Corporate therapy for Silicon Valley

April 21, 2014: 4:50 AM ET

Execs at Twitter, eBay, and Dropbox have Richard Hagberg to thank shaping them up.

Hagberg started coaching Dropbox CEO Drew Houston (left) in early 2012.

Hagberg started coaching Dropbox CEO Drew Houston (left) in early 2012. "It's sort of like a very powerful mirror that you shine on yourself," said Houston, who is pictured with co-founder and CTO Arash Ferdowsi.

FORTUNE -- At a going rate of $30,000 a year per client, Richard Hagberg doesn't come cheap. But his clients might argue his services are worth the price.

A trained psychologist, Hagberg has spent the last 35 years of his career as an executive management coach training over 5,000 executives to become better leaders. Many of them work at well-known technology companies, such as Twitter (TWTR), Microsoft (MSFT), eBay (EBAY), and Dropbox. And while the skills he has them hone -- delegating, dealing with conflicts, decisiveness -- may sound like no-brainers, they're vital to the long-term prospects of a company, particularly in an era where startups often live and die by out-innovating their competitors.

Entrepreneurs often go to extremes when managing for the first time: They either shy away from making decisions, or they go to the other end and just micromanage, explained Hagberg, who flies from his Whidbey Island, Wash., home to the San Francisco Bay Area every other week to meet with several of his 20 or so clients.

"As a result, they end up burning out, and they end up having organizational chaos," he adds.

MORE: Satya Nadella needs more than one trick to fix Microsoft

Once an executive hires Hagberg, he puts that client through a series of tests. One test screens the client for nearly 50 different personality elements, such as degrees of optimism, independence, and risk-taking. ("It's like a Myers-Briggs personality test on steroids," quipped Dropbox CEO Drew Houston, one of Hagberg's clients.)

Another test, dubbed the "360," involves getting feedback about the client from up to 20 people: company investors, co-founders, and subordinates. All the data Hagberg collects are brought together in a presentation that he gives to the client. It outlines his or her strengths and weaknesses, and offers a customized plan that Hagberg will use to improve the client's management skills.

"The plan needs to accommodate your personality," explained Hagberg. "If you're extremely shy, your company is going to IPO, and you need to go out there and do a roadshow, that may require some work for you to get over your fear of public speaking, or your general social anxiety."


Entrepreneurs often go to extremes when managing for the first time: They either shy away from making decisions, or they go to the other end and just micromanage, Hagberg says.

Dropbox's CEO Houston recalls undergoing a rigorous battery of data-driven tests when the file-sharing and storage company hired Hagberg in early 2012.

"He has this presentation where he starts going through your strengths," Houston explained. "'Oh, you're really, really creative. You like new ideas,' he'll say, and, 'You're really flexible.' And you're thinking, Oh, that's great. This is going pretty well. Then he goes through your weaknesses: You're bored by routine. You're unreliable. You drop balls. You don't like planning. You're conflict-avoidant."

The truth was harsh, but indispensable, added Houston: "It's sort of like a very powerful mirror that you shine on yourself."

Hagberg worked intensively with Houston over the course of a year, shadowing him, observing his interactions with employees and conditioning the Dropbox CEO to improve on his weaknesses.

For example, Hagberg pushed the typically conflict-avoidant Houston to discuss and confront all company issues head-on. He also studied and worked with the rest of Dropbox's management team to understand which skills they excelled at and which skills were lacking. Hagberg's feedback led Dropbox to hire Google (GOOG) veteran and ex-Motorola Mobility CEO Dennis Woodside as its chief operating officer earlier this year. Indeed, Houston continues to check in with Hagberg on a monthly basis.

Houston is one of 40 or so startup entrepreneurs Hagberg has coached since 2009, and the difference between today's startup founders vs. those of 15 years ago is vast, he says.

MORE: What corporate boards can learn from Delaware

Many of today's entrepreneurs build their companies right after college (or in some cases, right after dropping out of college), whereas founders from decades past generally came to entrepreneurship with more experience in the corporate environment -- experience that Hagberg says can be a disadvantage.

"If you come out of a big company, you may already have ideas about which models are appropriate for organizational structure, human resources systems, or budgeting disciplines," Hagberg said.

Many younger entrepreneurs don't come to a company with those preconceived ideas, he added. Rather, "they arrive with a tremendous appetite for learning and minimal ego problems compared with some of the people I've worked with at big companies over the years."

  • What's next for Dropbox?

    The file-syncing startup has launched a suite of new tools designed to capture a greater share of your online life.

    FORTUNE -- Last week, cloud file storage company Dropbox unveiled an array of new tools designed to capture a greater share of your online life.

    The new applications included tweaked versions of Mailbox, the e-mail app Dropbox acquired last year, and Carousel, a photo application for iOS and Android that lets its users MORE

    - Apr 14, 2014 6:17 PM ET
  • Dropbox opens its next chapter, with 275 million users

    Cloud-storage startup adopts a multi-app approach, taking on big tech players such as Facebook and Google.

    FORTUNE -- Dropbox, the popular cloud-storage company, is aiming high.

    At a press conference in San Francisco Wednesday, CEO Drew Houston announced what he likes to call the company's "Chapter 2" -- an initiative that seeks to position the startup he founded eight years ago as the go-to suite of services for data storage.

    The event included a MORE

    - Apr 9, 2014 3:38 PM ET
  • Dropbox raises $350 million

    Dropbox has another $350 million in the bank, and more may be on the way.

    FORTUNE -- Last month, reports surfaced that Dropbox had raised $250 million from Blackrock (BLK) in its final round of private funding before embarking on its highly anticipated IPO. Follow-up articles noted the round could go up to $400 million, with contributions from existing investors T. Rowe Price and Fidelity.

    Now we have an SEC filing with some MORE

    - Feb 24, 2014 2:17 PM ET
  • How to tell the difference between Box and Dropbox

    The two cloud storage startups can be easily confused.

    FORTUNE -- Quick -- name a cloud-based, file-sharing provider that's expected to go public later this year and has the word "box" in its name. (Hint: there's more than one right answer.)

    Whether you guessed Box or Dropbox, you're correct. That's because, on the surface, the two appear to be very similar companies, especially now that both startups are nearing their respective IPOs MORE

    - Feb 24, 2014 1:06 PM ET
  • Dropbox hires first COO amid Google divestiture

    Dropbox grabs Google's Motorola Mobility boss, Dennis Woodside.

    FORTUNE -- Dennis Woodside ran Motorola Mobility for Google, but apparently he won't be doing the same for Lenovo.

    Just weeks after Google (GOOG) agreed to sell the money-losing unit for $2.9 billion, Woodside has agreed to join storage company Dropbox as its chief operating officer.

    Dropbox has raised $507 million in venture capital funding. Its most recent deal, a $250 $350 million Series C round that valued MORE

    - Feb 13, 2014 10:24 AM ET
  • Hightail, formerly YouSendIt, raised $34 million. Here's why

    We sit down with chief executive (and one-time "Peanut Butter Manifesto" author) Brad Garlinghouse.

    FORTUNE—Hightail, the file-sharing company formerly known as YouSendIt, has raised $34 million in new funding. The nine-year-old startup has been around much longer than newer entrants like Dropbox or Box, but recently it sought to revamp its image and differentiate its product features in order to stand out in an increasingly competitive market in which larger companies MORE

    - Nov 19, 2013 11:59 AM ET
  • Dropbox aims for $8 billion

    The file-syncing startup is reportedly seeking to raise hundreds of millions at an astronomical valuation.

    FORTUNE -- Just how much does Dropbox need to fuel an aggressive push into the enterprise space? $250 million, if a report today is correct.

    According to Bloomberg Businessweek, the rapidly-expanding file-syncing business is looking to raise $250 million at an $8 billion valuation in the next few weeks. That would price it higher than other promising MORE

    - Nov 18, 2013 7:26 PM ET
    Posted in: ,
  • Dropbox revamps Dropbox for Business

    The file-syncing startup wants you to mix business and pleasure.

    FORTUNE -- If you're a working professional and Dropbox user, you're in luck. With the revamped Dropbox for Business, accessing -- and separating -- your business and personal content on the cloud storage startup should soon be a quicker, simpler process.

    At a San Francisco press event earlier Wednesday, Dropbox demonstrated how its business tool enables users to link together and securely MORE

    - Nov 13, 2013 3:37 PM ET
  • Making enterprise file sharing more like personal sharing

    File-sharing company Egnyte wants businesses worried about data security to embrace the cloud.

    FORTUNE -- From college students distributing documents for a class to CEOs working on their Powerpoint presentations on the train, most people are familiar with and depend on cloud storage to make file sharing a breeze. While brands like Dropbox and Box have become household names for cloud storage, a new company is trying to take secure cloud MORE

    - Sep 30, 2013 12:08 PM ET
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.