How to be a Startup CEO
The most important trait of startup CEO's are the most underappreciated
When I launched my startup, we neglected to choose one of us as CEO. What did not seem important at the time became a huge mistake that was the root of many problems down the road for our startup.
I thought we were an anomaly, but it turns out a lot of startups are similar. The benefit of advising, mentoring, and observing a few hundred startups over the past several years is that you begin to see patterns. And one problematic pattern that comes up again and again are startups without a CEO tend to be startups that never go far.
One of the first things I tell early-stage startup teams is to pick a CEO. It could change later on (it often does), but you need to have one person own the top role. Investors expect it when you go fund raise, customers want to know who’s in charge when issues arise, and prospective employees want clarity on who makes the final decision.
Many teams will push back saying it is unimportant. They say they are ok with having shared ownership in decision making, or designating co-CEO’s, or some other way of structuring their organization. Often this is because they are trying to avoid conflict or have a fear of creating hierarchy.
When I look back at my startup, it was clear that not having a designated CEO caused chaos. There was no cohesive strategy other than each founder doing their own thing. We had embarrassing fumbles and miscommunications with customers. Investors were confused by our pitch and which founder had the final say. When conflict bubbled up, we often avoided it, had screaming matches, or just ignored each other to continue doing our own stuff.
Startups need to operate fast. It is not just a survival mechanism, it is a competitive advantage. When clear decisions are not made quickly in alignment with other stakeholders, it stalls progress and creates a logjam of other downstream decisions. In startups with no CEO, this is often the thing that leads a startup to fold. I sometimes hear founders of failed startups share how they just didn’t move fast enough, and sure enough, those were startups that did not chose a CEO or had a suboptimal decision making organization.
It is critical to select a CEO in the early life of a startup.
Being the CEO is hard. Everyone thinks it is about being the boss, but it is usually the other way around as investors, customers, and employees have hefty expectations of their CEO’s performance and their decision making. As Brian Halligan of HubSpot says, as CEO you are not boss, you report into everyone.
Taking on the role of CEO at a startup is even harder! Startups have fewer resources, the CEO wears multiple hats, and many are usually in that role for the first time. So when you look around at your founding team to decide on the CEO, who should it be?
Sometimes it is obvious who should be CEO, especially if there was one person that did the legwork to bring the idea to life and assemble the team. Think of Nick Fury from the Avengers movie who brought together the world's greatest superheroes to become the de facto leader of that group.
More typical however is that the choice it not obvious. Much of the decision process is built on flawed assumptions on what a startup CEO should look like, such as being charismatic and extroverted or being more business oriented. Yet just as many successful startup CEO’s were awkward and introverted, the typical hacker profile that recalls Mark Zuckerberg or Bill Gates.
What is more important for a prospective CEO is hunger. This means hunger for the vision, hunger to learn, hunger to fail, hunger to persevere, and hunger to move fast. While everyone on the founding team should process all of these, the founder CEO should over index on these traits and bring the passion and fire when sharing the story of the startup. In a sense, the CEO embraces the role of chief storyteller!
The challenge of telling the story, especially early on, is that the founding team including the CEO is heads down building. With such an intense execution focus, the CEO sometimes struggle to convey the bigger vision needed to bring on investors and potential employees. It is therefore critical for the CEO to maintain the long-term perspective and remind the team and themselves of the bigger vision.
Understand that the role of a startup CEO changes drastically over time.
Later on, the balance of execution and vision shifts, so the CEO role becomes much more about the strategic direction of the startup. The CEO goes from sweating the details to delegating the details, firing themselves from direct execution responsibilities. This is when the CEO role become more about reinforcing the vision, preserving the culture, making strategic hires, and ensuring the startups has the capital to stay in business.
One of the hardest transitions for new leaders is the shift from being hands-on to letting others take control. This, more than any other reason, is why some founder CEO’s let go of or get fired from the CEO role. There is simply not enough time to be both strategic and tactical, and it also undercuts the people you hired to own execution.
The last point is that there are no shortcuts to learning how to be a CEO other than going through the ups and downs of being a startup CEO. You should not have to go through the journey alone however, so find communities where other founders meet to discuss their experiences and challenges in a safe environment. Often the best way solve problems is talking them out with others that can emphasize with your experience.
What are your thoughts on the most important traits of startup CEO’s? What have you seen work to help founders grow into and evolve as a CEO?
This week’s essay was spurred on by a recent post by Brian Halligan, who was the co-founder and long-time CEO of Hubspot before he handed off the CEO role two years ago. He shared his 20 lessons learned about being a CEO, and though HubSpot went on to become a very successful public company, many of the things he shared apply for earlier stage startups and is a good guide book for CEO’s as they scale their startups.
I share his 20 tips below, but I absolutely encourage you to read the full post for the backstory on each of these insights. Many of these hit home for me as I think about my own journey as a founder and what I could have done better as a leader, even if I was not the CEO.
Keep your head in the sky and your feet on the ground
You’re being watched 10x more closely than you think
Watch the competition, but never follow them
When everyone is zigging, you should zag
“Don’t trash talk”
Times change, teams change
Treat your culture as your second product
1 back, 2 forward, 1 back, 2 forward
Never waste a good crisis
Recruit from companies just a few years ahead of you
A truly independent board member is worth her weight in gold
Feedback is the breakfast of champions
Transparency builds trust
Your greatest strength turns into your greatest weakness
Make a large pie & take a bite along the way
The IPO is the starting line
Know when to hand over the keys
Pick your successor carefully
Chairpeople don’t drive
Being CEO is overrated
We are back in action after a couple of weeks to rest and recuperate! We are starting to hit the world tour again with Mark in SouthEast Asia. The journey started with AWS Startup Day Taiwan, then circled around to Thailand, Hong Kong, and now Vietnam!
Mark has been experimenting with more intimate community gatherings that we are calling Hacker / Founder meetups, hosting the first one in Hong Kong and the next one in Saigon this Friday. So far they have proven to be helpful for attendees to connect with other founders and to learn about important updates from AWS, especially in newer areas like Generative AI. If you are interested in hosting or participating in a AWS Hacker / Founder meetup, give us a shout.
Startup gathering assembles in Hong Kong.
Wrapping up a fun evening in Hong Kong!
The Asia tour will continue in Hanoi next week to give a talk on scaling startups and how startups are thriving during the funding downturn (sign up here)!
Then it is back to Hong Kong for two days for concluding the tour in Singapore from August 4th to 8th. Let’s us know if you will be around and want to meet!