When a group of high school friends and I released our first game, Twork, to German retail stores in 1996, I was the only one who’d already turned 18. So, by default, this made me the official CEO of our little company, which we registered as a German GbR (private partnership) for 50 Deutsche Mark. Since then, I’ve been working more or less in CEO-like positions for the past 20 years with varying degrees of scope, experience, and, of course, success.
As the 18-year-old CEO of a gaming company, I didn’t know what I was doing and probably negotiated the worst deal ever with our publisher — about one to two DM for every 30 DM game that sold. In my next venture, I started a social network for students called UniHelp.de. After about two years, 70% of my university used it on a daily basis, but I failed to see the commercial potential in it. So, I founded a non-profit organization to take it over from me when I left the university…only to see the meteoric rise of Facebook from the sidelines a year later.
Realizing I was too late to the party for students, I quit my consulting job and started meinSport.de, a social network for amateur sports enthusiasts. However, around the same time, Facebook also opened itself up to non-students and grew too fast for us to compete with. We no longer saw a real reason for people to use our site anymore and eventually closed it down. In hindsight, we should’ve gone all in to create something like Runtastic or online booking of sporting facilities, but we tried a little bit of everything and made the classic mistake of being not focused enough.
Luckily around that time, the iPhone had just been released with the new App Store model. So, I called my old friends from high school and persuaded them to move from PC and console games to mobile. A few years later, we released three major titles around our own SoulCraft brand which have now been played by over 25m people. The caveat: Our users were mostly in the developing world, which made it hard to monetize at scale. So, no $1m+ revenue/day as some other gaming companies with similar numbers have seen. My point in all of these examples is that I had plenty of time to learn in the CEO role and I used that time extensively to make mistakes.
In my current role as Product Director at BCG Digital Ventures I get to build a new company with a launched product and completely new team running operations every six-to-nine months. Since joining DV, I’ve had the opportunity to complete this process across a myriad of industries in the B2B context, essentially serving as the ‘interim CEO’ (or GM as we call it). Over time, I’ve had several colleagues ask me for best practices for this role. In order to give thorough, properly structured answers I decided to collate them into the five points below.
One last note before we get started: Being a CEO is an art not a science. Please take everything below with a grain of salt. These are all things that have worked for me, but you will want to pick and choose what fits you and your team’s personal style.
So, what are the top 5 things to do as a startup CEO?
- Give Direction
- Shape Your Team
- Establish Structure
- Be Responsible
- Push, Push, Push
The importance of each of these parts will change based on the maturity of your startup. In the first three to six months, points one through three will be most important. Later on, points four and five will become more so. Let’s go through them one by one.
- Give Direction
This is probably the most obvious job of a Startup CEO. While your company’s mission may seem obvious to you, it’s very likely not to the rest of your team. To test how clear your mission is, try giving it as an elevator pitch to your parents in two minutes or less. You may think, “But my company is much too technical/complicated.” The answer is: Every good mission can be explained in two minutes using layman’s terms. Otherwise, it’s not a good mission. Pitch to anybody who even remotely wants to listen — it will help you get clearer. With feedback, your mission will likely change over time.
As a CEO, your job is to give direction where the company should be in the mid-term (one, three, or six months) and long-term (12–36 months) — not where it should be tomorrow. Ideally, you should try to stay out of running day-to-day operations as much as possible and find a great team to take care of the short term. Your job is to help shape the roadmap to achieve your mid/long term mission.
In the first few weeks, it’s always good to aim for the early wins, especially with a new team. This helps inspire your team’s confidence in you as a leader and foster a success culture. It’s important to have big ambitions overall, but to set a lower immediate goal to get started and celebrate success along the way. This is better than always running behind your goals and never being happy. Trust me, I’ve made this mistake myself.
As time goes on, you’ll need to constantly refine your roadmap and mission. Every three months, hold an all hands meeting to update your team on your mission and share how far along in the journey you are. Even if you only take 15 minutes to do this, it will help reshape your direction with new learnings and changing market environments. Make sure you don’t start believing your own marketing in which you probably tell everyone how great your company is. Every 12 months, gather your leadership team together with select employees to put yourself in the shoes of a competitor/upstart and deliberately gossip about how bad your company is and how you will disrupt it.
What’s even harder than shaping the direction of your company is actually sticking to that direction. It’s easy to end up being reactive to everything pushed your way. Your main job is not to handle requests perfectly, but to drive your own agenda. Nobody else will do that for you. You must steer your company in the direction you want it to go. Don’t allow yourself to be driven by external circumstances or what others (including stakeholders/investors) want from you. This includes your own customers. Listen very actively to them, but don’t blindly follow their requests. Both qualitative and quantitative research can lie and may not be statistically significant; use it only as an input for your decisions and to understand the motivations of your users.
As a CEO, you’ll have to get used to saying no a lot. Your company’s success will be determined more by your ability to say no than your ability to say yes. If you feel you’re stretched too thin, you probably are. It’s better to do five things well than 50 things mediocre. So, change your strategy and focus, focus, focus! Communicate politely why you can’t handle a request and then hone in on what you think matters.
To make these prioritization calls, it helps immensely to clearly define success KPIs and continually ask yourself if your activities are bringing you closer to achieving those goals. You should only have three to five KPIs — even better if you only have only one. To quote one of my colleagues, you should always ask yourself: “Will it move the needle?” If you start a scooter sharing company, an example of your one KPI might be number of rides. Success KPIs will also help your team make decisions every day on your behalf.
- Refine, refine, refine your mission until you can easily pitch it to someone like your mom in under two minutes. This will help you get clarity about your mission.
- Break it down to a high-level roadmap and over-communicate that to your team. Mission and roadmap together are what I call direction.
- Formally update your mission/roadmap at least every three months. In the beginning maybe even monthly.
- Make the direction tangible by defining the one to five success KPIs which will really make a difference in reaching your goal.
2. Shape Your Team
You can have the best mission in the world, but without a great team to execute it you’re not going to go anywhere. Obviously, you need to try to hire the best team you possibly can, which is always easier if you’ve raised a lot of cash. In this case, simply work with a recruiting agency who will bring you potential leads for a fee of around 20–25% of the position’s yearly salary. If you’re a ‘normal’ startup founder, you’ll need to get a little more creative. Your own network will be the best resource for potential team members, but also don’t shy away from actively reaching out on LinkedIn.
It also helps to search ‘Tier 2’ cities/countries/universities for talent. These candidates are often as good as those from the usual sources, but you’ll have a lot less competition trying to get them. Think about it like this: Candidates from big companies/universities are used to working in environments with certain resources and perks. Tier two candidates are not as spoiled and know how to win with limited resources.
Once you’ve found your potential candidates, be sure to interview them yourself, especially your C-level/management team. Don’t just rely on your gut; have others on your team interview them too. Your initial hires will shape the culture of your company and it’s important to get this right. Doing the hiring yourself will force you to frequently pitch your direction. It will also allow you to speak with lots of talented people in your given industry, which will give you tremendous insight. Use this opportunity.
In a typical startup team, you have the following main positions you need to fill: product (CPO/CTO), go-to-market (CMO/Head of Biz Dev), and maybe operations (COO/CFO) if you are not going to do this yourself. How you draw the lines between these teams should be based on the people you have at hand. Hire great people and then shape their responsibilities around that, not the other way around. We will discuss this more later on when we discuss creating the right structure.
Once you’ve made your first hires, watch how they perform and interact with the rest of the team over the first few weeks and months. If someone fails to perform, the earlier you let them go the better. If in doubt, err on the side of cutting them loose. You started this journey to build something great, dragging along underperformers will cost you too much energy and send your team the wrong message about performance culture. You will be afraid to fire the first person — I certainly was. But I’ve had to do it a few times by now, and I can guarantee you that the rest of your (high performing) team will ALWAYS appreciated the move and will forget about it within a week. Do it.
Culture is a good next topic in the context of shaping your team. I used to think team culture was something that came from working together in a certain way and did not require special attention. I was wrong. Intentionally cultivating the right culture is critical. You should invest your time in this at the beginning of every new venture. Hold kickoff workshops, even if only for a few hours, where each teammate tells a bit about themselves. A good format is to use the following three talking points:
- Background on what each person has done.
- Things you should know about each person to work well with him/her (we call this “stinky fish” at BCGDV).
- Two truths and one lie: This always nicely brings up interesting hobbies, etc.
As the CEO, you should share your beliefs about culture. Let your team know it’s important to have a good atmosphere and that it’s not just about results. Here is a slide I use to get the discussion going, but you should also ask your team for input.
The most important thing here is that you must live the culture you want to foster. It’s important to be open and approachable, but you will also need to establish and exemplify the attitude people need to bring their A game. This may mean you will not be friends with everyone, but that’s ok.
Don’t demand anything from your team you aren’t willing to give yourself. If they have to stay late, you should too — even if you don’t have anything to do. Go through the valley of despair and celebrate your successes together. If organizing social happenings isn’t your thing, find someone who is a social magnet and delegate the task to that person. Your job is to give a small speech on these occasions to reward and inspire.
Don’t fall into the trap of micromanaging. The shorter term the goal the more you should let your team handle it. Try to manage where you are heading in the next one to three months. Create a culture where you can disagree easily based on sound arguments and encourage people to challenge your decisions. Sometimes, I purposely make an early decision because only then will people wake up and give counter arguments. If the team is able to persuade you with good arguments, publicly change your opinion for everyone to see. Your job isn’t to be right all the time or know all the answers. It’s to have the ability to see greatness even if it comes from someone else. For the success of the company, it doesn’t matter where the great idea came from.
For this to work, take time to have 1:1s with every new employee and tell them your pitch for the direction of the company/culture. Ask what they want to get out of this journey with you and find out more about their ideas. Treat them like a person, not a cog in the machine. This will make it easier for them to approach you later when they have input. To enable co-leadership, you’ll also want to schedule 1:1s with your core team every few weeks. Have these meetings even if you think there’s nothing to discuss. Otherwise, it will be easy to get lost in the day-to-day. Every quarter, you should also hold a leadership dinner where you can talk for longer in a nicer setting (and with alcohol :)). Have a running agenda that allows everyone to propose topics. Nothing is worse than a group of yes-sayers around you who don’t correct your mistakes.
- Hire a great team. Shape the position after looking at the people, not the other way around.
- Actively invest in shaping team culture. This includes a culture where the best argument wins — even against you.
- Correct your hiring mistakes early when needed.
3. Establish Structure
Now that you have the right team in place, the next step is to establish a structure so they can perform like a well-oiled machine.
The first part of that well-oiled machine will be to give the right tasks/roles to the right people. The best coder may not be the right choice for the CTO position — maybe it’s good to keep him/her in a more IC (=individual contributor) role and leave the management to someone else. I’ve had good experience hiring people a bit too “junior” (but talented) and giving them more responsibility than they had before. They will be very motivated to fill up the shoes and will also be more hands on, which is what you need as a startup. Learning on the job is the best training they can possibly get.
With people in the right roles, you will need to encourage them to take over responsibility for their role. They need to become decision-making capable (“entscheidungsfähig” in German). If you made someone a CPO this person should own the roadmap and drive product decisions. If someone is the CTO, they should have the last word in terms of how to build the product. Companies are not a democracy and making this clear from the beginning is helpful.
Nothing is worse than pretending to have an ‘everybody’s opinion counts the same’ culture and then making a top down decision anyway. Make it clear who is responsible for what decision (who is the ‘decision captain’ as one of the CEO’s we hired for a DV built company nicely put it) and then this person should actively reach out to the team and get their input. Treat them like adults. Get everybody’s input, but make sure they don’t expect to vote on something where you don’t plan it to be a vote.
Some hierarchy is needed for speed. A good rule of thumb is that if you have more than five to six reports you should think about creating more hierarchy. In a startup you will always make decisions under uncertainty so there is no way to find the ‘right’ decision if you just discuss/research long enough. Nobody knows the answer upfront for sure. That’s why enabling your teams to be ‘decision-making capable’ by creating clear roles and responsibilities also includes creating a culture where it’s ok not to be right from time to time. Because when you (or your leadership team) make calls under uncertainty you will sometimes be wrong. However, it’s better to make a wrong call and realize it quickly than waiting months for a decision and then potentially still being wrong. Even worse is being forced by the circumstances into a decision and not actively driving it.
If you’re working for a corporate and reading this: No this is not a confirmation that your current system is great. Very likely your company does not include/value the opinions of your most talented employees enough. From my experience startup teams tend to be ‘too democratic’ while corporate teams are way to hierarchical. Find the golden balance ;).
One good way to make decisions and share this decision with all stakeholders in the team is to establish a regular meeting structure. I’m a big fan of establishing a weekly or bi-weekly meeting schedule with the people/teams who report to me. This takes the craziness out of the startup life and gives everybody an option to have your time on a regular basis. This is especially important if your calendar is busy and you can’t just meet whenever it’s needed.
I’ve had good experiences using a running agenda on a Confluence page where everybody can put topics to be discussed to make the meeting more productive. These meetings should be decision focused and not reporting what has happened. Make sure the discussions are on the right level: Aim to make one big decision right than 100 small ones. Don’t have more than five to six people in the room to be able to have real content discussions. However, treat this only as a baseline of meetings. You will need to talk more for certain topics. If you have serious disagreements in these bigger meetings, stop, acknowledge the disagreement and continue to do the discussion a little later in a 1:1 setting. It will be much harder for you and your discussion partner to agree on certain points if you have an audience listening in.
You can adapt these meeting cycle over time — a more mature startup needs less of those meetings. Normally I start with a leadership meeting and meetings with every workstream on a weekly basis (e.g. with Product, GTM, etc.). Later, maybe only having the weekly leadership meeting is enough. You just need to be careful that not everybody on the team starts adopting that approach and only meets once a week. Very likely, if you’re on the working team you should just clarify points with your colleagues immediately and not wait until next week. It’s a matter of altitude (“Flughöhe” in German). The decisions of a CEO can mostly wait for a few days — the topics of the operational team should not.
Another element to increasing the productivity of your team is to encourage the usage of the right tools. Make sure they use a proper Todos, Notes app, etc. This task can be delegated to the CPO/CTO or somebody else but you need to make sure this happens. Tools can have a tremendous effect on the productivity of your people. While you’re at it, check out AllDone.app which I am developing right now as a hobby. It’s a work in progress, but already great :).
Another important part of team productivity is to be approachable. Sit with the team. Only when you are there can the team use you and you see what’s going on. I’m also not a big fan of remote work. In a startup, you need the random interactions between all team members that happen at the office. Having a regular meeting schedule doesn’t mean you should only meet and talk then. The magic happens when smart people sit together in a room and you can just yell an idea out and get immediate response and feedback loops. This won’t work when you’re at home.
- You want your team to run like a well-oiled machine. To achieve, this clarify roles and make your team decision capable.
- Empower your team in a way that you are not needed at least some of the time.
- Success is when you can go on holiday without things breaking down. It’s not when you’re so important to the team that they cannot live without you.
4. Be Responsible
As the CEO, you are responsible for everything in your company. Even if you delegate tasks, you are responsible. When you notice something is off, do something about it. If you have to address an issue related to a task you’ve delegated, the trick to avoid falling into the micromanaging trap is to talk privately with the manager responsible for the specific problem and not publicly shame them. This way, the manager learns and you empower the team moving forward.
That being said, some jobs are just for the CEO (“Chefsache” in German). Fundraising is one of those “Chefsache” tasks. Most investors don’t really know the markets and/or technology they are investing in. They mostly rely on market trends (“If everybody invests there, I cannot be fired for doing this.”) to pick a market/technology and then base their individual investment decisions mostly on the team they are investing in — next to business model and GTM approach which is easier for them to assess.
Since you’re the representative of the team, it’s your job to make a good impression on the investor. One tip I cannot stress enough is to always talk to several investors at once. You need to create a sense of urgency to get good terms. Having competition is the only leverage you have to persuade your potential investors to actually close the deal. Otherwise, it’s only smart for them to wait longer. Always do this even if you seem to get along with your investor very well.
Once you’ve closed your investment rounds, your investors become some of your most important stakeholders and will probably end up on your board which you will need to manage personally as well. Use the board as a sparring partner. I know it’s tempting to make nice slides and paint a bright future for the board, but they will appreciate if you openly discuss (selected) real issues with them. If they contribute to solving a problem they will get much more emotionally attached to your company. Also, nothing is worse than being surprised by bad news. Disclose problems early and at the same time propose options to mitigate them. Be open to their suggestions, but don’t blindly follow their advice. In the end, you need to make the call and drive your own direction.
You will probably have a very important key customers who make up or control a significant part of your revenue, especially If you’re in a B2B situation. Those people are even more important than your investors. Spend time with them and build a personal relationship. You need to have such a relationship with them that they will personally call you if something bad happens before they cancel your contract or stop using your product. You will need the chance to make it up to them. In the end, investors will always be happy if the money is right. If your key customers are gone, even the nicest investors will not put more money into your company.
With all the structural work, stakeholder management and other strategic topics, the best startup CEOs still find the time to do hands on work. You will need to spend time doing things that don’t scale, especially in the beginning. If needed, personally handhold the first 10–20 customers until they’re really happy. Only then should you think about how to make this scalable and economically viable. If customers aren’t happy for some reason, personally investigate why and talk to them. Sometimes, you have to force success.
Your job as CEO is also to figure out the complicated stuff, especially if things don’t work out as planned. Have the courage to do a real pivot if needed, and not just a minor optimization. But first, find out if you’re doing it wrong or if you’re doing the wrong thing. Remember that you can also be too early to the party — timing can be everything.
One last point especially for bad times: Go on holidays, even if only for a few days. When things go wrong, it’s too easy to put on blinders and just move faster in the same direction. This is very likely wrong since you may also need to change direction. You will need the mental distance from a holiday to make such difficult decisions.
- Some jobs are just for the CEO. Fundraising and stakeholder management are part of this.
- If you see problems in your teams, talk privately to the responsible person and don’t publicly shame him/her.
- Don’t just be strategic — be like the greatest leaders in history who stand with their armies on the front line. Do the hard jobs. If you only want to work strategically, go to a corporate :).
5. Push, Push, Push
In the beginning of any new startup the points above are probably more important, but over time pushing the team will become the most important thing and will massively influence the success of your venture. This is especially true after the initial enthusiasm has worn off, but the big money is not yet there. Pushing the team can mean pushing in terms of speed, quality, and/or cost. As the CEO, you are uniquely positioned to do this.
Let’s step back a second to understand why.
There is not a single company who managed to keep their dominant position over a really long time. If you look at the most valuable companies in the world, only two out of the top 10 by market value were founded more than 30 years ago. Yes, sometimes the reason is technological change, but why haven’t those companies been able to drive this change themselves — or at least react to this change accordingly? They have the customers, they have the cash, they have the talent.
Why is it, then, that they all lose against companies who started small and had none of the advantages above? There are a thousand reasons and many people have written books about it. The point I want to emphasize is that every organization has the tendency to optimize for themselves. The ‘insiders,’ if you will. In a way, this is great. Otherwise, companies wouldn’t share their success with their employees. It’s only human to try to optimize for the people around you. The downside is that, over time, your employees will get a little spoiled. If something goes wrong they will not simply focus on how to fix it, but cry for more resources. The focus shifts away from the external customer to the internal organization. Even promotions can become more dependent on how your colleagues grade you rather than on the actual impact/value your work had in the market with your customers.
This is different if you have a real founder who is hungry for the big payout. As a startup founder you are incentivized based on the valuation of the company which is mostly depended on actual traction of your product with external customers. (Yes, there is also craziness happening on the startup valuation side, but that’s another problem). So, if you have to sacrifice a bit of convenience for the success of your company, you will. To be clear, this is not a recommendation to burn your team. You are in a marathon together, so if you burn them out — and yourself! — none of you will make it to the finish line. This is a recommendation to give (vested) ESOPs (employee stock ownership plan) to your leadership team. Let them participate in the success of your venture. This way you’re all in the same boat and share the same mindset.
Not doing it alone also brings me to the last point: Pushing the team forward will cost a lot of energy. Make sure to have someone as your sparring partner. Ideally this would be your C-Level/co-founders, but sometimes this can be a junior person as well. Don’t be the lonely wolf having to decide and push on your own. From my experience, having two co-founders is probably best because you can’t have a tie when you vote on a decision.
- Push for speed, quality, and (less) costs.
- Do ESOPs with your team to all share the same output/value driven mindset.
- Don’t do it alone.
I hope this article has helped give an overview about the role of a CEO in a startup. However, knowing all of the points is unfortunately not enough to make you successful. In the end, you will win or you lose based on the quality of your decisions. You can check all the boxes, but you will still need to make the right calls under uncertainty. For this you need experience, and experience means making a few mistakes on your own — maybe just different ones after reading this article. Due to the uncertain nature of startups, at least 50% of any real success comes down to luck anyways. So, do everything you can to optimize the other 50% and don’t forget to enjoy the ride.