So You Want to Be a Startup CEO?
Are you currently a startup CEO or do you plan to be a startup founder and CEO? This post is for you.
How well do you understand “the job” you’ve taken on?
Startup CEOs are responsible for their company’s present, for its future and for every decision along the path that connects their company’s present with its future. Fundamentally, if you are CEO of a startup it is your job to ensure the venture survives and thrives.
Just to make things more interesting, if you are a startup CEO, you must do all of these things with far fewer resources than those of more established companies. You must prove beyond any doubt — to your team, your investors, your partners, your customers and the world — that the opportunity your company is pursuing is real, large, and growing. You must also prove that you understand the risks and have a clear, workable plan to eliminate or mitigate every one of them.
This is the job.
How Do I Know?
Some people go their whole lives without ever starting a company. That isn’t me, but it might have been me. When I finished high school, I worked for nearly a year in a welding shop. Then I became the lead guitar player in a band. Six or seven bands and two road tours later, I took a job managing a music store. After that I waited tables, framed houses, did some rough carpentry, painted houses, worked the assembly line at a General Motors plant spraying coats of pain on new Oldsmobiles, worked as a janitor, and finally, after ten years had passed since my high school graduation, I went to college.
After college I went to law school, graduating from Harvard Law School in 1989. I moved to Colorado and began to practice law. And that might have been the end of it. But something else happened. In 1993, I helped start my first tech company. In 1995, I started a second company raising capital from angel investors and from venture capital firms, and in 1998 I started another, and in 2001 another. At this point in my life, I have started and run seven companies. I have also stepped in to run a few that I did not start.
My confession: some of these companies were failures. I have sometimes been a terrible startup CEO. Three times I have approached being “really good” as a CEO. I have worked long and hard, I have learned through research, real-world experience and hundreds of small and large successes and failures what this “startup CEO” job requires.
I have been wonderfully fortunate. And I have learned enough over two decades, I think, to help you get closer to great — and do this faster and more surely than I ever did.
What Makes a Startup CEO Different from Other CEOs?
Many people think all CEOs are rich, powerful, polished leaders. They see “CEO” as synonymous with the persons who lead the largest corporations in the world, people with enormous resources at their disposal. When these CEOs travel, they fly first class, or travel on the corporate jet. When they say “jump” people jump — or ask “how high?” They give keynotes at conferences to thousands of people who hang on their every word. They exemplify a certain fantasy of success.
Some of the world’s CEOs are rich, powerful and polished leaders. Their cars are expensive and fast. Their homes are enormous and well-appointed. They earn an average of more than 200X what their own company’s employees can expect to take home.
But just to be very clear: these are not startup CEOs. If you are planning to be a startup CEO, what you will experience is vastly different than the fantasy land I have been describing.
If you are the founder or co-founder of a company and also its CEO, it becomes your job to identify and build the founding team, lead the team as the company grows and help the new company realize its full potential. You will make key decisions and help drive the decisions of your team in two key areas: opportunity identification and risk mitigation. This is at the core of what happens as new ventures are formed. You explore unsolved problems and possible solutions. You identify opportunities. You choose an opportunity in which you will invest time (yours and your team’s) and money (yours, friends and family, angel or institutional investors’). You identify key risks and determine whether you can address them — i.e., minimize them or make them go away entirely — and, if so, how you will do this. As the opportunity becomes more real — e.g., because you’ve built a product, found paying customers and gained traction in your chosen market — you increase your company’s value. As you identify and mitigate risks — the risk of running out of money, the risk of not being able to develop a minimum viable product, the risk of not being able to find a paying customer, the risk that a competitor delivers a better product or service, etc. — you increase your company’s value. This is the game of business. It is the game you are playing.
You will almost surely be ill-equipped to do some of the things you must do. As smart as you are, you are not smart enough — and you will know this to be true. As experienced as you may be, you will discover that you need to act, to make decisions to lead in situations where you have no real experience on which to draw. Be cause you are smart, you will recruit those with the intelligence, experience and skill to complement your capabilities. And while that is critically important and will help you and the company, it won’t be enough. You and your team will sometimes still fall short of being able to deliver with what the company needs.
What does all this mean?
In a classic Fortune article about Steve Jobs, Adam Lashinsky writes about a “sermon Jobs delivers every time an executive reaches the VP level.
Jobs imagines his garbage regularly not being emptied in his office, and when he asks the janitor why, he gets an excuse: The locks have been changed, and the janitor doesn’t have a key. This is an acceptable excuse coming from someone who empties trash bins for a living. The janitor gets to explain why something went wrong. Senior people do not. “When you’re the janitor,” Jobs has repeatedly told incoming VPs, “reasons matter.” He continues: “Somewhere between the janitor and the CEO, reasons stop mattering.” That “Rubicon,” he has said, “is crossed when you become a VP.” (Apple has about 70 vice presidents out of more than 25,000 non-retail-store employees.)
When you are a janitor you get to explain yourself. When you are a VP, you do not. If you are the CEO of a company, your company — what your company is, what it does and how well it does this — is the only explanation to which you’re entitled.
A sign on President Harry S. Truman’s desk read “The Buck Stops Here.” If you are a startup CEO and you are blaming anyone else for the company’s failure, for coming up short, you haven’t understood the job.
You are responsible.
This is the job.
There is another way to look at this. The job of a startup CEO can be boiled down to two things: vision and provision.
- Vision. Developing, communicating and “making real” the vision.
- Provision. Ensuring the company has the resources — leadership, talent, capital and any other thing it may need—to survive and thrive.
In this order. Vision first. Resources second. Why? Your ability to secure the necessary resources will invariably depend on your ability to communicate and make real/credible a vision about opportunity and risk.
You cannot do these things by yourself. You will recruit, develop, lead and rely on a team. But you cannot fail to do either of these two things and expect you will succeed.
Is this your vision? In once sense it is. Of course it is! You own it, and it owns you. You carry it with you everywhere you go, this vision for what your company is and does. All of your conversations within the company reflect this vision in some way. Whenever you speak or meet with your executive team, your employees, contractors and board members, this vision becomes clearer, more focused. This happens first for you. It then happens for those with whom you are most closely connected.
When you speak with customers, partners and investors — anyone external to the organization — you will help them understand, appreciate and embrace the vision.
Your company needs many things. At the start, it needs your undivided focus and attention. “What about Elon Musk, or Jack Dorsey,” you ask? “Why can’t I start and run multiple companies?”
These are questions you might ask after you’ve started and sold companies like Zip2 and Paypal. It is not a good question to ask if you’re running your first or second startup. For you, focus is key. The vision we talked about earlier will come into focus for you and for others only when you have yourself become focused.
Before ramping up to the first 10.10.10 program, I spent two years describing 10.10.10 to anyone who would talk with me about it. Some might tell you this was too long. And for some kinds of companies two years would have been far too long. But by the time we began, it had become far clearer to me and to others what we were building and why it was so important that we build it.
How you will provide and what you must provide for your company will depend very much on the vision embraced by your company and its stakeholders — senior team, employees, partners, customers, etc. If your vision is substantial in size, you will need to be actively and constantly the team you need to bring this vision to life. You will need to secure the capital the company needs to develop its product or service, communicate its message and value proposition to customers and partners, and generate the revenue it needs to grow and thrive. These are the basics. But they are not everything you will need to think about. You will need allies, partners who see in the vision you have articulated substantial potential — value — for themselves and their organizations.
The Best Job in the World
Difficult as all of this is, I think being a startup CEO is one of the best jobs world has to offer — particularly for those who actually understand what the job is and are willing to learn how to do it well.
Please let me know your thoughts and comments.
From October 16–26, 2017, 10.10.10 will host its Cities program in Denver. This 10.10.10 Cities program will focus on “wicked problems” 2 key areas: water and infrastructure. If you’d like to be involved in some way, this is the place to sign up. We are particularly interested in participation by those in other cities who may wish to bring a 10.10.10 Cities program to their city in 2018 or 2019.
You should know that we invite just 10 prospective CEOs to participate in each program. (You’ll find our most recent cohort of prospective CEOs here.) If you are a successful serial entrepreneur and plan to start a new venture, you may request an invitation here by filling out the form. We also partner with Validators (organizations and institutions with deep domain knowledge) and Ninjas (individuals with the specific skills — finance, marketing, design, product management, data analysis, etc.) to support our prospective CEOs during the program.