Analysis of why running a venture-backed company can be less fun that it looks, plus four recommendations for CEOs who are suffering from founder malaise
“I want to quit and do something else. Yet I’m afraid I’ll let down the company, as there’s no obvious successor and I’m the only founder. Plus, it’ll be harder to keep raising. The last round happened only because I convinced investors I’m super-committed. Yet I hate my job, I don’t want to be a CEO, I’m fed up with constant stress, plus I want a career in a different field. It’d be easier if the company was failing but this bloody thing keeps growing up and to the right year-on-year, which doesn’t help.”
This was one of the anonymous messages that arrived last week at CEOhelpline.org, a new pro-bono initiative that gives founders a chance to raise questions that might not be wise to put to their VCs. Here’s how it continued:
“Realistically, if everything goes to plan, we’ll be ready to sell in about 2–3 years for a good amount of money. But when I think about doing that, and then about a possible earnout, I want to vomit. Is this how I want to spend my thirties? In front of a laptop, with something new being fucked up every day, as Brad Feld says?”
“When I think about doing this for three more years, I want to vomit”
I’ve been thinking for the past few days how to answer it.
Few founders admit that they’re not enjoying their lives. If you’re a startup CEO, you’re supposed to go to networking events full of enthusiasm. You’re supposed to talk confidently about how well your business is going. And you’re also supposed to be lovin’ it. Running your own startup is the most exciting, most liberating, most creative thing you’ve ever done, right? And although you’re working at your hardest, you’re also more fulfilled than ever before. That, at least, is your story to the outside world.
Some of this language is alarming. Next time you hear a founders talking about how they’re ‘crushing it’, or ‘killing it’, you could refer them to the article in Psychology Today explaining that causing harm to small animals is one of the ‘homicidal triad’, along with bed-wetting and arson, that often indicates an incipient psychopath.
But there’s a bigger issue at stake here. To many founders, running a startup is truly not what they expected. It involves a tiresomely wide range of skills, many of which you may not be good at, and many of which may be repetitive and dull. It involves persuading other people out of their scepticism, when you may not be sure yourself whether you’ve done the right thing. And it involves trying to stay cheerful and optimistic to customers, and to keep a crew enthused and committed, when as their captain you’re feeling a powerful case of impostor syndrome.
It wasn’t until after the IPO of my company that I myself felt able to admit that I hadn’t much enjoyed running it, that I wasn’t very good at being a startup CEO, and needed more support. (That prompted me, many years later, to start helping other CEOs as a coach.) Part of the founder-CEO problem was the grinding regime the job seemed to require. I worked weekdays from 8am until 8 or 9pm, and was on my phone or computer most evenings after dinner and half the weekend. We had young children at the time — our third was born before the business launched, and our fourth shortly before we got a ticker on the NASDAQ. I barely saw my kids for a number of years, and was mostly emotionally absent when I did.
You’d expect that this would by now be a solved problem. Yet CEOs continue to struggle with it. One founder told me in a coaching session last week that she rarely gets to look at her emails until 7pm, and spends all day Sundays working to catch up. Another said his job is destroying his relationship. A third “finds the stress overwhelming”.
What’s going on here? After reflecting on what I’ve learned from a range of CEOs, I’d suggest that there are four different types of founder malaise, and they require different treatments.
Founder-CEO Malaise Type I: You’re no good at the job, and you know it
If your challenge is lack of skills, then you need to do two things immediately: allocate time to learning how to do the things that you’re not good at now, but can improve your business the most if you learn — and then actually learning them. One way to do this is with a coach; that’s expensive, if the coach is a good one, but will save your shareholders money if you’ve raised anything over $1m, since it will help you find answers with a more trial and less error. Another way is to learn it yourself via reading, podcasts, TED talks, networking, and asking other people for advice. This is the stonier path, much harder to travel, but if you’re self-funded or very early, you will have no alternative.
Building the required skills without outside help is doable if you have iron self-discipline, but a couple of health warnings. First, the biggest problems are often the ‘Rumsfelds’ — the unknown unknowns that the ill-fated US defense secretary Donald Rumsfeld observed in 2002 when trying to figure out what to do about reports that Saddam Hussein had weapons of mass destruction. I often find that the easiest opportunities for CEOs to improve are by fixing quite basic things whether they’re not even aware of their weakness, rather than in the areas where they know they have a problem and can easily figure out which expert to ask for help.
Second, it’s tempting but unrealistic to expect your venture-capital investors to solve the problem. Even though practically every VC firm on the planet talks about how its people add value and help founders, it’s important to remember that startups are like meatpacking plants: you don’t want to see how the sausages are made. Republican president Ronald Reagan is often quoted as saying that the ten scariest words in the English language are “I’m from the government and I’m here to help.” The equivalent in VC is probably “Call me any time.” Partners with real operating experience in their own businesses will understand that things inside can be a lot more messy and chaotic than they seem from outside. Those who come from investment banks, consulting or even the VC industry itself sometimes have an unrealistic view of what’s achievable. A few VCs from this background are truly inspirational: here’s one example.
Startups are like meatpacking plants: you don’t want to see how the sausages are made.
Sadly, the real world is rarely as easily fixed as a spreadsheet or a slide deck. And revealing the depths of your inadequacy, your personal problems, or your lack of confidence, to a VC on your board may fatally harm your relationship with the very person you need most to keep your business alive by giving you more money or introducing you to other people who will.
It may be that your efforts to build skills aren’t ultimately successful. If that’s the case, there’s no shame in that. You may be a great developer, or visionary, or sales person, or CFO, or poet; not everybody has the temperament or the all-round capabilities to be a great CEO. A good approach is to think of your shareholding in the company you’ve founded as your biggest asset, and try to make wise decisions about how to maximise its value. The best solution may be to fire yourself as CEO, and bring someone else in — which can make you not only happier but also wealthier.
Think of your shareholding in your startup as your biggest asset, and be wise about how to maximise its value
The high-risk way to replace yourself is to tell investors this is your plan before they give you money. That’s what I did: I added a line to the incoming term sheet from the favoured VC in our next round, saying that both sides agreed that the company needed a new CEO, and we would start a search for that person immediately after the round closed.
Of course, you have to keep showing up for work and doing your best until the handover is complete: in my case, when the guy finally joined, his first day on the job was the bake-off for the IPO, in which four investment banks were pitching for the job of taking the company public. And if you want your successor to succeed, you’ll have to resist the temptation to hide your mistakes. That’s why I showed the new CEO a private slide presentation the night before the bake-off, entitled something like What I’ve Screwed Up Inside This Company.
A lower-risk way to organise a CEO transition is to wait until just after you’ve raised a round, and then organise an outside audit of the company’s management skills, and share with your board the new insight that maybe a new CEO is needed. You may be surprised by how positively your VCs receive the news. It’s much more stressful for them to deal with CEOs who desperately need to step aside for someone else but don’t yet realise it.
Founder-CEO Malaise Type II: You don’t have enough freedom in the job
At first sight, this may seem weird. You’re the CEO after all, right? So you get to decide the colour of the bean bags,the working hours, the hirings and the firings. Yet that’s not always how it feels inside. Some CEOs are enslaved to their boards: for whatever reason, they feel they can’t ever satisfy their investors, and this produces a perverse set of behaviours. One founder I worked with was locked in a heartbreaking cycle of trying to prove to his VCs at each board meeting that the business was going great. Meanwhile, they saw it as their role to pick holes in his data and show that it wasn’t.
Other CEOs are enslaved to their staff. If you have thirteen direct reports and you take seriously your role in guiding, coaching and supporting them, then you’re either going to have a lot of your week blocked out for meetings with them (here’s advice on how to do one-on-ones well, and what questions to ask), or you’re going to get interrupted all the time as they ask for help.
A good approach here is to think of your startup as an engine. You have to decide whether to be a cog in the engine, or the technician whose job it is to maintain and improve it. In short, to work on the startup, not in the startup. Sometimes this can be about hiring more senior people; sometimes about basic stuff like doing your email more effectively. In general, the issue is that you’ve allowed yourself to become too engaged in the business; to make it better, you need to disengage a little.
Founder-CEO Malaise Type III: You no longer believe in the mission
Next time you participate in a exercise to decide a company’s vision or mission, take a minute to watch British comedian David Mitchell’s witty takedown of the way companies declare themselves passionate about anything from tax optimisation to local-government services, or from sofas to premium-grade flooring.
If before you founded a startup you were a consultant, adviser or banker — or worse still, an analyst, writer or journalist — then you’re likely to have encountered an important change. In your old life, you had the intellectual stimulation and variety of addressing fresh problems every quarter, every month, or every week. But now you run a startup, and your job is to fix this startup and do nothing else until it’s a success.
That’s a significant change of rhythm and focus. And unless you can reconcile yourself to that, rather than being too critical about the narrowness of your company’s focus, no startup will satisfy you. You don’t fancy devoting your life to selling people expensive toys they can’t afford that suck up their attention span? Then don’t found Apple. Or persuading people to reveal their innermost secrets, which you then package up and sell to advertisers? Then don’t found Facebook. Or harming the environment in big cities by encouraging millions of people to switch from electric public transport to private cars using fossil fuels? Then don’t found Uber.
Very few startups, when seen with a jaundiced eye, can claim to be doing something really big to help the world. Sometimes, you’ll need to content yourself with doing something that’s moderately good. Or something only a little good, if you’re simply providing a good service at low prices that’s better than the alternatives people had before. Even when your mission is unquestionably huge and important, like “organize the world’s information and make it universally accessible and useful”, that can sometimes boil down to trying not to be evil, to borrow the famous phrase from the founders of Alphabet.
There isn’t an easy cure for this one. But the equivalent of palliative medicine might be to look across the office when people are hard at work, or at your company parking lot if you’re in America, and to reflect on the fact that all these people have hopes and dreams, and that giving them a place where they can work honestly and earn better lives for themselves, their families and their loved ones, isn’t a bad way to spend your time.
Palliative care: look across the office, and reflect on all those people’s hopes and dreams
And if you’re under pressure from your VCs, then ask them to tell you who their biggest ‘limited partners’ are — the people who gave them the money to invest in you — and go and look at their websites. You’ll see that the vast majority of institutional investors, even if they’re run by highly paid people you may not find congenial, are actually investing on behalf of hardworking people who want to have a safe and happy life when they get old. One of the world’s biggest LPs in VC funds is CalPERS, the California Public Employees’ Retirement System, which looks after the savings of 1.6m people.
Founder-CEO Malaise Type IV: You’re bored, and you don’t feel you’re learning
It’s no coincidence that venture capitalists refer with contempt to ‘lifestyle businesses’ — companies that don’t require much hard work or engagement, and that allow the owner to draw a steady steam of profits without having to spend much time. Because in many ways, the itch that great startup founders most often need to scratch is the need to improve their business, even if it’s already doing well. (See the Onceler from Dr Seuss’s great book, The Lorax.)
If you no longer find intellectual stimulation in your CEO role, it could be that you’re not looking hard enough for those improvements. For the greatest opportunities can often be inside yourself. If you can’t see them, this may because you’re overestimating your own skills: like the ‘very stable genius’ who serves as the current US President, you may be suffering from the Dunning-Kruger effect.
Being a CEO isn’t one job; it’s at least four. The skills you need to quit your job and move forward a new project (CEO 1) are different from the skills you need to persuade half a dozen other people to quit their jobs and join you (CEO 2). And those are different from the skills you need to move from managing a team of individual contributors to looking after a set of managers who can hire, coach, enthuse and monitor a group of people below them (CEO 3). And those in turn are different from the skills you need to create an organisation with structure and processes that doesn’t collapse under its own bureaucracy (CEO 4). Plenty of founders are great at being CEOs 1 and 2, but indifferent at being CEO 3, and hopeless at CEO 4 — let alone CEOs 5 and 6, which we haven’t even begun to discuss. Yet the title on your business card remains the same, and your investors don’t put you through an interview progress to decide whether to move you from CEO n to CEO n+1.
Being a CEO is four jobs in succession. Yet your business card doesn’t change
So if your business is moving swiftly upward and to the right, and there’s nothing that needs fixing right now, maybe it’s time to think ahead. What skills will you need — skills you don’t have now — to run the company when it’s ten times bigger than now? When it’s a hundred times bigger than now?
That’s a question I frequently ask the CEOs I work with, usually at the outset of a coaching engagement and then again six months later. So far, I haven’t come across any CEO who has been unable to come up with a list of at least three skills to work on. Well, I suppose there was one: a founder who rejected his board’s suggestion that he work with a coach with the words “I don’t need any help; I’ve been managing other people since I was a small child.”
If you look inside yourself, and truly and honestly conclude that there are no skills you need to work on to be able run your company better in future, then there’s only one thing for it. Stand for president.
I’m Tim, and these articles come from my work coaching Series A and B CEOs backed by VC firms in Europe, America and Asia. Since 2013, I’ve run a seed fund out of London that invests in SAAS, platforms, marketplaces and tools. I’ve backed 50 companies, sat on 19 boards, founded a startup, and taken it to an IPO on the NASDAQ. Before that, I worked for The Economist and the Financial Times and wrote business books.
About this publication
This is one in a series of blog posts covering nine of the most important skills I’ve seen in founders who successfully scale their companies. If you’d like to read more of them, please follow; if you’d like to review a copy of my forthcoming book, let me know in a comment or DM. And if you think you know a CEO who might find these ideas valuable, please give a few claps or share:)