Your Startup’s Survival Depends On Your CEO SkillsBY Max Gurvits ON July 10
It’s funny how topics mature concurrently in the collective startup mindset. I’ve been aiming to write up my thoughts on the startup CEO topic for a while now, since I started witnessing a number of startups in our region get to validation with flying colours, and then stall awkwardly.
Then last month at Spark.me in Montenegro, there were two great sessions that touched on this point: the formidable Radu Georgescu talked, among others, about the need for the right CEO at the right moment in a company’s life, while Heather Russell held an awesome talk, in which she quizzed the audience about various famous companies, and how their CEOs dealt with tough situations.
Cause that’s pretty much the thing: being CEO is really tough. And no other risk is as big for a startup’s success as the CEO risk.
Let this be clear first: I was a really lousy CEO when I held the position in my first company. I did pretty much everything wrong: I couldn’t take decisions, couldn’t communicate my vision to the team, my co-founder and I couldn’t even agree on who of us should be CEO and what tasks the job should contain.
In our tech world that prefers engineer founders above everything else (and I agree with that), the job of the CEO is pure politics: Compellingly selling an inspiring vision, while making sure everyone remains happy when you’re not getting there fast enough.
The dirty, untold story of being CEO is that you either gotta be experienced in what you’re doing, or you gotta know what you’re missing and learn really quick.
At the pre-product stage it’s pretty easy to get away with the learning quick part. You talk the talk, walk the walk. Your team and yourself have nice CVs, and your explanation of the product impresses your local, non-domain angels and the managers of that local accelerator that you go to. What are you missing? Duh, obviously Product-Market Fit! That in itself sounds pretty cool, and with a number of sexy Lean Startup books and blogs to quote from, you pass the test.
Nothing wrong here, don’t accuse me of cynicism… just yet.
What happens next is that you get to product-market fit, or your minimum viable product, or whatever else you call it. Something is right. Something has to scale like crazy from here onwards.
And that’s the hard part. Because you have no clue how stuff works from this point on. They didn’t write about it in all those lean-something books.
I recently heard someone say, very accurately in my view, that the problem with lean methodologies is that they teach you how to fail in acceptable ways, but don’t teach you how to succeed. There is a bunch of corny quotes on success from famous people all over the internet. My favourite? Success is when opportunity meets preparation.
So how do you get prepared for the post-product story? It’s tough when you’re in Serbia, Bulgaria, or any other country in this area.
The good thing about being a founder here is that it’s easy to find engineers that will work without pay. Investors love the place because of great beaches/clubs/food and because the very few local startups that do break out offer investor returns that are way above-average, 2 or 3 times compared to US returns.
The not-so-good thing about being a founder in this region is that there is nowhere to learn the successful-founder trade. Literally nowhere. No one has done it, and the few that have usually move out and never return.
So you gotta teach yourself or be able to hire the right stuff. Remember what I said before about having no experience? You better know what you need and get it fast.
What you need is the ability to do business. Do marketing, do sales, do distribution. Chances that you can find anyone locally who has done that for an early-stage scalable product are virtually zero. The guys from local internet media companies and marketing agencies don’t count. They cater to local markets and their work is never scalable and rarely a product. Which means you need to understand the global game and either hire folks from other companies far away, or be able to do it yourself.
The other part is about being fast. Put very simply, your traction should never outrun your execution. Which means that you’re good when your traction is low (unacceptable, but manageable under lean methods), or when your traction is high, but you know exactly what you’re going to do when it continues growth.
Talking about execution, the right kind of CEO is someone who:
- Knows how to get distribution deals. At the very least that means getting meetings with decision-makers in your main distribution channels and being able to understand and push through partnerships that improve your competitive position in those channels.
- Knows at least 10 proven product ninjas and has a compelling plan how to hire them.
- Can get warm intros to leading European or US VC funds.
- Can contact at least 10 people that succeeded as CEOs in the same domain before them.
- Generally has a truckload of charisma and empathy, which allow them to dodge fatal bullets from indifferent investors and angry customers, fire rotten apples without breaking team morale, and paint a picture of the future that everyone is happy with.
The questions every founder should be asking themselves is:
Do I have all of that (not one or two points, but ALL of them)? If not, am I ok with getting help finding someone else to be CEO, while I remain COO/CTO and co-founder?
It’s easy to be CEO when you have no traction. When you’re getting traction, it’s really hard, and you better be good if you want your startup to survive.
What I’m trying to say is that’s absolutely OK to remain the founder and majority shareholder of a startup, but to hire an experienced killer-executive to serve as your company’s CEO. That’s actually one of the things your investors and advisors should be able to help with. Also, it’s one of te best ways to take away investor concerns when negotiating a seed or post-seed round.
Now here’s a pro tip. My friend Sal Virani who runs Leancamp, which I hope he will be renaming soon because it’s about so much more than just lean, recently told me he’s been mentioning Max 100 during Leancamp sessions; a half-joke we came up with one night when we made fun of my nagging point that everyone should make lists with the best 100 contacts they need.
It’s very simple: start a spreadsheet with 20 names (no need for 100 right away), of folks who have been in exactly the same place as you have been before. Track current and former startups in your domain through CrunchBase and Angel.co. Who got acquired, who raised money? What happened to the founders? Are they on AngelList? How many degrees between yourself and them on LinkedIn?
It’s really easy to make that list of 20, and that’s where the journey of a great CEO starts. Maybe that journey will help you find the CEO, instead of you becoming one. Start with 20 names, expand the list and work on those contacts until you either become really good at the 5 points above, or at least know which name from your Max 100 list should be your company’s CEO.