In 2019, NerdWallet celebrated its tenth anniversary, stretching well beyond the typically short-lived startup life expectancy. After its humble beginnings as a credit card comparison spreadsheet in 2009, the company has since grown into a 300+ person team that sees north of $100 million in annual revenue as it serves up financial wisdom to 100 million visitors.
Co-founder and CEO Tim Chen certainly has a pile of milestones to look back on with pride, whether it’s how the team leveraged SEO to build a veritable content machine or how they rebooted their approach to talent, growing from 50 to 270+ in just two years. Despite these achievements, however, he’s quick to note that NerdWallet’s journey wasn’t one of those fabled continually up-and-to-the-right tales. As is the case with most startups, a closer examination of its trajectory reveals several zigs and zags beneath the surface.
“Our story’s somewhat unusual. I was a tech outsider. Coming from the world of finance and hedge funds, I didn’t know a single engineer 10 years ago. And while all the other startups around us were raising heaps of money, we bootstrapped and didn’t fundraise until we were six years in,” says Chen. “While these differences gave us some advantages, they also led to some missteps. We certainly didn’t get everything right when it came to hiring and building the product in those early years, and we had to make a lot of changes as we went along.”
And as Chen quickly found out, those early-stage struggles didn’t abate as scale set in, but rather morphed into a new set of complex challenges that many larger businesses grapple with. In 2017, NerdWallet laid off 11 percent of its workforce after missing profitability goals. A year later, the executive team was overhauled as the company entered into a new phase of growth.
“When we missed our targets a few years ago, we decided to pump the brakes and reassess, even though many other startups might have kept burning. We needed to make strategic investments and hiring decisions more carefully — we couldn’t operate the same way as we used to, even compared to when we were a 200-person team. But more than that, I had to look in the mirror and examine my own role as CEO. I needed to evolve from a scrappy, seed stage founder to a more professional executive, which required several seismic mindset shifts. Essentially, I needed to do the work to get out of my own way.”
After capping off his company’s first decade and getting back on track with revenue and profitability goals, Chen’s here to reflect on the arc of his journey as founder and CEO. In this exclusive interview, he shares the six mindset shifts he needed to make to transition from entrepreneur to executive. He details the signposts early-stage founders need to take note of as their startups scale, doling out helpful advice and simple truths that he found were hard to swallow in practice. Chen peppers in tactical examples of how he made changes to his leadership approach at NerdWallet, creating a collection of lessons that will be invaluable for any founder finding themselves at this very same crossroads.
Founders are rarely equally skilled at both the work that built their business and the management skills necessary to grow that business. Company growth depends on constant evolution — and that starts at the top.
1. Culture is built in a founder’s image — so start looking inward.
Looking back on NerdWallet’s trajectory, Chen describes his company building journey as a “total rollercoaster.”
“We always felt like we were either understaffed, trying to incorporate new people or attempting to get a new product or feature off the ground,” he says. “Once you thought you had something figured out, it would completely change. The ‘right’ culture and processes always felt like a moving target. Over the past few years especially, I’ve done a lot of soul-searching, trying to figure out whether I had the tools to actually do this as every stage brought on a new set of challenges.”
That introspection didn’t come naturally, however, and it was one of the most important mindset shifts Chen had to make. While companies tend to reflect their founders, he wasn’t aware of just how far his behavior was rippling out into the waters of NerdWallet’s culture.
That jarring realization was served up when he hired an executive coach, who led his first 360 review. “I was shocked by what I heard. It turned out the team thought I wasn’t candid or constructive, especially when it came to performance and feedback. There was an underlying atmosphere of fear and uncertainty. You assume you're doing a good job as CEO if financials are healthy, metrics are moving in the right direction, and people seem happy enough, but those are surface-level indicators of success. In hindsight, it’s clear that I had no idea how to lead a company, and that I exhibited some incredibly problematic behaviors that had seeped into the foundation,” Chen says.
“I was a first-time manager, so I was very inexperienced. I also had several assumptions about culture that were faulty because I came from a hedge fund, rather than say, even another startup,” he says. “The Wall Street approach of hiring analytical, aggressive folks with great pedigree and leaving them to hash it out didn’t map over to building a sustainable startup. My focus on sticking to this hiring profile and reducing employees to a target number caused everyone to fixate on individual success. I wasn’t unifying the team around a bigger goal or establishing a culture centered around a common purpose. There was almost a Lord of the Flies-type competitive vibe. And it took me way too long to realize that my behavior was driving it. I was horrified.”
Culture starts with how the founder behaves. It gets cascaded throughout the company whether you like it or not. To change the culture, you have to change yourself. Too many founders realize this too late in the game — and I was almost one of them.
This realization may seem like common-sense wisdom, but Chen notes that it can be tough for founders to spot in the moment. “There were several hang ups that held me back from recognizing this obvious truth. As an early-stage founder, you’re moving at warp speed, working incredibly hard on a thousand different things. You have to take a step back to extricate yourself from what you’re building, to notice the symbiotic effects between your behavior and the company culture,” he says.
“Another mistake that’s easy to make is putting culture on the back burner or dismissing it as something you can delegate. It’s also tempting to blame cultural problems on the people around you, to say, ‘Oh I guess I didn’t hire the right players,’ or ‘This team isn’t really gelling, I’ve got the wrong people in the room.’ But eventually, through working with my coach, I was able to realize that they weren’t the wrong people — I had set up a system that incentivized them to behave like the wrong people.”
Organizational issues don’t stem from hiring the “wrong” people. Most of the time, they’re caused by poorly designed systems, misguided cultures, and bad examples flowing from the top that incentivize people to do the wrong things.
To overcome this hump, Chen turned up the feedback dial. “You need to get to a place where you believe that getting feedback is a gift, that it’ll help you become a better leader. You need other people to hold up a mirror, so you can all lift up the ceiling for the company together,” he says.
“I personally find feedback is most transformative when it’s quantitative — I’m able to digest it easier and build a more effective action plan. So we introduced ‘NerdPS,’ our internal employee survey to poll the team on how they're feeling about me, the leadership team, their org and our product. We run this survey every two months and share the results with the entire company, gauging sentiment on statements such as I have confidence in our CEO, I have confidence in my functional leader, I understand how my work ties into the strategy, I would recommend our product to a friend, and so on. We've seen our NerdPS score increase 38 points since kicking it off.”
And Chen has seen other benefits outside of his own personal development as well. “A huge part of a CEO's job is putting the right players on the field. While it's easy to tell if an exec is delivering results, it's harder to get a read on how they’re doing as managers. I use data points from our survey to figure out how to target improvements and find that they ground my skip-level sessions in a more specific reality, rather than a looser ‘How is the team feeling?’ kind of discussion,” he says.
This informs any changes he may make to the leadership team. “If these changes to the executive team seem arbitrary, employees fill in the blanks in all the wrong ways. A transparent internal score like NerdPS provides added accountability for execs and reduces the likelihood that employees jump to the wrong conclusion on executive departures.”
2. Let go of your entrepreneurial ego and remove yourself from the decision-making equation.
Another mindset shift that was key in Chen’s development as an executive was subordinating his ego. “For an entrepreneur, ego is actually a strength. Early-stage founders need a healthy dose of ego. It’s what drives them to attempt feats that no one else will even try. You need to be brave enough to take the company-building leap — and stubborn enough to stick with it,” Chen says.
“And even as you exit that earliest, scrappy stage, you can see how this attitude bleeds over. When you’re leading product, figuring out sales, and overseeing every aspect of the organization, it’s easy to slip into a ‘I have to solve this’ mindset that carries over to the company’s more mature phases. You hold onto your Legos and are reticent to give up the controls — and this does nothing but hold the organization back. An inflated ego makes for a lousy later-stage exec.”
Too many founders — myself included — sustain the ego from their early entrepreneurial days well past its expiration date. Push aside your “founder’s instinct” to make room for the perspective of the team you’ve worked so hard to assemble — and the customers you’ve battled to win over.
“There’s this quote often attributed to Mark Twain that was really fitting for how I was behaving,” says Chen. “‘It ain’t what you don’t know that gets you in trouble, it’s what you know for sure that just ain’t so.’” The impact of his ego — and what he didn’t know — reared its head in three different places: in the way NerdWallet was operating, how the culture was evolving and how the early consumer product was being built.
Ego in decision-making: “I used to be involved in everything. I had this delusion that I could add value to most decisions. For example, up until we were about 200 people, I’d interview every single person,” says Chen. “And since I can come up with a reasonable sounding explanation for why every idea will whiff, in meetings I’d try to poke holes in ideas and try to further the group’s thinking. This got baked into the culture — everyone was overanalyzing everything and we weren’t moving quickly enough, which started to show up in our internal feedback surveys. I later realized that at scale, the organization's job is to test a lot of reasonable hypotheses, not to minimize the number of failed hypotheses. I started pulling up my altitude and disengaging from as many decisions as possible.”
Ego in company culture. “I've learned over time that when you assign someone a negative label, usually your ego is preventing you from seeing the truth,” says Chen. “For example, when NerdWallet started to scale, I saw team leads were hoarding and battling over resources, and I was frustrated by how ‘political’ our culture had become. Instead of getting angry, I should have gotten curious and asked myself why they felt compelled to act that way. I had failed to create a transparent resource allocation process — that was the real problem.”
Ego in building product: “When I was starting NerdWallet, I had several assumptions around what consumers wanted in a financial product. Again, this ego cuts both ways. On the one hand, you need to start with a really crisp thesis on what you’re trying to build. If you don’t have some vision of how you can uniquely solve a problem in a better way, why are you starting a company? But you have to balance that with listening to your customer, which becomes all the more important as you start to introduce new products and features,” says Chen. “Every time we moved into a new area as we expanded the product, I found my assumptions as a founder flat-out weren’t true. For example, while I wanted a spreadsheet of information on credit cards and a comparison of the points I could get, other customers want to choose between a few good options, and dig into whether they’d get approved or what the credit line would be. As CEO, these days my hypotheses aren't going to be very good unless I spend a lot of time with customers in a particular segment. Our product team and researchers are always going to have far better product intuition, and I need to get out of their way.”
My job as CEO is contingent upon my ability to improve at the pace that the company needs me to — and my ego is the only thing that can stand in the way of that.
3. Your product is the company, so embrace process over speed earlier than you think you need to.
All of Chen’s problem solving in the early days was focused on getting the product right. But the role of founding CEO requires evolution.
“When I was an early-stage founder, the product was my baby. All of the other stuff — culture, systems, processes — was important, but it didn’t seem as paramount as getting to product/market fit, which is a battle for the company’s very survival,” says Chen. “Looking back, I should have shifted my mindset on this much sooner.”
One of the biggest shifts you need to make as founding CEO of a scaling startup is realizing that your product is the company, not the product itself.
“Even a few years in, I was still literally writing lines of code because we had to get work out the door. But once you grow beyond a handful of team members, you have to climb out of the trenches — and I stayed at the troop-level for far too long,” he admits. “Giving up product to focus on governance, HR or culture wasn’t appealing. But as a founder, you cannot underestimate how much you need to be directing your attention and your time there. It’s not something you can outsource.”
Founders should focus on disentangling themselves from tactical roles, Chen says. “If you have hundreds of employees, you can’t be taking on the very same tasks that you did back when just a few folks were on the payroll. As the founding CEO, if you find yourself working on the same things you were handling a year ago, you’re floundering. I’d bet that your profits are as static as your daily duties.”
Early-stage founders are the point guards, while later-stage CEOs need to be the coach. You have to stop hogging the ball and start figuring out which players to put on the floor.
With product building concerns off his plate, Chen trained his focus on the company. “If you believe that, as CEO, your product is not the product itself, but the governance by which the company operates, then your task is to build a consistently fair set of rules. That’s why I’ve come to embrace process,” he says.
“Previously, I always thought that process kills speed, and while I’m still a believer in retaining speed as a habit, now that NerdWallet is larger, I'm obsessed with finding processes to increase organizational efficiency. Process is the structure, the scaffolding that allows your culture to flourish. Once you hit the 30 to 150 people stage, a CEO’s time is better spent getting people to work together effectively instead of making sure a product gets shipped quickly.”
It isn’t easy to throw the switch, however. “I think like many startups, we had sort of allergic reaction to process and meetings. Other executives and I would make decisions on the fly, in a walk-and-talk in the hallway, and be proud of our ‘scrappiness.’ But in hindsight, that caused a lot of toxicity,” says Chen. “People start lobbying you in the hallway to get on this project or to make that hire. Soon, some folks get resources while others don't, which leads to infighting and the formation of factions. Instead of saying what they mean, people start talking with an agenda to get what they need in order to succeed. This all stems from decision-making or resource allocation without transparency — great people being put into a system where they are forced to be political in order to survive.”
Process may be the enemy of the nimble startup, but it’s the antidote to the organizational politics that plague larger companies.
Chen’s advice? Look for ways to introduce process, earlier than you think you might need to. “We now have an Investment Committee, which is a group of execs that reviews resources requests and ranks them, sharing our decisions so it’s transparent and others don’t have to guess at our reasoning,” he says.
Or take leveling and comp. “I didn't have any formal system in place for titles or promotions, we just paid everyone whatever we thought we needed to hire or retain them individually. But we decided to introduce comp transparency fairly early on, when we were around 40 people. I highly recommend other founders do the same. I think some founders think they don’t think they need to worry about ‘big company concerns’ until they hit 150 people, but my experience has shown me that it pays to get as far ahead of it as possible,” says Chen.
“Laying the foundation early allows for a lot of scalability in your startup’s future. It only takes one promotion that raises eyebrows to bring down the sanctity of your entire career ladder in the eyes of all employees. You also need to hire a strong HR leader earlier than you think you need to. We hit the jackpot when we hired Flo Thinh Chialtas — I knew she was an amazing get, but I didn’t fully realize how impactful it would be for the maturity of our organization and I wish I’d done it even sooner.”
4. Stop throwing spaghetti and start thinking about negative carry.
“Early on, I believed that throwing a lot of spaghetti at the wall quickly was the right approach to maximize our chances of success. I think that's completely flipped at this point,” says Chen. “Getting the organization aligned around fewer things is key to our success right now. We’re thinking about how we can slow down to speed up. If you would have told me that back in 2012, I would have laughed you out of the room.”
Chen’s found that boosting transparency was critical to that transition. “Transparency around resource allocation is critical, and frankly, something we did a poor job of, which contributed in part to the layoffs. Placing scattershot bets and lurching from initiative to initiative without any explanation of what you’re aiming for makes it tough for the team to follow along — and difficult for you to evaluate how you’re doing. You can get away with throwing spaghetti when you’re young, scrappy and just figuring it out, but when you’re established, they call that missing your targets and leading an unfocused company.”
Everyone on your team should understand what bets you’re making as an org and know where you’re training your firepower. If everything is important, then nothing is.
Here’s how Chen’s tried to clear the air for his team: “Since I’m a finance guy, I’ve started to reframe our experiments as a series of negative carry bets. They’re the investments for the future; you're not making money, but if this thing works, down the road it's going to pay off. What we’ve tried at NerdWallet lately is to do a better job of tracking our negative carry bets and the hypotheses behind them. There has to be a thoughtful framework for how we're choosing when to continue to invest, when to kill them and when to try a new one.”
To build that understanding, the NerdWallet team holds a quarterly product meeting. “Everyone shares the results of everything they've tested throughout the quarter so we can all get a better sense of what’s working and what’s not,” says Chen. “For example, we thought it would be helpful for our consumers if we had a network of financial advisors available to answer questions. But the issue we ran into is that consumers find it difficult to know the right question to ask. We’ve since tweaked our approach to let you link your financial data to the site so we can figure out what questions you should be asking, introducing more activism on our end. Without this meeting, the project would have dragged on and drained our resources.”
5. Overhaul your communication architecture — and cancel the CEO’s favorite meeting.
When you join a startup as employee 1 to 20, everything from meeting structure to company policies are lightweight and in flux. “You talk to everyone every day. You know everyone's significant other. You may not be doing things super efficiently, but everyone knows what everyone's doing,” says Chen.
But beyond the 30+ person mark, that starts to change. “I remember early on we had a management meeting, which was literally 50% of the people in the company, and we would talk about everything there, from HR to product strategy to random updates. This is fine when you're small, but at some point you start peeling off threads into sub-groups and saving other issues for standing company-wide meetings,” he says.
But as you pass the 100-, 200- and 500-person marks, things need to keep changing — and too many founders stay static. “Our meeting structure got brittle. I waited too long to get more intentional about which meetings serve what purpose,” says Chen.
He emphasizes the importance of thinking more about communication architecture. “Before, you would just call an All Hands when you had an important topic, no matter whether it was a people, product or sales problem. Now at our size, you have to be really thoughtful about which problems you solve through which forums. All Hands are a pretty blunt instrument when you're over 300 people. Everyone has different contexts. The engineers may be concerned about one issue, while the finance team cares about something completely different,” says Chen. “Now, we start by considering our objectives — what we want to accomplish with any specific communication — rather than the forum. What do we need to share and who needs to hear it? Will people have a lot of specific questions? Is the information sensitive? From there, we determine which forum makes the most sense, whether it’s small team meetings, company-wide emails, or lunch and learns, and go from there.”
For other founders looking to get even more intentional about making meetings suck less, Chen offers up an additional tip: Cancel the CEO’s favorite meeting.
“The meeting everyone hates is the large meeting, the one that’s only useful to the meeting owner. This person is often the CEO. And often the meeting consists of going around the room and giving status updates. The meeting owner feels great about it, but everyone else is rolling their eyes, bored to tears thinking about how 'this could have been an email.’ I was running a meeting like this for a long time,” Chen admits. “I was reading a book about meetings one day and it described exactly this phenomenon and I was like, ‘Oh my God. That's totally my meeting.’ So, I pulled the plug. Don’t waste anyone’s time. Find someone you trust and ask them directly: Are you getting anything out of it or should it be canceled entirely?"
CEOs, kill your most useful meeting. It may be your favorite, but chances are it's the one that everyone else dreads the most.
6. Change your approach to hiring executives and start placing more weight on references.
Outside of giving up his practice of interviewing every person, Chen made another key shift in his approach to hiring as well.
“Early on, I cared most about hiring people for senior roles who could figure out what to do in a totally unstructured environment. We used to internally call it ‘Driver Identification’. So, in interviews, I’d throw out completely obscure situations and see how they thought about figuring out which drivers mattered. In early-stage startups, you need to focus on being useful and figuring things out, fast. But when you get to a certain size — let’s say 150 people — the pendulum swings,” he says. “Now we're a team on a mission and we need people who have a knack for getting big groups of people to work together effectively together. Founders need to discard their old hiring mental models — you’re looking for something different now. I used to look for functional leaders who were really smart and spiked in problem solving, whereas I'd say now when I’m hiring executives, I think a ton about who has operational expertise and how they can bring people together.”
To suss that out in interviews, Chen works to establish the kind of role an executive candidate plays on a team. “Are they the analytical, strategic partner? Are they the person who’s really competition-oriented in driving results? There's no wrong answers but I'm really just trying to get a picture of what they bring and whether that's the right fit for the situation at hand,” he says.
That said, he finds that he’s placing less weight on interviews these days. “The more people I hire, the lower confidence I have that I can conduct an interview that gives me highly predictive assessment of how the person will perform. I'm probably not getting worse at it — I think I'm just being more aware of the limitations of interviews,” says Chen.
“In the 10 years I’ve been hiring for NerdWallet, I've interviewed awkward folks who turned out to be amazing people managers. And I’ve hired leaders who aced the interviews, but ended up being poor team builders. It’s hard to pick up on these things just from talking face-to-face, so I’ve found myself placing more weight on reference checks than I did when I was an early-stage CEO,” he says. “One of my favorite questions to ask in reference calls is ‘What would a strong number two for this person would look like in terms of complementary skills?’ I like to get a sense of how their team could take shape and who they need around them to succeed.”
Some people interview well and some people don't. Some people get super nervous, while others are incredibly articulate. But references never lie.
Since he started trusting his gut less and references more, Chen has uncovered a few learnings on what to look out for:
Scope: “You get a sense based on the type of references the person submits,” he says. “Is it a bunch of people only on their team? Or is it a pretty broad group of people from throughout the company? A good sign is when you mention someone else you know who works at the company and the exec candidate is like, 'Oh yeah, definitely talk to that person too.'”
Response time: “I've done references checks where I reach out to a broad group of people and everyone responds within like three minutes like, ‘I can't wait to give a reference call on this person,’” says Chen. “I've also done reference calls where the candidate submits this weird, narrow slice of people within the company and they take quite a long time to respond and you're kind of just like, ‘Huh. That's interesting.’”
Polarization: “I find polarized reviews of an executive dangerous. They give me a lot of pause. We're a team that's on the same boat trying to row in the same direction. If three of the six rowers hate you and two of them love you, there's probably something deeper going on in terms of tribalism or not putting interest in the company first,” Chen says. “I want unanimous feedback at the exec level. The worst dysfunctions I've seen are ‘us vs them’ factions on the exec team, that then ripple throughout the company. I don't care how good an exec is if they can't put the company above their own team.”
TYING IT ALL TOGETHER
Chen recommends that founders start thinking about these mindset shifts when their teams are in the 30 to 150 people stage, to get as far ahead of the curve as possible. “As I found out firsthand, a 300+ person team is a bigger ship to turn. If you can look down the road and try to anticipate the challenges you’re going to face — and how your leadership style needs to change to match them — you’ll be in a much better position,” he says.
To distill all of this advice into a simple checklist for founders grappling with scale and trying to transition into established executives, here’s a handy summary of the principles Chen recommends keeping in mind:
Culture is built in a founder’s image — so start looking inward. Your behavior gets cascaded throughout the company whether you like it or not, so rely on quantitative feedback where you can to make targeted improvements.
Ego isn't a trait that should be packed in the move to later-stage leadership. Suspend the entrepreneurial ego from your early-stage days, particularly when it comes to decision-making and building new product lines.
Make the shift from point guard to coach by realizing that as CEO your product is the company, not the product. Embrace process as the antidote to the organizational politics that plague larger companies.
Stop throwing spaghetti at the wall. Slow down to speed up and start transparently tracking the bets you’re making as an organization.
Overhaul your communication architecture to get more thoughtful about which problems you solve through which forums — and cancel the CEO’s favorite meeting.
Discard your old hiring mental models and look for executives that have a proven ability to bring large groups together. Don’t over-index on what you can get out of an in-person interview — start placing more weight on references.
And Chen will leave you with one more: “One of the most helpful pieces of advice that I ever got is that things are always in flux. As a founder and CEO, the bulk of your work should be focused on getting it right for the next six or nine months because there's always going to be change in terms of the goals of the company, the needs of the consumer and the optimal operating structure,” he says.
“I'm sure there's going to be another phase that we haven't even gotten to, a thousand- or two thousand-person team, but I’m now a firm believer that cultivating a more malleable mindset will help prepare me for all of the transitions that are still yet to come.”
Photography by Bonnie Rae Mills.