Being a startup CEO is the most exhilarating yet challenging of roles and brings new learning every day. The role of CEO / founder in a startup is probably one of the most diverse jobs it is possible to have. There are many hats you’ll have to wear when you are in that chair to make sure things keep moving in the right direction. You do everything from buying the printer paper to paying the bills to developing the strategy. But the diversity is also the reward as you see your whole business grow and appreciate what went into that success. In this series, I will consider some of the things I have learned over 35 years in and around startups and share some advice for new CEOs.
This month, we look at some of the key issues in running and growing a business once you have passed that very early startup phase.
One of the key roles of a CEO is to fire up the staff and investors. An element of charisma and a dose of Steve Jobs’ ‘Reality Distortion Field’ is required. “The RDF was said by Andy Hertzfeld to be Steve Jobs’s ability to convince himself and others to believe almost anything with a mix of charm, charisma, bravado, hyperbole, marketing, appeasement, and persistence.” You have to be able to do this to some extent in order to keep the team working, under pressure, in times of duress. You need to be able to do this to keep investors in line and to stop them meddling (too much) in your busines
If you are a young CEO, starting a business will make you grow up fast. You may have started the company with colleagues, but as CEO, you have to make the hard decisions. And it’s lonely at the top. Find a mentor if you can, as this will really help you through the tough times.
When starting a new business, you need all the help you can get. Any leg-up will be helpful. Getting a good mentor early on should give you a considerable advantage over CEOs without one. Mentors have usually been there, done that, and they can help you identify potential problems and either avoid them or overcome them. Mentors can be anyone; a successful family friend, an investor, someone from the local incubator. Find one and use them.
As CEO, you’re usually in it up to your neck! Investors, customers, HR, and development issues all come your way, and all need resolving. Handling the stress of all these competing issues is a skill CEOs of small startups need. Until you are financially strong enough to hire the right skills, you have to cope with these issues. Mentors might help. Investors might help. But the buck stops with you!
Starting a business is relatively easy; scaling a business is much, much harder. From one to two to ten people is easy to get your head around. If you group people together in a tight space, you can have a good feel for what each person is doing and how well they are contributing. You may have them all report to you directly, so there is no need for a hierarchy.
But once you get much beyond ten, it becomes impossible to know everyone’s work, workload, and achievements. Scaling the human resource requires a different skillset to starting from nothing. Some CEOs can move easily up the scale, while others need additional support during this process. Scaling often means opening sales activities in new international markets. The CEO needs to be actively involved in this expansion, but they need to be sure the ‘home market’ is not neglected. Scaling will also usually require new investment rounds. The CEO will need to lead the sales pitch, meaning their attention will not be on the day-to-day business. At this point, the business should be doing well, or scaling would not be an option. So, hiring a Chief Operating Officer (COO) at this point can make a lot of sense. The COO’s focus will be to look after ongoing business operations, while the CEO focuses on new opportunities.
As CEO, you carry the can for everything that goes right and everything that goes wrong in your business. You are under pressure from investors to deliver what you pitched them. From customers to deliver what you sold them. And from employees to pay them! You have to be highly resilient and be able to bear up under this pressure. When things are going well, you get to enjoy the privilege of leading a fantastic business. When things are going wrong, you have to show ‘what you are made of’, make some hard decisions, and keep the business moving.
David Tee has over 35 years experience in technology development, entrepreneurship and international consulting. He has founded and worked in Cambridge IT startups, consulted for a Silicon Valley-based advisory firm, and supported the development of innovation-focused incubation services across the world. He is currently on assignment in Turkey, and lives between Europe and India.