30 West 3rd

Very Early Stage Technology Investing

Five not-so-glamorous roles of the Start-up CEO

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Tech company founders are typically product centric visionaries. Saddling a founder with the real-world duties of a growth company CEO is actually a good way to slow a company down. It is possible to be the product visionary and do some of the not-so-glamorous roles early in the company’s development. But the degree of difficulty required to bring a new product to market is very high. I’d say failed seed companies outnumber successful ones by 100+:1, and those that reach sustainability and a successful exit are rarer still. So the founder/CEO faces a dilemma. Either take on too much, off-load product responsibilities to someone less passionate, or find a more business-oriented bookend. The bookend brings orthogonal skills to the company that either the founder/CEO doesn’t have or can’t execute while still managing the product. Or the bookend can bring passion to the product and free the founder/CEO to execute the other roles.  Either path is possible, and the founder can choose. But first founders should think about how much they want to chase these tasks on a day-to-day basis.  My top five not-so-glamorous roles (not exhaustive) are:

  • Chief Fundraiser – Raising money for the company, sweating the budget, meeting and managing investors, building out the business model, all belong to the CEO at least through the A Round. At that point you might have enough money to bring on a CFO, but until then the CEO owns this grinding task. Early on a founder can lean on a strong lead investor or board member for mentorship, but if a founder wants to be the CEO this is job one.  Not taking responsibility for capitalization is a disqualifying characteristic of any prospective CEO. I know of no company that has successfully grown and prospered without a CEO that takes this job on as a solemn responsibility.
  • Chief Talent Officer – New companies need talent. Talented people with serious life responsibilities are wary to take on a start-up job for good reason. Many fail, run out of money, pay below market compensation, have few benefits and demand more from everyone. Start-up cultures can be as bad as big company cultures, whether things go badly or go well. The CEO has to be able to attract people to do something that is most likely not going to work out. This requires a combination of competence and confidence, but not arrogance. Employing people is another solemn commitment to do all that is needed to capitalize the company, operate with integrity and give best efforts. It is akin to guiding someone up Everest. While everyone expects risk in an early stage company, they are more likely to respond to maturity and experience than exuberance.
  • Chief Compliance Officer – The CEO is responsible for knowing the legal, ethical and regulatory environment the business operates in. Investors, employees and customers all have legal rights and those must be recognized and protected by the CEO. Products have regulatory and ethical constraints. Privacy, safety, age appropriateness and any number of other laws and policies may apply to a start-up. While the CEO can employ consultants and lawyers to ensure all is well, there is usually not much money to do this up front.  Just knowing what the applicable areas of regulation and policy are in play is the CEO’s responsibility. Painful, boring and tedious tasks indeed.
  • Chief Economist – The CEO owns the macroeconomic and microeconomic monitoring for the business. First the CEO must watch for positive and negative elements of the macroeconomy that require planning or adjustment. Many companies bled out their capital in 2008/9 because they waited too long to cut spending, as an example. In addition to the macro picture, the CEO must know the target market inside and out. The CEO should have deep experience and a broad network of sources in the market where the company competes. Trends have shorter half-lives now, and customers are increasingly fickle. Running a start-up requires continuous course corrections based on inputs that feed product plans, distribution strategy, and many other operating decisions. The CEO must be in touch with the broad economy and the market segment, synthesize the data and make appropriate decisions. This is a role that also requires objectivity about the company’s product and past strategy.
  • Chief Urgency Officer – Urgency is required in all start-ups. Different from rushing, urgency implies intelligently acting, learning and adjusting. By nature the introduction of a new product consists of a critical path of actions, recalibration based on feedback, and then restarting again along an adjusted path. Each stage must be executed with urgency, but can’t be rushed. Rushing means missing data points and learning little if anything from a series of actions. Just as dangerous is spending too much time imagining what the market may want, building it, and launching it as the company runs out of money. Pace-setting inside the start-up is a critical job and one that will requires being the “decider”. And being the decider can lead to being wrong.

The Hollywood view of the start-up CEO is one of glamour, wealth and fame. This rarely happens. I have a bias to founder/CEOs, so I’m not advocating that all founders abandon that path. Rather, I think it is more important that everyone involved is aware of the heavy burden of work that is shouldered by the start-up CEO. The unglamorous roles must be filled and the over-worked founder/CEO will rarely pull all of them off while also driving a great product vision or leading a development team. Backfill or front fill the position. And for founders, I would ask that you examine what feels the least like work to you. I find that I can work with more passion and energy when I don’t feel like I’m working. That zone is where people create the most value. Make a conscious choice to pursue one path or the other and share that with your investors and team so they can help you find the appropriate bookend.

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Written by Mike Venerable

March 18, 2012 at 8:30 pm

One Response

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  1. Mike,
    Good article. I would argue an addition or maybe even a potential substitution for compliance, but that may be my sales background speaking. Chief Culture Officer. There is no better time to build culture than when you are small. We all have a culture regardless of the size of our ‘tribe’. Even families have a culture. Culture is being developed whether you direct it or not. If you are not looking for it, you wont even notice it due to your laser focus on everything else. Culture drives sustainable long term performance. Culture minimizes the lows and maximizes the highs.
    I would suggest that each leader pen a few comments answering the question of how they want to feel coming to work in three years. If they also ask “How do we want our employees, partners and customers to describe our entity?” they will know their desired culture. A few phrases capturing that sentiment will give clarity to hiring criteria and decisions, provide ethical direction, assist in retention and quietly provide the battle cry for the troops while you are focused elsewhere. In my experience, there is no substitute for the energy that a positive, proactive culture delivers.
    It certainly was the catalyst for the turnaround of the sales culture of a successful $1B software company.
    Greg

    Greg Lorden

    March 20, 2012 at 1:04 pm


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