Corporate therapy for Silicon Valley

April 21, 2014, 12:50 PM UTC
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.

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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.

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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.”