Startup founders have to become great startup CEOs if they want their companies to thrive. Are you an effective manager?
I was replaced as CEO of my first venture-backed company. It was, as I’m sure you can imagine, a humbling experience. But it was also an educational experience that helped me appreciate and overcome the most common weakness for startup CEOs, which is their inability to manage other people.
To understand why this happens, consider the lifecycle of a startup. Startups (usually) begin as tiny companies with few people and every person, including the CEO, desperately trying to juggle 20 different jobs. However, as a company gains traction and begins scaling, it hires more people. At that point, the primary job of the founding CEO morphs into managing.
In other words, every startup CEO has to become a manager. If they don’t, it means their companies aren’t growing.
Unfortunately, the skills required for being a manager are completely different from the skills required to launch companies, and this is why so many CEOs run into problems. They enjoy the things they did to launch their companies (that’s why they did them!), but they don’t necessarily enjoy managing people and, as a result, they never learn to get good at it. Ultimately, assuming their companies have traction, they get removed.
This is exactly what happened to me. And while it wasn’t fun, I learned some important lessons. If you’d like to avoid learning the same ones the “hard way,” then you should keep reading:
When I was a startup CEO, the more people I hired, the more often I found myself in meetings. It eventually got to a point where I spent most of my days in meetings.
The same thing happens to every CEO. Or rather, that’s what should happen. As a company grows, the CEO becomes its central “brain.” In order for that brain to effectively make decisions, it has to know what’s happening in the org, and it gets most of that information from — you guessed it — meetings!
When you’re CEO of a company, you’ll always feel tempted to run any meeting you’re in. Or, at the very least, you’ll be the dominant force in the room. Why wouldn’t you be? After all, you’re the boss!
But only bad CEOs try to run meetings. Good CEOs use meetings as opportunities to listen and learn.
Remember, you’re the central brain of your company. The brain needs to constantly collect stimuli from the world around it in order to control the body properly. This is also what good CEOs do. They rarely use meetings to control. They mostly use meetings to listen carefully and learn what’s going on in their companies so they can make well-informed decisions.
Like most startup founders, I’m a “people pleaser.” It’s something all entrepreneurs learn to do in our earliest days because that’s how we get our initial traction. After all, we don’t get our first customers, investors, and employees, by telling everyone to shut up and listen. We get those people by figuring out what they want and then trying to deliver it.
This “whatever people want” mentality is a useful approach for winning early customers, investors, and employees, but it’s a terrible approach to running companies long term because pleasing everyone is impossible.
As the CEO of your startup, the thing that matters is the company’s forward trajectory, not the personal satisfaction of any individual stakeholder (including you, the CEO!).
Sure, this type of “company first” mentality can lead to some seemingly heartless decisions. For example, sometimes certain investors have to be “capped out” because the company needs to take a down round in order to survive. Sometimes beloved products have to be canceled because they monopolize too many resources. And sometimes staff need to be fired simply because the jobs they were doing are no longer necessary. These types of decisions will always feel heartless from the perspective of a CEO seeing the world as a human. But, from the perspective of a CEO representing the best interests of a company, they’re not heartless. They’re necessary.
When I was a first-time startup CEO, I was laser-focused on the enormous amounts of work my team had to accomplish just to survive. As a result, I was always thinking about the “bad stuff.” What were the problems? What were the failures? What were the shortcomings? What need to be fixed?
Because I was always thinking about the company’s problems, I focused my team on the problems, too. After all, how else were we going to survive if my team wasn’t constantly trying to correct our flaws?
In retrospect, it was a terrible way to lead a company because it made everyone feel like failures. I wish I had taken more time to celebrate the wins.
The truth was that, yes, sometimes my company was failing. But, we also had lots of successes, and we needed to celebrate those, too. In fact, helping a company celebrate its successes is one of the most important jobs for a startup CEO. Showing people how far they’ve come inspires them to work harder and get the job done.