What to expect as a new CEO

I wrote this while helping advise a new CEO. He told me to share it with others. Good, reliable, trustworthy business advice is hard to find. Most people repeat things they read out of a book. Few have the experience necessary to build a company out of nothing.

These are tips I’ve learned after years of hard work. I haven’t built a “big company” and I’ve made plenty of mistakes of my own along the way. Take them as you will. That said, I would loved to have had this advice when I got started.

First, your entire job as CEO is to make sure there is money in the bank for the commitments you have made. This is not a trivial job. Vendors, Employees, Lawsuits, and other costs will end up burning away at what you do have while Customers and Partners will do everything they can to cheat you out of paying you. Mitigate Risk and Maximize Profits while always remembering that you count on Results and not Reasons. As CEO you are accountable for the entire business, problems roll uphill so you need good people helping you along the way. You can’t count on reasons why things didn’t get done to pay your people, you can’t tolerate reasons, you need to emphasize results.

Second, everyone around you is going to look at the title of CEO and forget that you are a human being. They will assume that the title of CEO makes you different from them, they will show you the worst of humanity. I mean everyone. During your time as CEO, while everyone looks at you this way, you are going to mess up. That’s okay. The people who work for you are going to mess up. That’s okay. As CEO your focus should always be on finding a solution to move forward, long before you start worrying about who to blame. When the pressures of leading the company are upon you the criticism tends to be from people who don’t understand how hard the job can be. These people will be horrible to you. Don’t fret, just remember that karma is real, society treats pariahs as they are and rewards those who keep their head high during terrible situations. People always think I’m exaggerating how awful others will be to them in business unless they have experienced it themselves. It’s no wonder that so many in business are terrible to one another when it’s been reported that many CEO’s are Psychopaths.

Third, memorize your numbers. Every single day you should know how much Cash is on Hand (CoH) and have an idea on what your expenses will be. You should be doing reports to project how much business you will do and where it will come from. If you fail to plan, you plan to fail. You should be able to live and breath every financial detail from the gross margin to your payroll expenses monthly. Don’t even think of stepping into meetings with investors until you can do this. (e.g. for every $5/hour you pay it’s roughly $10k/year in salary you are offering). I’m sure you can quickly compute things like that in your head, start doing that with every monthly expense that you subscribe to so you can quickly annualize costs when making decisions. This may seem simple but it will help tremendously when you are actualizing your expenses for the year both for yourself and when speaking with investors.

Fourth, hire slow and fire fast. I don’t care if it’s your best friend and they are not performing. If something isn’t right, then it’s time to pull out the axe. Do it in person. Don’t call, text or email someone. Look them in the eyes and feel their pain so you remember it forever and won’t want to rush to make the same kind of wrong hire again. Hire slow, hire by committee and be ready to go with your gut when it comes to cultural fit. Don’t hire too early for growth that is going to come or for roles that you think will be here in a year, hire for the role you need today and resort to the fire fast portion of this if you need someone else down the road. When you let any employee go in person be sure there are camera’s on and recording the room or at least another employee you think you can trust is in the room. I don’t care how awesome you think you are or how incredible this person you are letting go must be, this is 2016 and you don’t want anyone claiming anything improper went down during the conversation.

Fifth, the world is rubber. The sooner you realize you can bend it to your will the better you will be at your job. No matter if you are dealing with software developers or investment bankers, they all play by rules that were made up by people and enforced by people. Ask for everything and give them an inch when they want a mile. Be ready to say no to a deal. Be ready to not hire the guy you absolutely need because they want too much. Be ready to walk away from funding if you don’t like the terms. The world is rubber, but you shouldn’t be, be the rock.

Sixth, try to avoid hiring your friends. Don’t ever bring anyone you care about who isn’t a blood relative into the business. It’s not that they can’t do the job. It’s that you’ll very likely DESTROY your friendship with them. Even if it’s a blood relative you are more than likely going to change the dynamic of the relationship with them by hiring them. Nepotism also kills culture in organizations. Don’t be the CEO who appoints unqualified people to important positions.

Seventh, titles are cheap, give them to people while you are still trying to find a way to make money. If someone want’s to be an IGEIT then let them. IGEIT stands for Inter Galactic Emperor in Training. It’s free for you to give out and it helps attract people with big egos. There is a book called How Google Works that talks about hiring people and labels the knowledge worker of today as a Smart Creative. The author makes a compelling argument that if you ignore hiring people with big ego’s (diva’s) that you end up missing the Steve Jobs’s of the world.

Eighth, try and keep your humanity intact no matter what comes next. Who knows if the media will throw a shit storm at you, if investors will act like you unleashed the plague on their investment, if your partners will quit on you, if your employees will someday conspire against you, if your biggest customer will one day call and blame you for total data loss, or maybe you’ll get lucky and nothing bad will happen at first while you start making big bucks. Just remember that money doesn’t last forever, and the way you treat people does. The wealthiest people I know are some of the nicest people I know.

Ninth, a business is more than just you. Departments like sales, marketing, PR, HR, Legal and Finance are really important and they often get overlooked by most early stage startups. The most successful companies out in the world have very early on defined their mission, core values, and done an incredible job building a brand alongside their products. None of this is possible without a focus on it early on. The other departments will unfold as incredibly important as you grow. Just be ready to become “the man” as you build yet another “corporation” to get your idea out there. Don’t try and cut corners on these departments or you shoot yourself in the foot.

Tenth, you can never be too careful about being overly transparent about your successes when talking with other people you work with. Nearly everyone you hire will feel entitled to your good fortune. They will want just as much equity as you. They will push to get it from you. These same people will simultaneously perpetuate any terrible gossip surrounding your failures. As CEO you are not equal to those you hire, you have more responsibilities and more to lose. Don’t feel the need to keep every employee in the loop all the time. That is what you have an executive team for.

Lastly, Reagan had a saying, Trust but Verify. Do this with your executive team. Fall back to firing fast if you can’t verify what people are telling you. Everyone is replaceable, but a bad actor in an organization is a cancer that will spread fast if not cut out. To ensure you and your team are accountable at all times make sure you and your people put everything into writing. If it doesn’t happen in writing, then it didn’t happen at all.

Hope this doesn’t spook you too much. You are about to embark on taming the last great frontier, the last true challenge available to our generation, building a business out of nothing with the odds stacked against us.