Volume 1 of 3 (9 minute read)
Volume 2: https://medium.com/denver-startup-community/1st-time-ceo-learnings-vol-2-beb11324a42c#.zaop18pnf (9 minute read)
Volume 3: https://medium.com/denver-startup-community/1st-time-ceo-learnings-vol-3-8c0e1b4b0f7f#.2ar9llxyp (5 minute read)
1. Why I’ve Written This
Ten weeks ago I transitioned out of the CEO role at a startup I co-founded 18 months ago. I am sharing my thoughts here in at attempt to distill what I have learned from my first term as a startup CEO. It’s a cathartic exercise for me, and I hope you can derive some value from it and add your 2 cents to this list of considerations.
Running a company is damn hard, often lonely and possibly the best way to learn about yourself if you so desire — the good, the bad and the ugly. Transitioning out has been humbling, liberating, confusing, exciting and probably some other “ings” and has provided me with the excess brain capacity (and time) to get introspective.
I am taking these learnings forward with me with the aim of coming not only a bit more seasoned but also substantially more prepared to all endeavors I choose to pursue from here on out.
So, here are some things I’ve learned…
2. Be the Expert, NOT the “yes man”
\ˈyes-ˌman\: a person (especially a man) who agrees with everything that someone says; a person who supports the opinions or ideas of someone else in order to earn that person’s approval.
As a CEO, you have access to really smart people, some of whom serve as instrumental supporters for you and your business as investors, advisors or mentors. You also have the responsibility and difficult ongoing task of extracting maximum value from these resources. I failed to do this.
Set yourself up for success by being a proactive, vocal leader and an ever-striving expert on your business, not a yes man who is all ears and along for the ride.
What do your supporters offer you and your business?
- Value — Some combination of their valuable time, mental energy, networks, emotions, expertise, reputation and possibly money that they invest into you and your business.
- Risk — Their own wide-ranging opinions based on their experiences. With these come the potential for off-basis suggestions, inherent biases and unrealistic expectations. Protect yourself from whiplash.
Do your best to understand and communicate your situation and its similarities / differences as compared to your supporters’ experiences. It is human nature that we pull from what we know, it’s easier. That does not mean it’s appropriate or a sure-fire recipe for success.
At the end of the day, you are receiving data. You must decide how to apply it to your business.
Top 3 Things I did Wrong
- Played second fiddle (more like fourth fiddle) — By this, I mean I failed to lead my supporters at times given the lack of confidence I had in myself to do so. “They’ve been here before. Surely what they say is gold!”
- Felt the responsibility and pressure to satisfy/impress — I focused more on proving my worth rather than establishing myself as the expert leading them to provide maximum value.
- Got complacent and lost a predictable cadence — Sure, I would send email updates, but I got less pointed with my asks, did not proactively call meetings and sometimes found myself communicating reactively. Time between communication increased, frequency of interaction decreased and confidence in me ultimately deteriorated for some.
Bottom line — I did not set the stage or provide the playbook to foster maximize the valuable of my support network.
6 Takeaways for CEO’s
- Lead with passion — This is how you keep your supporters excited, engaged and on their toes. A little bit of crazy goes a long way. Don’t make supporting you another boring chore.
- Define and nurture these relationships — The expectations, roles & responsibilities, accountability. You must lead this and not let it slip. At the end of the day, your supporters are working for you, not the other way around.
- Be results-oriented — As CEO, you have not recruited your supporters so you can stroke their egos and be regaled. You have done so because you believe they can help you with your job, which is to achieve results for the business.
- Be the expert — No investor, advisor, mentor has as much knowledge of what you and your team are doing every day to build a successful business as you do as CEO. You do not look for them to provide vision. You leverage their expertise for fresh perspective and to tackle problems at hand.
- Over-communicate — Given that there is a knowledge disparity, as CEO, it is your responsibility (and only your responsibility) to close the knowledge gap by being an excellent, proactive communicator to the point of annoyance.
- Be your best supporter — Learn to listen to and trust the advisor who’s been with you the longest — your gut.
3. Be Reckless
\ˈre-kləs\: marked by lack of proper caution; careless of consequences
Do you view the above definition as positive or negative? If you have taken a startup CEO position, you likely have above average risk tolerance. Live up to it and throw caution to the wind!
It’s not just a school of thought, it’s the mentality that you as CEO must embrace (and get your team to embrace) to execute on the business. Create your own urgency and use it to get shit done. Launch your product FAST, go after customers FAST, test distribution channels FAST and make your mark FAST (before someone else does).
Don’t be scared to try anything or reach out to anyone. Don’t wait around for others to notice you. Toot your own damn horn and know that there’s only upside in doing so!
Mistakes as an Asset
When you’re moving fast, you will make mistakes. These mistakes may be painful and costly at times, realize that. In the moment, they will, of course, seem more severe than they likely are. They also may be the best seedlings for learning fast and moving toward getting things right(er).
And, most importantly, do not just fail fast, fail forward. Leverage your mistakes, your failures, your pain as motivation for continuous growth and improvement. Do this and nothing can hold you down.
4. Raise with Caution
I know I just said to be reckless in, but when it comes to bringing outside capital inside your business, be completely dialed in. Here’s how…
Oh Jean-Ralphio, oh many a startup CEO (including me). You get that first chunk of money into your bank account somehow (not always from selling to actual, paying customers), and you’re off to the races. But, hold up…
Have you trained enough on your own dimes and sweat to get you and your business ready for the race? What kind of race is it? Do you have a line of sight to the next stations at which your train will be arriving (and when), or are you on a pulsating rocket ship that just needs to be gassed up for it’s trip to the moon? Be contemplative and real here because the second you take that money (which likely is not customer money), the clock is ticking.
Get Yourself Comfortable First
I believe I raised money too early. Basically, I was uncomfortable (for a long time) with our not having any semblance of product-market fit prior to raising our first round and for several months after as we were burning investor cash (and not generating revenue). And, guess what, after you raise money, talking about looking for product-market fit is not something a lot of investors are all that interested in hearing from you. So, how could I have gotten myself comfortable?
By Determining What’s Meaningful
We had built an MVP and put it into private beta with a couple hundred unengaged users when we took our first slug of outside capital from friends and family and angels. That’s a pretty low hurdle to get over. How do I know our private beta users were unengaged? Because they were doing me a favor by signing up and giving feedback, not raving about how the product was solving a problem for them, and they weren’t paying me! In hindsight, that is not a recipe for proper demand validation or a compelling traction story.
Basically, I had shown that I could pull together the resources to get a product up and out the door, but I had bluffed on the level of demand and my understanding of and ability to acquire customers who would be drooling all over themselves to buy (or even sign up for) our offering.
We did not have any revenue. I had a quasi clear (read: unproven and loosely defined) path to it, but I was not aggressive enough in pursuing it. In short, I had not adequately validated real demand for our offering and had no sense for the unit economics of our business. Raising money too early (subjective) puts your company on a different course, maybe not one you even want to pursue and can actually make failing fast more difficult IMO.
This may be ok for some, but I’m a better truth-teller than shit-seller, and I operate with more confidence with a bird and real data in hand.
By not being solely focused on my (would be) customers, I missed out on a vital opportunity to:
- Really hone in on, adjust and communicate our value prop in a repeatable, compelling fashion
- Make customers delighted to pay me by living their pain and solving it the right way
- Have a clear path to world domination that would give investors wobbly knees and open checkbooks.
Empathize with Investors
Not all investors are created equal. It’s on you as CEO to understand what type of investors you want/do not want and why and what each investor you’re corresponding with truly wants from your business as one of their investments. Be clear on what type of business they believe they are investing in, and if it doesn’t jive with the type of business you are out to build, you may not belong in their portfolio.
It really does seem that there are some investors that are just in it for the fun and to be involved with something cool. Whether that’s true or not should not matter one iota to you. If you take money, you are in business to return it and then some. That’s both fun and cool for all investors!
My friend and fellow Startup CEO Adam Rentschler has put together this great deck that I hope will help you understand the investor-entrepreneur relationship from a different perspective and how you can approach it with empathy and intelligence.
Know Your Shit
Before bringing others along on this joy ride, be honest with yourself about where your business stands. Know both what you know and what you don’t know. Know what’s primarily responsible for keeping you up at night. It’s certainly okay (and possibly welcome) not to know things. It’s not okay to not be striving to figure them out as quickly as you can.
Investors love to ask questions and poke holes; they don’t just love it, it’s their duty as an investor. You should crave their inquiries and be confident that you are the expert on your business. Here’s a braindump of questions you should be asking yourself and formulating answers that you can articulate in your sleep:
- Learning — What hypotheses did you set out with? What have you proven/disproven? What have been your key learnings? What are your hypotheses now?
- Executing — How have you taken your learnings and acted upon them? What have you really accomplished to date? Have Real milestones that show you are a de-risking machine!
- Planning — Why are you raising money now? What are you planning to do with it? I suggest a financial model with hiring and marketing plans. I’m happy to help you build it if you’re struggling with this deliverable.
Now, go out and raise some money or don’t just yet (or ever).
That’s it for volume 1. I’ll be posting volume 2 in the next day or two. I’ve got the whole shebang in one long-ass post on my blog if you want to take down the whole thing in one sitting.