The Three Roles of a Funded Startup CEO
As the CEO of a fast growing startup, there normally comes a time when you transition from wearing too many hats to wearing just the right hats. It’s that moment when you go from being the “Chief Everything Officer” to being the CEO who is trying to scale an organization by hiring top experienced talent and delegating more.
You know you’re ready to move beyond the “two guys or gals in a garage” stage of start-up development when have some amount of market validation and you’ve most likely raised some real money. Suddenly, your time is “too valuable” for certain tasks.
It’s not that you’re now “too important for that stuff.” It’s simply that in order to scale your company, you have to scale yourself. The only way to do that well is to empower other people to do many of the things you once felt you alone could handle.
In the beginning, you probably move the obvious things off your plate: customer service, operations, small ticket sales, etc. Later, you might move other things off your plate to reduce the busy work (although you probably feel guilty at first): scheduling, booking travel, or even answering your own phone.
Eventually, you’ll hit a wall as to what you can delegate — at least you should. A CEO who is focused on building a company (as opposed to an early stage CEO who is focused on building a product) should boil his or her responsibilities down to three key roles:
The Strategist
The Keeper of the Culture
The Budget Overseer
Let’s delve into all three.
The Strategist
There’s a reason the best CEOs are called visionaries. It’s because above all else, CEOs create vision and set direction. They paint a picture of a future state for the product or the company that others may not see yet. The good ones are many steps ahead of the market, while still listening to market realities and the desires of their customers. Here’s how to do it well:
Tell the Right Story — According to a 2013 study cited in the Harvard Business Review, only 29% of employees could pick their company’s strategy when presented with a line-up of six different choices. Is it because employees don’t care or weren’t listening? Or perhaps it’s because communicating vision in a comprehensive way often comes as an afterthought in fast moving start-up environments. Fix this by honing a company story that communicates the WHY in a compelling way (your coach can help with that), and by nailing your delivery in weekly all-hands meetings (your coach can help with this too!).
Provide Direction — Great leaders point their companies in the right direction; they don’t necessarily tell the company how to get there. As former Apple CEO Steve Jobs famously said, “It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do.” If you don’t think you can trust your people with the “how” after you’ve point in the direction of “what,” then you might rethink your hiring strategy (see below).
Playing the strategist role doesn’t mean giving up the tactical all together. We help CEOs understand the importance of knowing when to “zoom out” and when to “zoom in.” Steve Jobs was a master at this and was very intentional to not let go of those things where his knowledge and expertise was critical to execution. Effective CEOs are able to find the right balance around the strategic and the tactical being selective about which things they choose to manage closely.
The Keeper of the Culture
Great CEO’s build world-class teams, create great culture, and make sure people love their jobs. Let’s break it down into component parts:
Team — In 2012, before hiring CTO Thuan Pham, Uber CEO Travis Kalanick personally spent 30 hours interviewing Pham. When is the last time you spent more than 2 hours with one candidate? Your team is your most important asset — above IP, VCs, and money in the bank. If you don’t make managing your team one of your top priorities, none of the rest of it matters.
Creating a team climate conducive to building trust through open, honest and transparent communication is critical to maximizing performance. Patrick Lencioni in his best-selling book, The Advantage, considers trust to be the #1 factor in building strong teams. As coaches, we work religiously with CEOs and Founders in creating high performing teams.
Culture — The CEO is the spiritual leader of the company, so you need to set the bar. Your mood and example will set the standard. When you’re in a bad mood, so are they. When you’re disorganized, so are they. When you doubt your leadership skills, so will they. But if you set a standard of positive energy, ethical behavior, and collegial appreciation, your teams will follow suit. We suggest making a code of conduct available and visible for all employees to follow. When you set a high standard, people tend to rise to it.
Happiness — Contrary to popular belief, the happiest employees aren’t the best fed or the highest paid. They are ones who feel supported in their personal growth and trusted to do their jobs well. A 2015 Deloitte studyfound that above all other potential perks (including cash bonuses), today’s employees coveted “Training, Learning and Development” as a job benefit.
The Budget Overseer
Great CEOs don’t run out of cash, and they constantly drive towards profitability and growth. They trust their CFO and bookkeepers to monitor the financial health of the company, but they make final decisions on budget, burn-rate, and runway with the board. They create dashboards to monitor financial management with their teams.
Budget (Burn-rate and Runway) — Successful budgeting is about managing costs. Rather than go into an in-depth analysis of how to calculate burn-rate and runway here, you can find a thorough article on it here. The key takeaway here is knowing that this is not something you can delegate. Yes, you can delegate the baseline calculations, but that doesn’t mean you don’t have to double check them as the former CEO of Zirtual learned in 2015. If you run out of money, it’s your fault, not your accountant’s.
Revenue — At the end of the day, businesses exist to make money. Long gone are the days when start-ups were not expected to make any money and sought instead just to build up massive numbers of eye-balls. In today’s start-ups, the CEO is the ultimate revenue and growth hawk. If you aren’t spending a significant percentage of your week driving revenue and growth, you aren’t really running the company — your Chief Revenue Officer is. Again, dozens of articles have been written on growth hacking, pricing, etc.
As a CEO, you should try to organize each day around wearing these three hats well. This means that you should develop the habit of starting each day looking and planning your calendar so that each of these three roles gets the appropriate amount of time.
As you plan your day or your week, ask yourself these questions:
The Strategist — How much time am I spending on the strategic challenges? What are these challenges and how will I deal with them? What tactical issues will I intentionally stay involved with and why?
The Keeper of the Culture — How is my team operating? Do I have the right amount of trust and openness happening in team meetings? Am I modeling the way through my own behavior? Are we developing and growing our leaders?
The Budget Overseer — Do I have the right processes in place to manage budget and revenue issues? What things am I worried about? Are we talking about all of these concerns in team meetings?
Did you have other thoughts on the key roles of a CEO of a funded start-up? Please let us know in the comments below.
Velocity is an executive coaching firm for entrepreneurs. We were built by founders for founders. We develop our coaching practices in partnership with leading research institutions like Stanford, and work with our client companies to achieve measurable outcomes as a result of our work. Learn more at GainVelocity.co. or email us at hello@gainvelocity.co.