Reader beware: This is a beefy piece that spans my 18 months of experience as a first-time CEO. I’ve split this piece into a series of 3 published on Medium. Here are the links:
- Part 1 of 3
- Part 2 of 3
- Part 3 of 3
Why I’ve Written This
Ten weeks ago I transitioned out of the CEO role at a startup I co-founded 18 months ago. I am sharing my thoughts here in at attempt to distill what I have learned from my first term as a startup CEO. It’s a cathartic exercise for me, and I hope you can derive some value from it and add your 2 cents to this list of considerations. Running a company is damn hard, often lonely and possibly the best way to learn about yourself if you so desire – the good, the bad and the ugly. Transitioning out has been humbling, liberating, confusing, exciting and probably some other “ings” and has provided me with the excess brain capacity (and time) to get introspective. I am taking these learnings forward with me with the aim of coming not only a bit more seasoned but also substantially more prepared to all endeavors I choose to pursue from here on out. So, here are some things I’ve learned…
1. Be the Expert, NOT the “yes man”
I landed on Ace Ventura as best Jim Carrey character to emulate as a CEO. He was driven by his passion, his insanity was alluring and he did not let anything stand in his way to get shit done.
\ˈyes-ˌman\: a person (especially a man) who agrees with everything that someone says; a person who supports the opinions or ideas of someone else in order to earn that person’s approval. As a CEO, you have access to really smart people, some of whom serve as instrumental supporters for you and your business as investors, advisors or mentors. You also have the responsibility and difficult ongoing task of extracting maximum value from these resources. I failed to do this. Set yourself up for success by being a proactive, vocal leader and an ever-striving expert on your business, not a yes man who is all ears and along for the ride.
What do your supporters offer you and your business?
Value — Some combination of their valuable time, mental energy, networks, emotions, expertise, reputation and possibly money that they invest into you and your business.
Risk — Their own wide-ranging opinions based on their experiences. With these come the potential for off-basis suggestions, inherent biases and unrealistic expectations. Protect yourself from whiplash.
Do your best to understand and communicate your situation and its similarities / differences as compared to your supporters’ experiences. It is human nature that we pull from what we know, it’s easier. That does not mean it’s appropriate or a sure-fire recipe for success. At the end of the day, you are receiving data. You must decide how to apply it to your business.
Top 3 Things I did Wrong
Played second fiddle (more like fourth fiddle) — By this, I mean I failed to lead my supporters at times given the lack of confidence I had in myself to do so. “They’ve been here before. Surely what they say is gold!”
Felt the responsibility and pressure to satisfy/impress — I focused more on proving my worth rather than establishing myself as the expert leading them to provide maximum value.
Got complacent and lost a predictable cadence — Sure, I would send email updates, but I got less pointed with my asks, did not proactively call meetings and sometimes found myself communicating reactively. Time between communication increased, frequency of interaction decreased and confidence in me ultimately deteriorated for some.
Bottom line — I did not set the stage or provide the playbook to foster maximize the valuable of my support network.
6 Takeaways for CEO’s
Lead with passion — This is how you keep your supporters excited, engaged and on their toes. A little bit of crazy goes a long way. Don’t make supporting you another boring chore.
Define and nurture these relationships — The expectations, roles & responsibilities, accountability. You must lead this and not let it slip. At the end of the day, your supporters are working for you, not the other way around.
Be results-oriented — As CEO, you have not recruited your supporters so you can stroke their egos and be regaled. You have done so because you believe they can help you with your job, which is to achieve results for the business.
Be the expert — No investor, advisor, mentor has as much knowledge of what you and your team are doing every day to build a successful business as you do as CEO. You do not look for them to provide vision. You leverage their expertise for fresh perspective and to tackle problems at hand.
Over-communicate — Given that there is a knowledge disparity, as CEO, it is your responsibility (and only your responsibility) to close the knowledge gap by being an excellent, proactive communicator to the point of annoyance.
Be your best supporter — Learn to listen to and trust the advisor who’s been with you the longest – your gut.
2. Be Reckless
\ˈre-kləs\: marked by lack of proper caution; careless of consequences Do you view the above definition as positive or negative? If you have taken a startup CEO position, you likely have above average risk tolerance. Live up to it and throw caution to the wind!
It’s not just a school of thought, it’s the mentality that you as CEO must embrace (and get your team to embrace) to execute on the business. Create your own urgency and use it to get shit done. Launch your product FAST, go after customers FAST, test distribution channels FAST and make your mark FAST (before someone else does).
Don’t be scared to try anything or reach out to anyone. Don’t wait around for others to notice you. Toot your own damn horn and know that there’s only upside in doing so!
Mistakes as an Asset
When you’re moving fast, you will make mistakes. These mistakes may be painful and costly at times, realize that. In the moment, they will, of course, seem more severe than they likely are. They also may be the best seedlings for learning fast and moving toward getting things right(er). And, most importantly, do not just fail fast, fail forward. Leverage your mistakes, your failures, your pain as motivation for continuous growth and improvement. Do this and nothing can hold you down.
3. Raise with Caution
I know I just said to be reckless, but when it comes to bringing outside capital inside your business, be completely dialed in. Here’s how…
Oh Jean-Ralphio, oh many a startup CEO (including me). You get that first chunk of money into your bank account somehow (not always from selling to actual, paying customers), and you’re off to the races. But, hold up… Have you trained enough on your own dimes and sweat to get you and your business ready for the race? What kind of race is it? Do you have a line of sight to the next stations at which your train will be arriving (and when), or are you on a pulsating rocket ship that just needs to be gassed up for it’s trip to the moon? Be contemplative and real here because the second you take that money (which likely is not customer money), the clock is ticking.
Get Yourself Comfortable First
I believe I raised money too early. Basically, I was uncomfortable (for a long time) with our not having any semblance of product-market fit prior to raising our first round and for several months after as we were burning investor cash (and not generating revenue). And, guess what, after you raise money, talking about looking for product-market fit is not something a lot of investors are all that interested in hearing from you. So, how could I have gotten myself comfortable?
By Determining What’s Meaningful
We had built an MVP and put it into private beta with a couple hundred unengaged users when we took our first slug of outside capital from friends and family and angels. That’s a pretty low hurdle to get over. How do I know our private beta users were unengaged? Because they were doing me a favor by signing up and giving feedback, not raving about how the product was solving a problem for them, and they weren’t paying me! In hindsight, that is not a recipe for proper demand validation or a compelling traction story. Basically, I had shown that I could pull together the resources to get a product up and out the door, but I had bluffed on the level of demand and my understanding of and ability to acquire customers who would be drooling all over themselves to buy (or even sign up for) our offering. We did not have any revenue. I had a quasi clear (read: unproven and loosely defined) path to it, but I was not aggressive enough in pursuing it. In short, I had not adequately validated real demand for our offering and had no sense for the unit economics of our business. Raising money too early (subjective) puts your company on a different course, maybe not one you even want to pursue and can actually make failing fast more difficult IMO. This may be ok for some, but I’m a better truth-teller than shit-seller, and I operate with more confidence with a bird and real data in hand. By not being solely focused on my (would be) customers, I missed out on a vital opportunity to:
Really hone in on, adjust and communicate our value prop in a repeatable, compelling fashion
Make customers delighted to pay me by living their pain and solving it the right way
Have a clear path to world domination that would give investors wobbly knees and open checkbooks.
Empathize with Investors
Not all investors are created equal. It’s on you as CEO to understand what type of investors you want/do not want and why and what each investor you’re corresponding with truly wants from your business as one of their investments. Be clear on what type of business they believe they are investing in, and if it doesn’t jive with the type of business you are out to build, you may not belong in their portfolio. It really does seem that there are some investors that are just in it for the fun and to be involved with something cool. Whether that’s true or not should not matter one iota to you. If you take money, you are in business to return it and then some. That’s both fun and cool for all investors! My friend and fellow Startup CEO Adam Rentschler has put together this great deck that I hope will help you understand the investor-entrepreneur relationship from a different perspective and how you can approach it with empathy and intelligence.
Know Your Shit
Before bringing others along on this joy ride, be honest with yourself about where your business stands. Know both what you know and what you don’t know. Know what’s primarily responsible for keeping you up at night. It’s certainly okay (and possibly welcome) not to know things. It’s not okay to not be striving to figure them out as quickly as you can. Investors love to ask questions and poke holes; they don’t just love it, it’s their duty as an investor. You should crave their inquiries and be confident that you are the expert on your business. Here’s a braindump of questions you should be asking yourself and formulating answers that you can articulate in your sleep:
Learning — What hypotheses did you set out with? What have you proven/disproven? What have been your key learnings? What are your hypotheses now?
Executing — How have you taken your learnings and acted upon them? What have you really accomplished to date? Have Real milestones that show you are a de-risking machine!
Planning — Why are you raising money now? What are you planning to do with it? I suggest a financial model with hiring and marketing plans. I’m happy to help you build it if you’re struggling with this deliverable.
Now, go out and raise some money or don’t just yet (or ever).
4. This is War
Please bear with my hyperboles here, this is fucking war soldier!!! Approach it as such. Let’s see what you’re up against.
Your Problem — The Objective
Identify a problem, the existence of which you find to be so fucked up that you simply can’t stop yourself from acting. Inaction would be unconscionable. You’re bringing it up in every conversation, subjecting yourself to its awfulness, starving to connect with the people it’s preying upon to go deeper with it, and imagining/preaching/creating a world where nobody has to feel the pain it causes. This is the level of irrational enthusiasm you need to have for your problem because that is what will catapult you out of bed every day to sustain your assault to ensure its demise and your business’ success.
Do yourself (or those you convince to join you) the disservice of solving a problem you’re only ho-hum about. I fell into this bucket, and, believe me, it’s an easy one to drown in. You have to keep pumping yourself up to stay afloat, which is no way to prosper. I want you to be standing on top of tables, screaming at people, over the top maniacal about the problem you’re solving. That level of crazy is infectious, intriguing and a mother to beat down (and you will get severely beat down along the way). Your problem, that leach of all that is good, is what keeps you getting up.
Here are some questions to run your problem through:
What are the negative consequences of its existence?
Who specifically is impacted by them?
How big of a deal is it for those victims? How are they currently coping Are they screaming out for mercy or resolved to apathy?
What does a problem-solved world look like? How much better is it in measurable terms?
Are you creating a problem to fulfill a solution you want to create?
How is your problem currently being addressed and by whom? Why is that not sufficient?
Your Market — The Arena
Know what market(s) you are participating in and all that it encompasses — the history, the players, the biggest challenges (your opportunities), the pecking order, the alliances, who’s sued who, how business gets done, give me some more… I do not subscribe that you have to be in a market where you have domain expertise. It can certainly be beneficial and radically reduce your barriers to success, but being a wide-eyed noob can bring its own benefits. As a market noob (new entrant), you are starting in the basement and have a shitload to learn. It’s your responsibility to become a domain expert by throwing yourself in full-bore. Study. Question. Participate. Connect. Impact. Evolve. If you felt your market were fine just the way it is, you likely wouldn’t be there in the first place. So, remember, you’re here to shake shit up!
Your Customers — The Citizens
The tribal elders, the women and children, the taxpayers – your customers are your key constituency. You must listen to them, you must serve and protect them and you must get paid by them. They are the court of public opinion. Without them, you are nothing. They are bigger and stronger than you, but they are a victim of your problem. You, yes YOU, have taken the reins to be their savior. Act like it! You must balance leading and following them. Be a benevolent and inspiring force for good in their life and recognize that, without them, your tour is up.
Your Competition — Propaganda
Competitors are mere distractions in your arena and by focusing on them, you only make them stronger. Be up to speed, aware and vigilant of the competition and the noise they’re spreading in your market. Collect intel on them, liaise with them and see how you can use them to your advantage, but do not obsess over them. Remember, the problem is your ultimate objective. Maintain laser focus on eliminating it while being a hero for your customers. That is how you will shut down your competition.
5. Compromising as Your Craft
Obvious: you have to make compromises in business to manage your resources, your bandwidth, your priorities, your sanity. As a startup CEO, you are often resource-constrained across the board — human, financial, time. You need to be able to reach compromises to make the most of your limited resources. You also need to coach your team in the craft of compromising, on both an individual and aggregate basis (across roles and teams).
At different stages, you will have to make the tough compromises regarding your team (human resources), product (IP), finances (lifeline) and time (planning vs. executing). Careful, efficient consideration and cost-benefit analysis are required before you select a compromise. This is not a zero-sum game and there is no arbitrage, so understand and articulate the trade-offs (sacrifices) you are making and have conviction in your decisions.
There is no such thing as a minimum viable team. I have to admit I didn’t fully buy in to the importance of team before running my own company. That now sounds ridiculous to me, but at one point, I questioned the need of Co-founders and top talent. I figured I could muscle through on my own. I figured everyone was coachable. I figured wrong. Let’s start with your founding team. Dev, design, sales | hustler & hacker | mouse-trap builder, biz ops, go-to-market. These are roles you need to have covered on your founding team in some combination, which vary dependent upon what kind of business you’re in. What doesn’t vary is the need to contemplate and construct an aligned founding team. Noam Wasserman of Harvard Business School has been studying Founders for 15 years now. He got on this beat by questioning why companies with seemingly unfair advantages fail. They may have a kick-ass product in a big-ass market with a smart-ass team, yet things didn’t go as planned. Money was burned, products were sunsetted and companies shut down. What gives? Noam has found that 2/3rd of these failures are directly attributable to broken team dynamics. Guess what – these dynamics are in your control and the onus is on you to consider them before and during the life of your business. Noam has put together a survey here, which goes beyond just building your team into what kind of company you are really out to build (and why). Positively, he’s found that this failure can be mitigated by doing your work up-front by having the hard conversations and making the compromises that might contribute to setting your company up for success. Beyond the founding team, you need to construct and execute a hiring plan that takes into account what you’re trying to accomplish, when, where the holes are in your team and what resources you have (or need to acquire) to do so.
“Hire Fast, Fire Faster.”
I’ve been stung by both sides of this mantra by doing one and not doing the other. Be careful with hiring fast. Don’t be pushed into adding resources you’re not comfortable with and do not hire out of fear “shit, we need a [fill in position]. I’ll take anyone”. Strive to develop a hiring process that fits for the culture you’re creating. Sidebar: that culture starts with you and your founding team. Do not neglect it or your company will lack identity and you will be lacking a hugely important filter. Do fire fast. It’s best for all parties involved. If you have people on your team that are underperforming, give them the opportunity to improve, but establish a rope that does not go on forever. Communicate with them what improvement looks like (this is on you). If they are not improving, you need to fire them. If they are not a culture fit, you need to fire them. Even if they are an A-plus performer. Cultural misfits can be toxic. One more point: In an early-stage startup, I believe it’s important that the early team members (first 10 maybe?) have been in the early-stage startup game before because it’s a different animal.
MVP is real — It’s how you productize an idea and get it in potential customers’ hands in a tangible form, maybe even one they’ll pay for, as efficiently as possible. Avoid bloat and hemming and hawing. Set a narrow scope and execute on it. This is where compromising on features and communication (and embracing) of the shittiness of this version of the product are crucial. You and your team must be comfortable with what you’re putting out and must explain to everyone outside the company why A-Z aren’t going into the product right now. Don’t get stuck with it — View your MVP solely as a learning platform, not a milestone, and work your ass off to move beyond it as quickly as possible to the next iteration, again using a narrow scope of improvement (you may even end up releasing a slimmed down product). The communication and compromises between sales and product within your organization are crucial here. Sales wants more from the product. Product/engineering wants less (generally). You must get them to meet in the middle to keep moving the ball forward. Keep doing this!
The cash you have in your bank is a finite resource. You are merely a custodian of this resource, and you have a fiduciary duty to manage it with care. Summon your inner miser and always be pushing to do more with less. I personally hate it when someone’s gut reaction is to throw money at a problem. To me, it’s the easy way out, signals the lack of scrappiness and creativity and is symptomatic of big-company thinking, where the coffers are open. This is where resourcefulness comes into play, and you do the hard, often unglamorous work to scrap out progress and protect your cash. For example, don’t blow $20k on stock legal docs. Write your own and/or tweak existing and have your attorney review them. It will take more of your time, but in my book, that’s worth the savings. Of course, sometimes it does make sense to spend money to acquire other resources – people aren’t free, repeat with me, people aren’t free and distribution (getting customers) is often not free. If you need more manpower, budget for it. If you have a compelling ROI for acquiring and converting users, pay for them rather than expecting them to just show up.
What is the most important thing you can be working on right now? Are you working on that thing or attacking less meaningful tasks because they’re less intimidating or sitting on your never-ending to do list? The compromise here is learning to say “NO” to yourself and to others. Seriously, start saying “no”. Don’t go to that meetup. Don’t take that meeting. Instead, focus on your most important thing and see it through to completion. I definitely struggled with this in my last company and am certain I will continue to struggle with it going forward. The first step is having the self-awareness to admit you struggle with managing your time/priorities followed by developing having the self-discipline to focus. It is paramount to utilize this framework for GSD while remaining nimble with your priorities. Do not downplay the importance of strategizing and do not overdo it to the point of not executing on your plans. There is a balance to be found here, and you have to bake it into your and your company’s DNA.
6. Take Care of Yourself
http://www.youtube.com/watch?v=ZsABTmT1_M0 Take it from a workaholic who is striving for work-life balance. Your business is very, very important, and it demands just about all of you. And you probably demand too much from yourself most of the time. That said, your business is not your life. Bottom line, it’s not. It’s not why people love you or why they’re friends with you or why you’re interesting or a good person. It’s just one thing you do, which happens to take up more of your time and energy than anything else. It can only give you so much. You have to give yourself the rest. I will not wax on here. But prioritize exercise, disconnecting, dedicated time with the people that care about you (and who miss you, not your company, well yes your company, but hell you know what I’m getting at). Oh yeah and HAVE SEX. Don’t let it slip. How you want to accomplish that, I’ll leave up to you. I’m in a committed relationship, so I have some latent demand if I can ramp the supply. However, I do need to be intentional about being around and having enough energy to provide the supply. Commit yourself to making these things happen and having a life outside of your business, whatever that is for you. And remember, your business is a means to an end (not the end all-be all) for what you want to get out of life.
7. Do Shit that Matters
Shit that matters to you personally, to society at large, to a grouping of people/orgs. (your market, your contributors). Your vision must matter and must resonate across all of these, and it starts with you. Be thoughtful here and generate answers for yourself. These answers are for you first and foremost. So, ask yourself what matters to you. Then ask why. Then prioritize them and select one to focus on solving. Then ask yourself how far you’re willing to go for it? Once you have your answers, get started doing something that matters. Note: this thought process is not time wasted. Better to know what matters to you out of the gates rather than 18 months down the road… You do not found a startup to do something marginally better. You may start a small business or side business to do so. In a startup, you are out to disrupt and be massively/radically (10x) better than what exists today. You exist to be big, bold, exciting, crazy and inspiring. So, how much does what you’re doing with your business really matter to you? Are you attacking a BFP (big fucking problem – thank you Daniel Epstein), the mere existence of which you consider to be abhorrent?
Determine and do shit that matters to your business. This is how you execute daily, weekly, quarterly, annually, up until you are no longer running this business.
Focus — Create strategic plans with goals and tactical action items so you can move the ball toward making your vision reality. Don’t waste your time with fake progress; don’t make up work because it feels good. Do the important things, the hard things, the things that matter.
Accountability — You need to hold yourself and your team accountable so you don’t get sidetracked. You do not have the luxury of wasting time. Set and communicate goals. Work toward milestones along the way. Demand that others hold you accountable and don’t let you slip.
Progress — Maintain an eye on and measure progress. Demand it. Celebrate it. Crave it. You and your team need measurable results that don’t lie.
8. Define Success
You control what kind of life you lead. Of course, external forces affect your course, but you control the roadmap. Relish that fact and expend the mental cycles required to chart your course. Do not let others define your life and what constitutes success for you. Find like-minded people who share your values and definition of success and connect with them to live a successful life, whatever that is for you. For me, I know I want to have a meaningful impact much larger than myself. I’m good at connecting people and encouraging others in their pursuits, and I am energized by new experiences (much more so than new things). Success for me includes serving as a catalyst for others to fulfill their visions, including my family, my future family, those in my network, and just about anyone else I run across who is hustling to make things happen. Boiled down: For me, success is being instrumental in others’ success(es). I reserve the right to add onto or completely change that and so should you for your definition.
For Your Business
Defining success for your business before you start it gives you another decision-making filter for all the aspects of that business and the compromises you have to make along the way. It, along with your vision, constitute your North Star. As I said earlier when I told you to take care of yourself, your business is not your life. It’s one piece, and it’s on you to fit it into the overall picture of the life you’re painting. If, for you, selling a company for $1 billion constitutes success, that’s all good! So, assuming that’s your measure of success, take the steps to create a company where that can be a realistic outcome. That very well could mean running a smaller business as a first step if you’re focused on the outcome of selling that business and achieving a positive ROI for your investors to position yourself into a VC-fundable CEO for your big thing. That’s only one course. There are many others you can take, but there is only one measure of success. You should view it as if you don’t achieve that, you have failed, which is also just fine. It just means, you’ll probably be at it again with more learnings to build your $1 billion business.
9. Manage Like a Boss
You are the CEO, which means you are the boss of everyone involved in helping you build your business (team, advisors/mentors, investors). You have to manage up and down your support system, which does not mean you have to be a prick, but does mean that you have to master:
Strive to be an excellent communicator. You do not have to be a guru of interpersonal relationships; you do have to communicate with confidence and purpose. This entails being proactive, establishing a cadence, knowing your audience, being a good listener, being an engaging storyteller (this can come in many forms) and getting to the meat of/not clouding issues. As you can probably realize from this post, I tend to over-communicate, which is both good and bad. I like to make sure everyone on my team has a clear picture of what’s going on and why we’re doing what we’re doing at any given point. I want my team members to be empowered, invigorated and accountable with clarity as to how I expect them to add value. I value transparency, but I have learned I must, at times, temper my gut reaction to overshare, as it can be counterproductive and even damaging. We all know startups are hard but, as CEO, you must paint a positive picture for your business. Share your struggles for the purpose of getting help with solving them and always bring a solution to the table. Being overly negative (or even realistic) can be demoralizing for your team and sow doubt in the minds of your investors/advisors. So, find other CEO’s to be real with and just lie your ass of to everyone else (or don’t).
Delegation starts with trust. It’s the only way you can cede control of the reins and focus on the most important thing you can be doing at any given time. You cannot do it all forever. You are not the best at everything. You must rely on your team to GSD. Provide instruction, motivation, support and get out of the way. Understanding what makes your team members tick, what gets them into a flow state, is very valuable here.
If you can’t inspire those who are helping you realize the vision for your business, you aren’t going to make it very far. Now, you don’t have to be the most dynamic person on planet Earth. What you must do is set/sell an exciting vision and rally everyone to buy into the absolute awesomeness of that vision to where they couldn’t be happier to be working their asses off to make it a reality. Bring the passion, the craziness, the “I don’t give a fuck” – this is the kool aid.
Pissing people off
As CEO, you must have the hard conversations and make the unpopular decisions. So, put on your big boy pants, be diplomatic and act decisively knowing that you are only doing what you believe to be the best courses of action for your business. Then, have a beer with your team or go do some yoga and don’t beat yourself up. If you’re still with me, thanks for reading. Now, go focus on doing what matters. Keep moving, Brian