high level of cooperation. You know, the the level of skills is very high. They're interchangeable. And we had that shock coming in, and then when we sold the company to Activision Blizzard, they had that shock coming in as well. When you say about kind of data over intuition, have you ever gone against the data? Yes. Let me give you an example. You know, we came up with a a feature in Candy Crush, which was incredibly good at monetization to the point where it made us uncomfortable. And so what we did was we essentially kept the feature. I think we had a number of rules. We were very privileged in the sense that we had a huge number of players. So at the peak, we had 540,000,000 players, and we had a huge number of spenders. We had seven or 8,000,000 spenders. And so we could afford to have players who would spend a very low amount of money in the game and still create a huge business. So we were not reliant on very high spenders. I think we were very careful to make sure that, you know, we would not essentially vulnerable people spending too much money on the title and putting themselves in challenging situations. And one way of doing that was to gap the amount of money that you can spend in the title. When we would see high spending, we actually would reach out to the players, and we would ask them if they were aware of what they were doing to make sure it was not one of the kids who was using some, you know, one of their parents' credit card. But speaking **Harry Stebbings** [8:35]: of people being proud to work with King, you mentioned also kind of the Swedish culture there. Do you think you can use that culture in other countries? Like, do you think it carries over, or do you think it's only the magic sauce in Sweden, the Swedish people? **Stephane Kurgan** [8:47]: It's not only the culture. It's just the model of labor relations. To a large extent, they take the drama out of it. They make beautiful products. You know, and there are so many exceptional Swedish companies. They're a bit like the Japanese. They they have that incredible sense of design. They're highly cooperative, and they they just design a a working system which basically lets them live pretty normal lives and have families and take good care of their families and themselves. Right? And I think that's that's a model for, you know, the rest of **Harry Stebbings** [9:16]: us. We're going to discuss kind of building efficient systems, but my mother's favorite question in the show is actually the question of, if we're all a function of our histories and our pasts, and we all are shaped by our parents in some ways, what do you think you're running from, Steph? **Stephane Kurgan** [9:30]: That's a very good question. Well, for a long time, I was running away from them from my father. I had a very difficult relationship with him. You know, I left home before I finished school. I never had somehow his approval or I never had, you know, recognition from him, and and I basically left that behind and and went to build a career and a life somewhere else, which is, you know, The UK much later. Right? Did you did you always seek his approval? Because, like, you're always someone's little boy. I I have three kids. There was basically a speech at school by, you know, a very famous child psychologist called Stephen Biddle. And what he was saying is, if you don't have a good relationship with your dad, how can you expect to have a good relationship with your sons? And what you need to do if you want to fix that is to go and sit down with your dad and make peace with him. I hadn't been at war with him or whatever, but, you know, I hadn't had that conversation. And so I went to sit down with my dad probably fifteen years ago, and as the heather, the hardest thing I've done, I wouldn't say in my life, but close. Right? And Yeah. And, basically, I took him to lunch, and we we had a proper chat, and it's changed a lot of things. Can I ask, has that relationship changed how you parent your three children? Well, I assume so, but, you know, I haven't seen what it would have been if I had not, you know, sat down with him and had that conversation. **Harry Stebbings** [10:41]: From very deep there, which I love, but to the making of Europe's greatest exec. And I wanted to start with high performance, when we think about building machines and models. When I say the words high performance to you, what does that mean? **Stephane Kurgan** [10:52]: Well, talking about leaders, I use the way I evaluate the performance of the leadership team is I look across four dimensions. You know, the first one is the operating or the financial performance of their function. So, you know, have they beaten their numbers essentially? The second one is organizational maturity. So have they built a great team? Do they have strong people in in all the key functions and and are they challenging them? Have they built, you know, great processes? Do they have great succession in place? The third dimension is, you know, to what extent do do they contribute to the corporate agenda? You know? Because if you're a leader, have two hearts. Right? You have your functional or your operational heart, and you have a second heart, which is the collective heart of the collective leadership. And then the last one is where they stand on on the leadership journey and personal. And so are they a role model? Are they a thought leader? Are they being sought after by other people in the organization? How are they developing themselves? I look across these four dimensions to assess leadership performance. **Harry Stebbings** [11:51]: Where do you find most people fall down? Among those four, where is the most common failure point? **Stephane Kurgan** [11:57]: With founders, in the early days, I don't think that greed would be applicable because there's so much uncertainty. You need to navigate much more tactically in the early days and the early years of of building a company. The the framework applies better to professional executives and managers than to founders. You know, we will find the founders spiking exceptionally on some of these Yeah. And maybe less on on some others. For them, it's the ability to put a fantastic team together and and then show them the way as opposed to getting high marks on on all of these dimensions. **Harry Stebbings** [12:29]: And you know one thing about Van Horn, which is that, you know, you've worked with the best executives in the world, you've with best founders in the world, both investor wise and operationally within teams. And then you meet companies and young founders. How do you think about analyzing rate of development founders? **Stephane Kurgan** [12:42]: Yeah. Well, first, many of them are are not young in the young sense. Right? If you look at the average age of company founders, and there was a start in The US that founders of successful software companies in The US are in the early forties. And so very often, we work with founding teams who are, you know, from late twenties and thirties, sometimes to the early forties. And so, obviously, you apply a slightly different evaluation grid that at at that stage, But it's really what is the appetite to listen, what drives them, you know, what is really the objective? What are do they want to build something that's going to change the world? Are they self aware? Are they vulnerable? I mean, great leadership, you know, it's self awareness and vulnerability as well. And those are qualities you don't need to be older to have these qualities. Right? They are they are onshore early. Do we feel that we'll be able to to build a great team? That's something you can see reasonably quickly. Actually, you just look around them if they already brought a couple of people with them and you get a sense for, okay, you know, do we believe that, you know, some of the the top execs will want to work with them and go through the journey? **Harry Stebbings** [13:42]: We were talking downstairs actually about relationships and their impact on, you know, being the most effective exec and kind of operator that you can be. When you think about kind of one or two lessons or secrets in being the most effective and efficient exec, what would you say those are if you were to summarize? **Stephane Kurgan** [13:57]: I think you need to do the work. I think you are at the service of your team, and that means that you should not be a consumer of their time, but you should be a multiplier of their time and their effort. That means that before you meet with them, you know, if there is material, you read the material. If you have questions, you send them the questions and you come prepared to the meeting and and you focus on the couple of issues that that really matter. And if you apply the discipline to yourself, you will drive it down through the organization and you will have a much more effective and efficient organization. So it's all modeling. **Harry Stebbings** [14:29]: Now when we spoke before, you said 90% of scaling organizations is communication and decision making. If we break this down, what did you mean by this? And how does that realization change how you lead? **Stephane Kurgan** [14:40]: When you run a survey inside a company and and you ask the company, is communication good? And are you happy with the the level of communication? The answer is always no. And it gets worse as you scale. So there is never enough communication in a company. And if you aspire to be a leader, and it's even true in the public markets, you have to be ready to repeat yourself a lot. And that's good. It's perfectly okay. But that means you really need to design your organization in a way where you're gonna have very thorough communication both vertically and horizontally. So vertically, you want to communicate with your direct team and then tell them that they have to cascade it all the way down. So they will they have to communicate with their teams and then the teams below. And they should communicate everything unless you tell them this, you can share. They should push down every little bit of information to the very bottom of the company because that's how you drive engagement and trust. Do you teach them how to communicate? Well, you role model it. If you have your staff meeting, you know, at some point, it's your turn and you should only communicate what cannot be communicated in writing or through reporting earlier. You know, when you run a digital organization, typically, they're very data rich, you know, designing and distributing these very detailed reports which would go pretty much everywhere. And you know at King, everybody could access the data warehouse, and that was a deliberate choice. That's driving engagement. That means I trust every employee to be responsible with the data. It's a very big decision to take when you decide to go public because if you do that, that means the whole company will be insiders and they can only trade within trading windows. And so you have to make that decision on whether you wanna treat your employees as adults and they will be responsible with essentially the data and the power you share with them or whether, you know, you want to allow them to trade any day of the week. You know, we had that discussion I think actually with Meta. I mean, we were very lucky. We spent time with Mark Zuckerberg before we went public. It was like a year after his IPO, and he shared these lessons about his IPO, which was very challenging. Right? His stock went on 50% after the IPO, and I think that that's one of the insights we took from that discussion. What are the biggest ways that communication breaks down? What are the most striking? It's when trust breaks down. Because, you know, horizontal communication is also very important. So when you get your staff together, it's all about sharing information or sharing challenges and also, you know, getting feedback from the rest of the team in the in that might help you in in solving your challenges. And you can only do that in a trusted environment. As you scale, politics starts to enter the organization where, you know, you might have leaders who do not have the right fit or who might have been imposed or whatever. Suddenly, you you lose the congenial nature of the meeting and the discussion around the table and you have a communication breakdown. **Harry Stebbings** [17:29]: Do you trust people from day one and if that's be lost or do you say, you know what, we're starting a relationship and it's yours to be gained? **Stephane Kurgan** [17:37]: I think you will definitely give them the benefit of the doubt if you had a thorough recruitment process, and you'll be very transparent and you will share with them as much information and as with, you know, any other member of the team in terms of trusting them with the ability to make the right decision and execute. That trust will be earned over time. **Harry Stebbings** [17:55]: When trust is lost, say someone does something and it doesn't work out, is there a step to regain it? But I find trust once lost is very difficult to regain. **Stephane Kurgan** [18:04]: That's a personal failure of mine. I have a hard time trusting after, know, after, you know, something goes wrong, but I can get there, but it's hard. I have a number of specific examples where, you know, I managed to rebuild trust afterwards and and somewhere, basically, there was always a stain that could never be removed. Yeah. **Harry Stebbings** [18:21]: I'm sorry. I am doubling down on this. But when you think about, like, goal setting, how do you think about effective goal setting today? **Stephane Kurgan** [18:27]: It will depend on the function. What's very important is for teams to set their own goals because that's how they're gonna be engaged, and that that's how they will stretch them thirds. But if you feel these goals are not stretching enough, then you should challenge them. **Harry Stebbings** [18:40]: When you see communication breakdown, what's the commonalities in the mistakes that they make around communication? **Stephane Kurgan** [18:46]: For some of them, it takes time to find the right balance. Either they overcommunicate, they will share too much operational data with investors and board members. They might believe that we expect, or they might believe we will help with some of that operational detail. Some of the founders want to keep boards and investors at a distance, and sometimes there's information retention that goes beyond what makes an investor and a board member effective. And then you need to sit down and have a pretty direct conversation that that's not the deal. Right? Knutsson, from a communication standpoint, **Harry Stebbings** [19:18]: when you reflect on your own, what are the biggest communication mistakes that you've made? **Stephane Kurgan** [19:22]: Decisions made too fast and communicated too fast. Communication takes work. It takes structure. Communication is about telling a story, and telling a story takes time to build, you know, the right narrative and the right structure and find the right words. In my experience, I made communication mistakes when I communicated before I was ready. And typically, they would be, you know, saying something in front of somebody which was not the right thing to say. And then, you know, I have no problem to go and apologize. I can say sorry. **Harry Stebbings** [19:51]: Can you help me with that? Because I always think when someone does something, you're providing feedback and communicating back to them, It's best done in real time. You know, Steph just did this. Let's discuss it now. And as you said, sometimes things need a little bit more thought. **Stephane Kurgan** [20:04]: Look, praise, you can be very spontaneous with praise. You wanna be very systematic with it. When you see something that's great, you absolutely have to call it. But at the same time, you wanna be sparse because otherwise it loses quite a bit of its value. Yeah. Everybody will know if you are sparse with your praise. When you get it, they will value it immensely. For more challenging feedback, you need to pick your time. But, you know, it's also highly valued if you have the right team members. You just need to box it in a way where you say, hey, by the way, maybe you could have done this differently or clear, and give an example and say, but, you know, no problem and move on. And then something you said to me before, **Harry Stebbings** [20:39]: which is the uncomfortable power of almost radical transparency. What does the uncomfortable power of almost radical transparency mean? **Stephane Kurgan** [20:47]: Yeah. So I work with a fantastic company and two fantastic entrepreneurs. One of their principles has been apply radical transparency to the the way they have founded and they've built their company and they mean it. So everything is totally transparent from every conversation at every level in the organization with everybody to compensation. And so initially, you know, all the employees and the board members and the investors and the stakeholders would receive that weekly newsletter where everything was, and it's incredibly powerful. So what works really well is in terms of, for example, compensation discussions, which, you know, a negotiation that can take a lot of time and create a lot of tension. There's no room for negotiation because it's all, you know, they have these companies that grid, which is public and the whole system is completely transparent and there's no room for negotiation. So it gets these discussions short. The company, you know, the employees back to the trust point, They know pretty much everything, so the trust is extremely high. The engagement is extremely high, and so that makes the company extremely efficient in terms of shipping. I was uncomfortable a couple of times when you have the names of people who are being recruited that are shared internally. You need a lot of trust in your employees to be really careful with that because, you know, that can be damaging to the carriers of some individuals. If you have any, you know, discussions about transactions or personal matters and I think over time, they've slightly adapted. There are a couple of things that now they might not disclose. I don't think companies should be transparent on fundraising. I tend to agree with you. I think, you know, they've they've managed to be incredibly successful at fundraising while being transparent many, many times. I think they might be a little less transparent today. **Harry Stebbings** [22:19]: How do you give effective feedback as a leader today? And what's been some big lessons here on how to do it right and how not to do it? **Stephane Kurgan** [22:26]: Always start with the good stuff, positive feedback to start with. There are always a couple of items that can be developed, and for those, you have to be very specific and have an example ready. So if you say, well, you know, I think you could do this differently or you can improve this, and let me give you an example of what you've done. Here's how you could have done it differently. If you don't have that second part, feedback is useless because they cannot action it and it's actually very toxic. It creates a negative loop. So if there's an issue, make sure you are prepared and you have that example and you have a way to improve it that you can share before you give that feedback. **Harry Stebbings** [23:02]: Do you think teams have gotten a bit soft? And what I mean by that is like, you know, the shit sandwich, all these nice ways to mollycoddle, but slightly more gentle ways of saying, hey, you know what, Steph? We fucked up here and it shouldn't happen again. You know, twenty years ago, the world was a lot more blunt. **Stephane Kurgan** [23:18]: Well, I think it's great to fuck up. I think you have to fuck up. The the job of, you know, most managers and leaders is to make decisions. If you as a manager, if you make 55% of good decisions, you're a really good manager. If you make 60%, you're exceptional. But that means 40% of your decisions will be wrong. And so I was listening to a podcast with Zuckerberg and he and he says, you know, failing is one of macro competencies. That's so true. So the job is not to be right. The job is to make decisions. Of course, you're gonna get a bunch of decisions wrong, and there is no negative feedback about that. If you keep making the same decision wrong multiple times, then that's a problem, and then you need to have a conversation. **Harry Stebbings** [23:53]: How do you analyze your decision making framework today? People have different frameworks. You know, Jeff Bezos has a a regret minimization in one way and two way dual. How do you think about your own decision making framework today? **Stephane Kurgan** [24:04]: Look at the data, consult widely, and when you make a decision, if you have to syndicate it, syndicate it. And when you make a decision, stick with it. What is incredibly toxic in organizations and I've seen that many times is you make a decision and then you come back on it the next week and then the following week and basically drives paralysis in your organization. Go through due process, take the time, but once you make it, stick with it. I think that's very important. And then have a bias for execution once a decision is made, execute it immediately. The faster, the better. Let's just do the stick with this. What if it's potentially wrong? Of course, you will have exceptions. If you followed due process and you looked at the data and you consulted YDA, probably 95% of the decisions will be the decisions you should have made. And if indeed there are new facts that come to light and you change your mind, that's okay. But you need new facts. When facts change, I change my mind. If there are no new facts and you change your mind on a whim, that kind of behavior will cascade down the organization and you will paralyze it. You can't do that. You mentioned once **Harry Stebbings** [25:04]: that decision is made, speed of execution being so important. Yeah. Talk to me about speed of execution stay within companies and why it's I think it's the number one difference between those that achieve product market fit and those that don't. **Stephane Kurgan** [25:16]: Sure. It's part of, you know, sense of urgency, which is another common theme that, you know, we've heard about many times on the podcast. But if you make a decision, just go and do it as soon as you're out of the door pretty much. And speed of iteration is very important. And to your earlier point, I've seen companies where they take six weeks or eight weeks or ten weeks to come up with, you know, a minor iteration to a pretty minor feature, just way too slow. In this day and age, you need to really come out within days with a new feature and test it and see if it works or not, then and iterate again and move on again and and and go really fast. Just can't afford to to have these cycles in months anymore. When you think about **Harry Stebbings** [25:57]: the decisions you've made, what do you think is one of the biggest decisions you've made that changed the way that you think about decision making? **Stephane Kurgan** [26:03]: So one of the things we had at King was we required unanimity for recruitment. We put in place, again, a well documented recruitment process where we wanted six interviews, you needed a cross functional interviewer, an executive sponsor, and unanimity. And after a lot of lobbying, after, you know, five or six years, because we were not meeting our recruitment targets, I agreed to soften the criterion and that if one of the interviewers was neutral, we could still proceed with the higher. What happened is actually when one of the interviewers was negative, you know, the other five would lobby him to change his rating and and to go to neutral, and they could proceed with a higher. And we made a number of wrong hires. And, you know, there is nothing more important when you scale than recruitment. If you were in doubt, there is no doubt. I think one of your guests said, I think it was Frank Schlotman. I completely agree with him. There's much more downside making the wrong hire than not bringing in the the right person because, you know, that person, if you scale fast, will be recruiting himself within a few weeks, and then you will, you know, create pockets of people who are not culturally aligned with the organization. And before you know it, in a matter of months, suddenly, you'll have part of the organization which doesn't really fit anymore. And that that's happened a number of times. And then it takes, you know, months or sometimes years to fix this thing, Not something you can fix overnight. **Harry Stebbings** [27:25]: You know, a lesson that I have on management is, like, you never stop worrying. And the reason I say that is because the best people you worry will leave. The worst people you worry, you should fire today, and the middle people you worry are actually good enough. **Stephane Kurgan** [27:37]: Would you agree with that? For most people, there is a cycle in the scaling, and so they will be a good fit between their skill set and the company for a while. And then at some point, it's not the right organization for them anymore, and you need to have grown up conversations, and and they need to find something where they can be very successful and where there's a better fit. But nobody has failed. It's just the way things are, and and organizations and people should be honest about it. If you think about our company, we went from, you know, 100 employees to 2,400 employees in three years. So at the peak, we were hiring 100 employees a month. And so the people who joined, obviously, at the start of the journey where they had a very high risk appetite. They they had very horizontal skills. You know, they could do many, many different things. But then as you get closer, suddenly the company becomes much larger, very profitable. We made almost a billion dollars of EBITDA the year before IPO. You run into IPO and you need to specialize. So you you bring people in functions who have very deep specialized expertise as opposed to horizontal skills. They're less risk averse. They they look for, you know, a different compensation mix, maybe less equity, more cash. And they want to work in in a more organized environment where, you know, you have a set of processes and you have a set of rules. And so you have these cohorts of people who've entered your company within three years who are totally different. And you need to to retain a single cemented culture that wraps around all of them. And that's a huge challenge, but you have to evolve your values. For example, your values cannot stay static. So every year, you have to revisit whether, you know, the values you had for the company are still the right values. To your point, I think there's a natural cycle of attrition. It's the right thing for both the company and the employees, and it's not about failing or underperforming. It's just that it's not the right place for them anymore. What do you think is a good value? Values is the behaviors you would expect the leadership and the the employees to abide by when they they are in in the company environment. And what we used and actually what I would be using if I had another company is we try to balance them. So for example, one of the values was supportive but demanding. Right? Because, you know, we were a hugely caring company, but also we wanted people to stay focused and to deliver. You know, we were running, you know, the biggest game in the world, and we had the biggest network of players, and we had the responsibility towards these players. And so we were gonna be demanding with ourselves and with our employees to keep delivering, you know, outstanding entertainment to a player base. **Harry Stebbings** [30:00]: I had Activision on the show, and he said that, you know, mission statement's largely bullshit. You think mission statements have their place and are good? **Stephane Kurgan** [30:08]: If you scale to a large company and it becomes a public company and you have multiple business units and, you know, in some businesses that can be challenging, for example, from a privacy standpoint or it can get really difficult to put together a crisp mission statement. When you're early stage, it should be pretty straightforward to know what you stand for. Actually, I think if you can't articulate a mission statement as a founder when you're at seed or series a stage, I have a question mark about whether you know, you know, where you're going and what value you you're gonna be delivering to your clients. The early mission statement at King was, you know, it was about bringing moments of magic, and I think that's exactly what we were doing. We were bringing moments of magic. It was pretty straightforward. That was our raison d'etre. That was over time, it gets harder. **Harry Stebbings** [30:52]: One way to scale culture is also by having diverse teams. And before we move into the myth of which I'm terrified about how to do that well, but tell me, what are the biggest lessons on building diverse teams and the myth of Sisyphus? **Stephane Kurgan** [31:07]: Yeah. Okay. It's the challenge of our generation. You know, it's obvious that diverse teams over time perform better. It's not only the right thing to do. It's a much better thing to do by the shareholders and by the employees and by all stakeholders. It's very hard because, especially in technology companies, the recruiting pool, for example, for engineers and all STEM subjects is not equal from a gender standpoint. And here, I'm talking about gender diversity as opposed to other types of diversity. And what I was referring to is the myth of Sisyphus. So Sisyphus is this guy who keeps pushing a rock up a hill, and then the rock keeps falling, and he has to start again from the bottom of the hill and push it up again and again and again. And that's what we experienced. So if you look at making your leadership team more diverse from a gen gender diversity standpoint, you can bring external hires and there are very few of them. You know, a good rule is one third external, two thirds internal. And then you develop your female employees and really overinvest to develop them into managers and to leaders, and you have a a set of programs around that just to make sure that we're gonna get to that diversity at at the top. But then what happens is because there is such a scarcities, very often, once you promote them to an executive level, be it VP or CXO, you you lose them within weeks. And so it happened to us multiple times. We made that investment over years of, you know, bringing up and developing great female leaders. And then when they got to that leadership level where we wanted them really to to blossom and join the collective leadership and lead the company, they would be snatched very quickly. And so we had to start again and again, hence, the Sisyphus analogy. **Harry Stebbings** [32:45]: Kurgan Yeah. Blanc, is that not your fault? Like, is that not a lack of loyalty there? We see some incredible people like your Naomi's at Messer's or your, you know, Cheryl's who was there for many, many years. There's two great examples just from Messer. But I'm sure they have every single company in the world wanting to poach them, but the loyalty that Zaccon inspired in them meant they stayed. Is that not up to the leader to create that loyalty? **Stephane Kurgan** [33:06]: Look, it's on us. Right? Clearly, we failed. There's something that was missing if they felt that it was the right thing for them at that point to to go somewhere else. There was something missing, and we failed to bring it. How do you know when to pay up for **Harry Stebbings** [33:19]: a candidate versus not pay **Stephane Kurgan** [33:21]: up for a candidate? There is no good answer there. As you scale, at some point, you have compensation frameworks, and it becomes very difficult actually to go outside these frameworks for a bunch of reasons. If it's for an individual contributor, that's easier. If it's for, you know, managers or leaders who will fit within the existing organizational structure, there are ways you can structure things. But the reality is that you're going to need to have some consistency. Hopefully, the market is clearing a bit, and we're going to a a place where the balance between talent and organizations goes back towards something which is closer to the middle as opposed to being very much a seller market to the advantage of the individual, which has been the case for for the last few years. How do you advise founders on when to sell? I would never advise a founder on on when to sell. It's a decision to be made by the founder. And if he asks my opinion, then I will tell him what I think. But I think most of the large majority will come to the right decision themselves. There are some instances where it's not the case, and then, you know, you want to give a a little nudge. It's obviously a very relevant question for King. You know, we sold at a very low multiple. We sold the company at, you know, 5.9. We sold about $6,000,000,000, and there was 1,300,000,000 of cash on the balance sheet when we sold. So the effective multiple was by, you know, five or six times EBITDA. Today, the effective multiple on King inside Activision is probably, you know, 15 or 18 times EBITDA. So there was a huge value arbitrage. But at the same time, it was the right thing to sell at that time because we had had institutional investors who had been in the company for more than ten years. It was important to generate liquidity for them, and we couldn't do it through the stock market. **Harry Stebbings** [34:55]: And you think it is important to generate liquidity for them? You're an investor now. We both know that actually we have long time horizons. We actually have LP bases if you're bluntly in the fortunate position to have great institutions in a way. You can say, hey, this asset's taking longer. I want a two year extension to the funding period. And then we enjoy value appreciation. **Stephane Kurgan** [35:12]: Investment funds have a lifetime. It's typically ten years, and it can be extensions. But so they will invest with you for eight or ten years when they invest early stage. And I think you know what you get into when you sign you sign up with them. You need to figure out the way of basically finding liquidity, distributing that liquidity to the institutional investors. One way of doing this is to go public and then for the investors to be able to sell their shares. It was very difficult to do that with King because we were trading below IPO price and because our largest institutional investor had 40 of the shares and if they just couldn't sell it down and selling it down, it would have driven the share price, you know, further below and it would it would have taken ages. Basically, selling to Activision was was a way of delivering against that objective, and it was the right thing to do. Then you gave me Sisyphus, and then you gave **Harry Stebbings** [36:05]: me Sanica and the elixir of luck. I was looking at the the, you know, at midnight over the weekend going, what on earth am I gonna do with these? Yeah. So what is the elixir of luck? Me? **Stephane Kurgan** [36:15]: Yeah. Look. Luck is important in business. Right? You have that saying that when you asked Napoleon how he picked these generals, he said I picked them lucky. You know, I was a beneficiary of that. I had a very lucky timing when I I joined King because I joined right before the launch of the first successful Facebook title, and then it's a lot easier to ride a wave of that sort as opposed to to going through some of the very challenging times they had before. But what Seneca said, you know, going back to the Greeks is, luck is a combination of opportunity and preparedness. And you have to be prepared. And so when you're prepared, opportunity might knock on your door, and then you can seize that opportunity. And so the only thing that you can do as a professional and the most important thing is to prepare yourself for the opportunity. And so as you think about, you know, your personal development, you should focus on accumulating skills and knowledge and network so that if and when the opportunity presents itself, you can seize it and you can execute against it. That's what I was trying to say. And sometimes it takes a long time. I had a dry patch. I mean, for ten years, I was in pretty much in the desert. Right? Really? When was Between o one, which was my first large exit, I was working with a company called eNBA, so Enbap Lc, which was an Internet bank. It was the biggest startup of the European people. We raised 250,000,000, and we merged it with the, you know, the Internet bank of Telefonica and and BBVA in Spain for 2,400,000,000, front page of the financial debt. For a bunch of reasons, that deal was never completed. It was blocked by the Spanish regulator. And so we initiated litigation. We ended up with a settlement with €700,000,000. Investors made good returns. You know, the management got some money, but we had to sell our customers and our deposits and close down our operations. So relative financial success, not industrial success. But after that, it was really hard to land in Europe. I mean, The US, if you have failed as an executive after building your startup, you know, they will give you a second and a third chance. At that time, Europe was not like that. You know, it's it's been a really long struggle. What did you tell yourself in that story? It's an interesting question. I I had confidence in my abilities. I think I had performed quite strongly. I had done two companies before, and actually, both of these companies went on to become unicorns even if that Internet bank was only a unicorn for a few months before the completion. But, you know, I couldn't find an opportunity, and so it was quite a challenging and stressful time. And then when another opportunity presented itself, I was a founder, so I founded a payment company which didn't take off, so I pulled the plug after a year. That was hard too. And then I joined an enterprise software company, which got crushed by the great financial crisis in 2008. The o five to o nine for very little, and then, you know, basically, we had to to restructure and sell that company for for quite little. How do you think about your relationship to money today, Steph? I mean, it buys you freedom and spontaneity, but not happiness. Of course, life gets a lot easier when when you are liquid. Right? And every LP feels zero. Look. If you if you if you're raising a family in the in the large urban center like New York or London or a place like this, if you don't have access to to some liquidity, life is hard. But I think, obviously, it's not a means to a net. Right? You have to spend it, and you have to give it, and you have to invest it. And it can certainly not stay basically stored in some vault somewhere, not doing anything because otherwise, what's the point? Because by spending it and investing it and buying art and doing all these things, you know, basically, you give it back to the economy and you give jobs to people and you fund artists and creators and you do something good with what you've built. **Harry Stebbings** [39:56]: Speaking of kind of doing good with building and then also opportunity in Santa Care, obviously, you joined Index, peak COVID, I think it was, Nina told me. Yeah. What have been the single biggest surprises of becoming an investor? **Stephane Kurgan** [40:08]: The shock is that when you're an executive, especially in the digital business, you know, you have a daily clock. Right? You the feedback loop is is extremely fast. So, you know, every morning, I would get a thousand data points, all the reporting, and then suddenly you go to a profession where the feedback loop is eight to ten years. So you go from one day to three thousand days. I mean, of course, you have milestones along the way. You have valuations if you fundraise, but we know how, you know, that these are not as very reliable milestones because, you know, it might go in both directions. You have operational milestones, but the reality is, you know, for an investor is basically when do you return liquidity to your your limited partners and your investors? That's been a major change. Also, I had not realized how incredibly sophisticated and fluid, you know, these investment firms is from the outside. Because, you know, I had been on the receiving end of, you know, working with with venture capitals and and funds and private equity for for many years. But when once you're inside, you just realize that they like incredible high performance machines. So like an Intel and Risker, it's really, really very refined. That's been incredibly impressive and, you know, I'm incredibly grateful to my partner. Refined. What do you mean? Is that a decision making process? Is that the tooling? What does that mean? It's the number of criteria that will come into making decisions and the subtlety of many of those and how they all come together in forming decisions. It's such a diverse firm if you look at the partnership. We have an incredible richness in our partnership in terms of individual experiences and preferences and profile, and we make these collective decisions. And on the whole, it it's been incredibly successful. It's a very, very impressive machine. What have been the biggest challenges? I have to restrain my bias for action because, obviously, you know, this is not about pulling the trigger very often. It's taking a very, very long term view because, you know, it's gonna take eight to ten years before the outcome, and so you have to think really hard about whether you want to do something or not. It's been also finding the right balance in terms of working with founders. Obviously, I have a bunch of executive experience, which I can bring to the table, but that can also be overpowering, and I need to find with the founder basically where to set the dial. How can I be helpful but not too helpful because they need to make their own way? And so I'm I'm there to serve. Right? I'm I try to be a sounding board and and always available, but it's their company. They're gonna build them. They're gonna run them. It's not mine to do. **Harry Stebbings** [42:30]: The final one before we do a quick fire, but how did your time with King? How did that impact the type of founders that you like to work with, do you think? **Stephane Kurgan** [42:37]: Well, at King, there's a very nice saying, which is in that type of gaming, which is mobile gaming. You know, it's the mathematician meets the magician. And I think before I went to King, I could work with mathematicians, but since I've worked at King, I can also work with magicians. And so I have, hopefully, a great affinity for creatives, and I can work with creatives as well as with the business guys. **Harry Stebbings** [42:58]: I wanna do a quick fire with you, Steph. So I say a short statement. You give me your immediate thoughts. Does that sound okay? Yes. So what single piece of content has had the most impact on you? **Stephane Kurgan** [43:07]: It's a very simple, book called the Tao of Coaching. I spent a couple of years with McKinsey and Company, which is a a great school. It's a great place to have been to. I bought that quote from a venture capitalist, actually. And, you know, it's it's a very human, very subtle way of discussing work relationship and how you can manage them and how you can become a good coach. It's maybe a 100 pages long. It's very easy to read, and I think it's very helpful. What have you changed your mind on in the last twelve months? Alcohol consumption. For the first time, we went pretty much dry in January, and it's been awesome. I love wine, but I consume less of it and less frequently now than than I used to. Yeah. I feel great. My wife and I were quite surprised and thinking, this is really nice and cool. We don't need another glass of wine. We don't need a glass of wine. **Harry Stebbings** [43:51]: I stopped drinking entirely, but it was the single best decision I've ever made. What's the kindest thing anyone's ever done for you? **Stephane Kurgan** [43:57]: You know, when I left King, I received tens of emails of people I hardly knew. Maybe some of them, I'm not sure I hadn't met, and they were saying, you know, incredible things. And that's when you realize you've touched people's lives. And, yeah, I mean, I'm still shocked today of I was not expecting that at all. **Harry Stebbings** [44:13]: You can be CEO of any company. What company would you be CEO of even for a day? It's probably SpaceX. **Stephane Kurgan** [44:19]: You can play with rockets. You have all the satellites. You have all that stuff. I I think in terms of doing something Totally. As a boy Yeah. You know, who likes his toys, you know, I think that's probably the coolest the coolest company out there. What remains your biggest weakness? Great sushi. Great sushi? Yes. Really? Why is the best sushi in London? I'm not gonna tell you. So that's a that's a close skip to it. **Harry Stebbings** [44:40]: I think it's UMU. **Stephane Kurgan** [44:41]: Have you been to UMU? I've been to UMU. It's great sushi. It's great sushi. **Harry Stebbings** [44:45]: Tell me, how would you describe **Stephane Kurgan** [44:46]: your biggest insecurities today? You know, I can't keep up with my wife in fitness. She crushes me. What's the secret to a great marriage? Love the qualities, but **Harry Stebbings** [44:56]: also love the imperfection. Parenting. Biggest parenting advice. If you were to sit down with someone who's about to have a child for the first time, what would you like to have been told before you had any of your children? Yeah. Enjoy every moment. You're not gonna have a second opportunity to have a first child. When you think about the next five to ten **Stephane Kurgan** [45:12]: years for you, where do you wanna be then, Steph? Well, I have a kickass side project you're gonna hear about at some point, and then I'm I'm sure I'll be working with some of, you know, the founders I'm working with today in in five years and and beyond that. **Harry Stebbings** [45:24]: Steph, thank you so much for doing this. As I said, I had so many great things from Fred for many years. I'm thrilled we could do this, and it's been such a pleasure. **Stephane Kurgan** [45:30]: Well, thank you so much for having me. Yeah. I still feel like an imposter here. **Harry Stebbings** [45:35]: I mean, what an incredible episode. What an incredible journey. 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