I suffocated as a startup founder.
At many points while running Slice Capital, I became overwhelmed. I had so many responsibilities and tasks, both high level and day-to-day, that it was hard to focus on any one aspect and push the business forward.
In one month, I spent more time on bookkeeping than any other task. In another month, I split most of my time between legal compliance and speaking with investors while bookkeeping was neglected. It was not sustainable or healthy.
Although I didn’t know it at the time, I was not alone. I have observed many other startup founders become overwhelmed, fail to delegate, and then sink along with their ship. Running a startup and trying to grow it at the same time requires a lot of work. In particular, it requires founders to think about a host of different issues and take on a wide range of responsibilities. Enter, the overwhelmed founder.
I won’t name the startup founders who failed out of respect for them and their teams (*pours one out for the homies*). But, this wouldn’t be a useful article unless I explain why they failed. Of the ones who failed due to suffocation, they did not tend to delegate:
- Operations. A founder and CEO should not be designing wireframes for the product, nor should a founder be responding to customer service chats.
- Legal. Unless you are a lawyer, you with your founder title and responsibilities should not be reviewing contracts and drafting MOUs. You should still be involved in the process and know what is going on, but you can have others do the majority of the work.
- Finance. Founders need to be on top of their finances, but should not be doing basic tasks such as bookkeeping, invoicing, and payroll.
- Marketing. Someone else should be writing the website copy, sending the newsletter emails, and running the Facebook ads.
If a founder you know is handling all or most of those responsibilities, you can go ahead and play over-under on when he or she will burn out.
In the early stages of building a startup, it is common for founders to handle everything. If a startup isn’t making money and doesn’t have much funding, it is expected that the founders and early employees will handle everything and be overwhelmed for a while. They should, however, push forward with delegating as soon as they can afford to. Until then, their business will take a while to grow.
What Should a Founder Spend Time On?
Before we go any further, let’s get something out of the way.
Startup founders’ jobs are incredibly hard and require a lot of meaningful thought on a regular basis. In fact, startup founders are constantly thinking about their business.
If they’ve delegated everything I listed above, then what are they doing? According to Ali Rowghani, “a CEO’s first job is to build a product users love; the second job is to build a company to maximize the opportunity that the product has surfaced; and the third is to harvest the profits of the core business to invest in transformative new product ideas.” Ali provides a great high-level explanation of a CEO’s job, and goes more in-depth in his article on Y Combinator’s blog.
At various points, I had front row seats when founders successfully delegated responsibilities. I found that the successful founders focus their time on the following:
- Strategy and direction. At every stage, the founder(s) should be on top of driving change in the direction they want and focused on making the right decisions. Deciding whether to pivot, how to respond to a scathing review, and what to do with a rogue co-founder could mean life or immediate death for a startup. Founders are the best suited people to handle these responsibilities.
- Sales. A Founder and CEO’s most important job is selling the company and vision. Unless there is already someone else on the team who is better at sales, the CEO is the company’s most important sales person.
- Investor relations and fundraising. There are only four people in an early stage company who would take part in investor relations and fundraising: CEO, CTO, COO, and CFO. No early stage startup should need a Founder and CFO, so that leaves the other three. All can participate, but it is the Founder and CEO’s job to manage both fundraising and speaking with current investors.
- Organizational management and company culture. Any organization with people working in it needs to be actively managed. There are always issues that come up, fires to put out, and changes to make. All decisions and actions need to be mindful of the people and the culture. Everyone on a startup’s executive team should get involved in various ways, but these aspects are always driven by the founder(s).
What to Delegate and Evaluating The Options
As mentioned earlier, my experience and observations show that operations, legal, finance, and marketing should be delegated. Startups can be vastly different from one industry to another or even one founder to another. Therefore, each of these business functions mean something different for every startup. All founders must decide for themselves what to delegate and when. Here are some options for next steps:
Hand off HR and operations. As long as you are still involved in the final stage of hiring, you can have someone else on your team recruit and vet new hires.
Payroll and benefits are easy: sign up for Gusto or a PEO (like Trinet or Justworks) and have someone on your operations team manage that service. At Slice Capital, we used Trinet for payroll. You could also have a part-time CFO handle this.
Operations as a whole is hard to hand off. You can hire a COO that you trust, or you can hire a couple people to fill roles like Head of Business Development and VP of Product. This one takes a lot of trust and time for onboarding.
Trust others with legal tasks. “A lawyer should articulate your thoughts in a legally sound way, and help provide clarity.” — Ishmael Samuel of CTRL LA. Drafting contracts, reviewing agreements, and cap table management can be handled by someone else. The founder should always be aware of the details and drive negotiations, but other team members can do the basic legal tasks and prep work for lawyers. As well, you should always have a lawyer review legal documents. Yes, it is worth the obscene cost.
There are more and more legal tech startups and law firms popping up to try to solve this issue of high startup legal costs. It might be worth the time to speak with firms like Clerky and Atrium. Engaging with a firm that focuses on working for startups could greatly reduce your legal costs.
Another option is to bring a lawyer onto the team part-time and give them equity. Since lawyers get paid a very high hourly rate, you will need to offer a large bite of your startup. I only recommend startups requiring a large amount of legal work spend time attempting this.
Get someone to handle your finances. While working on Slice Capital, I learned that there are too many aspects of finance for one founder to handle on their own. This was exactly the reason why I started siliconCFO — to handle financial management for founders so they can focus on growing their business.
Hand off the bulk of your financial responsibilities to a part-time CFO. You can also use a CPA firm or bookkeeping service to handle your bookkeeping. Whichever you decide, promise me you will have someone file your taxes for you.
Onboard a marketing hire. Someone to design your graphics, write your social media posts, and speak with customers can be a huge relief to your day-to-day.
To offload marketing work, someone on-staff or a professional marketing firm would be ideal. If you can’t afford either, there are inexpensive options such as Penji and Flocksy to at least design graphics for you.
Opportunity Cost and Virtual Assistants
Many founders also tend to spend a lot of time getting through their emails each day. It could be useful to hire a Virtual Assistant to act as a gatekeeper and filter for your emails. Tim Ferris says in The 4-Hour Workweek that “if you spend your time, worth $20–25 an hour, doing something that someone else will do for $10 per hour, it’s simply a poor use of resources.” You can hire pre-vetted Virtual Assistants and Admins from a firm like Go2.
If you have already done all of this, then you must have a nicely growing organization and enough time to spend on what founders should be focusing on. As you grow, you can continue to delegate and attempt to hand off other responsibilities in part or full.
To many founders, a lot of this information is self explanatory because they have gone through it all before. If you are a founder with suggestions on what else can be delegated and how, drop me a line at email@example.com.