The Distinction of Startup CEO

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

1. Set the overall vision and strategy of the company and communicates it to all stakeholders
2. Recruit, hire, and retain the very best talent for the company
3. 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:

1. intellectual: ideas, information, technologies, stories, educational activities
2. cultural: attitudes, mindset, behaviors, history, inclusiveness, love of place
3. financial: revenue, debt, equity, or grant financing 
4. institutional: system of rules, functioning market, stability, operations
5. network: connectedness, relationships, bondedness 
6. physical: density of resources, quality of place, fluidity, infrastructure and platforms
7. 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.