The job of a startup CEO

I hope you all had a great start to the new year! Things in startup land have ramped up quickly after the Christmas season. Today, I would like to cover a topic I discussed with several founders last year: the job of the startup CEO.

In the early days of any startup, things are chaotic. Everyone rolls up their sleeves and helps wherever she/he can. Goals are somewhat clear to everyone; Processes sometimes less so. All push ahead. And they step on each other's toes from time to time. This is fine, as long as things move forward in the right direction. Titles exist, but are, well, only titles… When I launched my first startup, people asked me if I was the ‘CEO’. It seemed weird. I felt more like being a ‘Chief Everything.’ This was a startup, after all, not some big corp.

The true meaning of titles only emerges later. When a business matures, the respective responsibilities of individual team members do so, too. It is an essential evolution of any business. Sometimes, it happens naturally, and sometimes, it creates friction. Much has been written about this. In this post, we focus on the CEO role.

The 'Big Eight'

The job of the CEO comes with clear responsibilities, let’s call them ‘the Big 8’:

Always make sure there is enough cash in the bank

Set and communicate the vision and strategy of the company

Hire and retain the best possible talent

Go out and be connected in the domain your startup is active in

Run great board meetings

Design and adapt the organisation

Tackle urgent matters in due time

Be a leader...

When observing some of the more successful CEOs I have had the privilege to support, how they manage this ‘to-do’ list is nothing short of impressive. Great CEOs will and often have to do a lot more than these things, especially in the early days. And that's normal. But as the company grows, the CEO should delegate all other tasks to the team. CEOs are evaluated on the Big 8. That’s it. These are the things you have to do well to be a great CEO. They require to consistently take the company's pulse. Let me share a few things I observed.

Enough Cash in the Bank.

This is clearly job #1. As a CEO, it is your job to set up and track annual budgets, and make sure there is enough cash in the bank at any time. You usually manage a handful of financial metrics to see and predict how the engine runs. Those vary from one business model to another, and sometimes they do not always reflect cash flows accurately. While bookings are important in the mid to long run, do not forget recognised revenues. Tracking operating losses is key, but do not forget to factor in capex. And so on.

Set the Strategy.

One of my most successful CEOs blocks 50% of his working days. In the other 50% he takes meetings. His ‘free’ time is there to work on his todo’s, including strategy. He once told me: ‘Some of my managers spend all their time in meetings. I don’t understand how this could possibly work. They need to have some time on their own to digest the stuff and condense it into a clear and actionable strategy. Otherwise, they will not only be stressed out, but the outcome will be mediocre. In an ideal world, I would block more than 50%, but I never got there.’ I don’t think that a 50/50 ratio applies to everyone. However, CEOs need to ensure they set aside the time to do their work properly.

Once the strategy is set, sharing it regularly with the broader organisation in all-hands meetings is important. Every quarter feels like a good cadence.

Hiring.

Recruiting and retaining top talent is obviously important. But it is hard. And in a startup, it is even harder. You have to go the extra mile. HR can help, but you can only outsource it partially.

When it comes to engagement, CEOs need to be involved in these initiatives. She/he is the leader, the one employees ultimately follow, and one of the key reasons people join an organisation. Churn is inevitable, of course. You just have to factor this into your recruitment targets. Communication is probably the best remedy to lower it. Some stuff I have observed that works well is: Regularly conduct random roundtables of a few employees to ask for ideas. Make sure all-hands meetings include Q&A besides status updates. Hold CEO councils when you have a tough decision to make and want a cross-section of opinions.

Be in the market.

Nothing interesting happens in the office. CEOs must spend time in the market: Get to know competitors and potential acquirers well. Spend time with customers and channel partners. Actively engage with industry leaders. Walk the floor at conferences from time to time. Etc.

Manage the board.

CEOs should think of the board as another team, with additional brains to pick from. More on this here.

And, like all teams, boards need leadership. Otherwise, they don’t work well. Early on, it has to come from the CEO; later on, it usually comes from a board member who steps up, or the chair when one member officially takes on the role.

Design and adapt the organisation.

The aim is to build a high-performing organisation of people with a doer mentality. This takes one or two years and some AB testing on what works and what doesn’t. Mistakes are inevitable.

Three important things I have seen are: be agile and double down on what works and change quickly what doesn’t; don’t be a bottleneck but try to be open and efficient with feedback; delegate and give people enough space to try stuff.

Be ready to tackle urgent matters.

Urgent matters and tough decisions come up ALL THE TIME in startups. Block yourself the time to deal with them quickly.

Be a leader.

Finally, the hardest thing about being a CEO is to be a leader. This is the most important of all. You need a thick skin and a cool head to stay objective at all times. Take the time to observe and act upon it once things are factual and clear. And if you want to attract world-class talent, you gotta be inspirational, persuasive, and persistent.

Startups are overwhelming, so keep yourself fresh. Get one or two mentors, a coach, or join a CEO peer group, whatever works best for you.

I celebrated the start of the new year at a friend’s place in the Swiss Alps. We were 10 college friends. It was much fun as I haven’t caught up with some since college. Seeing the exciting and diverse things people with the same degree go out to do after college is fantastic.

Life is awesome,

Yannick

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