Chief Executive Officer. The responsibilities of a CEO are set by the organization’s board of directors because technically, a CEO is the Chief Executive among many, referring to the fact that companies are largely run by the CxOs of their respective business (CMO, CTO, CIO, etc.). Managing a leadership team and meeting the expectations of stakeholders and shareholders (represented in that Board), means that a CEO is, in most respects, something distinctly applicable to that Company, and established and operating Corporate entity.
Begging the often asked question, what distinguishes that role in a startup?
A “startup” is technically not yet a company; at least, not in the classical sense of what we consider a company. It’s not even really yet a business. Yet, we use the word CEO in the context of startups, and generally know what it implies, but can we better appreciate what it means and what’s expected of the position?
I’m a fan of Steve Blank‘s characterization of startup: a new venture in search of a business model.
Primary responsibilities of CEOs are: making major corporate decisions, managing the overall operations and resources of the company, acting as the main point of communication between the board of directors and corporate operations, and being the public face of the company.
Not a very startup-relevant definition is it?
“CEOs set the tone, vision, and culture of the organization.”
A ha! In that we can find the right CEO Job Description…
The Startup CEO
Serve, by weaving together 3 distinct perspectives about this role:
ONE
Given an eye toward Venture Capital investors, let’s look first to that perspective. Now I know, you may not want nor be seeking VC but generally speaking, startups are oriented in that direction; and since you don’t yet have that Board spoken of as a Company, a VC’s point of view is a nice analog
Mark Suster and Fred Wilson’s perspective on the Startup CEO
- Set the overall vision and strategy of the company and communicates it to all stakeholders
- Recruit, hire, and retain the very best talent for the company
- Make sure there is always enough cash in the bank
Helpful no? Vision, strategy, people, and cash.
But I’ve always felt that clarify falls a little short does it not? While we can and should have that vision and strategy, we might not yet be capable of attracting talent, nor have the cash available nor accessible. We get there with consideration #2
TWO
Before cash and people, there are other forms of “capital” at our disposal. It’s your responsibility to develop that which you can so that you might avail the others.
Brad Felds’ take, that there are 7 Forms of Capital is what strikes me as most valuable to appreciate. Firstly, Feld’s work in some great books like Venture Deals and Startup Communities hit the mark but secondly, because his work through Techstars, and as one of the foremost community builders, puts him at the stage of knowing what it takes to get off the ground, meaningfully. One more thought to appreciate, pen to paper came together for Startup Boards, which is rather what we’re exploring here.
Let’s digress, the 7 forms of capital you can develop:
- intellectual: ideas, information, technologies, stories, educational activities
- cultural: attitudes, mindset, behaviors, history, inclusiveness, love of place
- financial: revenue, debt, equity, or grant financing
- institutional: system of rules, functioning market, stability, operations
- network: connectedness, relationships, bondedness
- physical: density of resources, quality of place, fluidity, infrastructure and platforms
- human capital: talent, knowledge, skills, experience, diversity
Now, you may not have cash (financial) nor human capital, that talent to which Suster and Wilson refer, but you can (must) develop the rest.
THREE
If I may, I’m going to bring it home with my own experience both first-hand and indirectly. I’ve had the blessing of working with some incredible startup leaders, Kevin Reeth and Ethan Stock come to mind for me most often. Thanks to MediaTech Ventures, Texas Startups, and Collective, I work with hundreds more, every year, while being one myself.
The Three Things a CEO of a Startup Should Do
- Build something new
- Sell it
- Know the market and have a plan to address it
What Does a CEO Actually Do?
Peter Drucker’s observation that only two things create value in business: Marketing and Innovation. Drucker also noted that everything else is a cost…
The CMO’s job is to answer why, for whom, with whom, when, and where. The CTO’s job is to determine what and how. The CEO discerns all of that into a vision to align everyone and to draw the resources they need to build a successful company: human resources, capital, and attention.
So it could be said that the CEO’s job is to overcome and mitigate costs… so that Marketing and Innovation has what it needs to create value.
Tying it all together, what is a Startup CEO?
Overcome and mitigate costs… so that Marketing and Innovation has what it needs to create value, by building and selling something new, and knowing the market in which to do that.
That means you have the intellectual, cultural, network, and institutional capital at least, to pull together the rest, as you develop the team, stakeholders, and cash flow that makes you a company.
I draw from a McKinney Rogers report to wrap, because roles, all roles, should e clear, measurable, and defined. KPIs.
The KPIs of a CEO
1. “Context of the business” (the big picture)
- Progress Towards Targets – as defined in your plans
- Month over Month top line audience growth – 20% is not unreasonable
- Customer Satisfaction – measured in many ways from surveys to NPS
- Funding/Financing – as applicable
2. People (if not spending 20% of time on finding the right people, you’re doing the wrong things)
- Team Satisfaction and Engagement – do you have the right people?
- Closing Relevant and Valuable Advisors – as well as evangelists and supports
- Increasing the Pipeline – be that more audience, partners, or customers
3. “Lead not lag indicators” (looking for intel and data telling them what is working now rather than accounting what has been done)
- Revenue Growth Rate – as defined in the plan
- Project Completion Rate – as defined in the plan
- Conversion Rate Improvement – optimize the experience
Not revenue explicitly? No, that’s a lag indicator. Profitability? You’re a startup not a company. Revenue is fantastic and applies to that cash flow but at this stage, it’s not the means to the end but rather a resource to leverage along your way.
Get shit done. Leading indicators, to use McKinney Rogers’ perspective, that indicate that you’re developing a vision, strategy, team, and business model that work.
I want to invite you to join me in such discussions live and together.
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Cool article, Paul. I’m sure what you’ve written covers a key component leading to the start-up CEO’s success and I’d like to underscore its significance: the pre-disposition to deliver on the promise…and this characteristic should be present in the DNA of not only the CEO but in nearly every early-stage employee.
Cheers Fred Pierce! Happy new year. Great to see you here, best we can under the circumstances.
You know, that is perhaps most paramount, and I’m not so sure I touched on it well enough. Granted, “Get shit done.” at the end gets there, but that’s not the same as credibility, accountability, and trust. Brilliant point to add, thank you!
Paul O’Brien you touched on it well enough to agree and compel me to underscore the significance of “gettin’ shit done”… Again, a very cool article that every up and coming CEO should take to heart…
Good stuff!
I recently started exploring the idea of founding CEO’s stepping down and being replaced with more seasonal executives that can help grow the startup even further. (Either by their own or their stakeholders’ request).
I’ve talked with founders that wanted to hire their own managers, and it really helps understanding why with how the metrics of a startup CEO compare to a more mature business.
Yep, I’ve uncovered an entire ecosystem (poorly developed, granted) wherein the notion of Startup vs. Company CEO is so different that organizations, culture, and plans should in fact expect the role to change.
Dave Lawson too uncovered that idea a bit with us: https://mediatech.ventures/startup-stages-stage-teams/
PEOs like Insperity are chewing on how to help.
Paul O’Brien YJ Lin
Alternatively, if you intend to stay on the ride as CEO whilst the venture matures from startup to full-fledged company, you have to be prepared to grow and endure metamorphosis equivalent to becoming a new version of yourself entirely.
So hire to replace, or evolve to become your own replacement…
I resemble this definition. I think often about adapt or die, not only as a company but CEO. Meaning, if I don’t adapt to grow with our startup, I better expect someone to come in and take over. Great post, Paul.
Love this awareness. WAY more people need to hear this. As I’ve ventured into the startup world as a doctor and mind/body/business coach I’ve been met with major skepticism by people around “how could you be doing something in technology, your a doctor, what would you know” I then have to explain to them that technology is a tool, I’m after the vision of doing a certain end goal in health and I’m letting kick ass team members tell me how to do it through technology. This article should be a checklist given to every “CEO” starting a start up as a reminder what they should be doing on a daily basis. When they go to do their 90/30 and weekly planning they should look at this and back fill their schedule using it as a template! Get out of the busy work and live in momentum 🙂
Yes, indeed. I have talked at length about this with advisors and others because it is fascinating to consider the type of CEO you will be at different points in the growth of a company. My first true encounter with this was in Blotzscaling when they describe the stages: Household, Tribe, Village, etc and what each stage requires from team, product and leadership.
Michael Barnes, the key then is to not spend unnecessary time in the goop–the chrysalis of not caterpillar / not butterfly.
I’ve launched and aided my share of start-ups – and I resonate with Paul’s spotlight on genuine, broad capital, because that is the key to success. Possessing and leveraging that scope of can-see/can-do together with that of the best of the best in partnership while nurturing the most promising start-up leaders themselves around you! Love this piece.