Originally published in May 2019 here
When we released our first game “Twork” in 1996 in retail stores in Germany, I was the only one who had already turned 18 which made me the official “CEO” of our little company (=group of friends from high school who registered a German “GbR” for 50 Deutsche Mark). Since then I have been working more or less in CEO-like positions for about 20 years - obviously with varying degrees of scope, experience and success.
As an 18 year old “CEO” of our gaming company I did not know what I was doing and probably negotiated the worst deal ever with our publisher: we just got about 1-2 Deutsche Mark for every game sold for 30 DM. During my studies I started a social network for students called UniHelp.de. This was 3-4 years before facebook was founded. After about two years 70% of my university used it daily but I failed to see the commercial potential in it. So I founded a non-profit organization who took it over from me when I left the university to start working for a consulting company - only to see the meteoric rise of facebook from the sidelines a year later. Realizing I was now too late to the party for students, I quit my job and tried to start a social network for amateur sports people called meinSport.de (=mySports.com in German) but facebook opened up also to non-students, grew too fast for us and we did not find a real reason for people to use our site anymore. We tried everything a little and nothing for real - classic mistake of being not focussed enough. Luckily just then the iPhone had been released with the new AppStore model. I called my old friends from school again and persuaded them to move from PC & console games to mobile games. A few years later we had managed to release 3 major titles around our own SoulCraft brand which have been played by over 25m people throughout the world by now. The caveat: those users were mostly in the developing world which made it hard to monetize the games at scale. So no 1m+ revenue / day as some other gaming companies with similar number of users for us. My point here is: I had plenty of time to learn in the CEO role and I used that time extensively to make mistakes ;)
In my current role as Product Director at BCGDV I get to build a new company with a launched product, completely new permanent team and running operations about every 6-9 months - mostly as an “interim CEO” (or GM as we call it) in the B2B context and in various industries. Some colleagues have asked me about best practices for this role and in order to give proper & structured answers I wanted to write them down. One last note before we get started: Being a CEO is rather an art than a science - so please take everything below with a grain of salt. These things worked for me but please pick & choose what fits your own personal style and the team you are working with.
So what are the top 5 things to do as a startup CEO?
1/ Give Direction
2/ Shape Team
3/ Establish Structure
4/ Be Responsible
5/ Push, Push, Push
The importance of each part will change based on the maturity of your startup. In the first 3-6 months the points 1-3 are more important, later the points 4 and 5 become the major ones.
Let‘s go through them one by one.
1/ Give Direction
This is probably the most obvious job of a Startup CEO. Very likely the company was founded on the idea you (and probably your founding team) had. This mission may seem obvious to you but it is very likely not to the rest of your team. One really good test how clear your mission is if you can explain it as the famous elevator pitch to your mom/dad in 2 minutes or less. You may think „but my company is much too technical/complicated“ - the answer is no: every good company mission can be explained in 2 minutes in layman’s terms. Otherwise it‘s just not a good mission. Tell it to anybody who remotely wants to hear it. Pitching it will help you get it clearer. It will also help you get feedback - very likely your mission will change over time.
As a CEO your job is to give direction where the company should be in the mid-term (1,3 or 6 months) and long-term (12-36 months) - not where it should be tomorrow. So ideally you can stay out of the day to day operations as much as possible and find a great team taking care of the short term. Your job as a CEO is help shape the roadmap how to achieve your mid/long term mission. Especially with a new team it is always a good idea to aim for “early wins” in the first few weeks - this helps inspire confidence in you as a leader and helps foster a “success culture” in your team. Have big ambitions overall but together with your leadership team rather set a lower immediate goal to get started and then celebrate success than always running behind and never be happy. Trust me on this - i did that mistake ;)
Constantly refine your roadmap and mission. About every 3 months do an „All hands“ to lay out & update your mission and how far along the journey you are - if only for 15 minutes. This will also help you to reshape your direction given new learnings and changing market environments because it forces you to think about it again more formally. Also make sure you don’t start believing in your own marketing in which you probably tell everybody how great your company is: It’s worth doing an exercise once every 12 months where you deliberately put yourself in the shoes of a competitor / upstart together with your leadership team and selected employees and try to gossip about how bad your company is and how you will totally disrupt it.
Maybe even harder than shaping the direction of your company is to actually sticking to it and to drive it actively. It is so easy to just end up being reactive to all the things being pushed your way and managing those requests perfectly. However your main job is not to handle requests perfectly but to drive your own agenda. Nobody will do that for you. Drive the venture to the direction you want it to be - don’t be driven by the circumstances and what other people including stakeholders / investors want from you. This point even includes your own customers: listen very actively to them but don’t simply follow all of their requests. Both qualitative research and quantitative research can lie and may not be statistically significant. Use it only as an input for your decision and to understand the motivations of your clients. Don’t blindly follow it. You will have to say “no” a lot in the job as a CEO. Focus, Focus, Focus. The success of your company will be decided more by your ability to say “no” than by your ability to say yes. Rather do 5 things right than 50 a little. If you feel you are stretched too thin you probably are. Change it, communicate politely why you cannot handle that request at the moment and then focus on what you think matters for your company.
To make this prioritization calls it helps immensely to clearly define success KPIs and then always ask yourself if the current activities of you and your team will bring you closer to achieving that goal. To cite one of my colleagues always ask: “will it move the needle”? You should only have 3-5 success KPI. Even better if you only have one. An example could be “number of rides” if you start a scooter sharing company. The success KPIs will also help your team to make decisions every day on your behalf.
To sum it up these are the things to remember around “Give Direction”.
- Refine, Refine, Refine your mission until you can easily pitch it to someone like your mom in under 2 minutes. This will also help you to get clarity about your mission
- Break it down to a high-level roadmap and over-communicate this mission & roadmap to your team. Mission & roadmap together is what I call direction. Formally update it at least every 3 months - in the beginning maybe even monthly.
- Make the direction tangible by defining the 1-5 Success KPIs which really make the difference in reaching your goal
2/ Shape Team
You can have the best direction in the world, without a great team to execute on it you are not going anywhere.
Obviously you need to try to hire the best team you possibly can. This is easier if you have raised a lot of cash: Simply work with a recruiting agency who will basically bring you potential candidate leads as a service. This will cost you around 20-25% of the yearly salary as a fee. If you are a “normal” startup founder you need to get a little more creative. Your own network will be the best source of potential team members but also don’t shy away to actively reach out on LinkedIn. It also helps to actively search in “Tier 2” cities / countries / universities to get good talent. Often these people are as good as the ones from the usual sources but you have a lot less competition trying to get them. Also think about this: people from big companies/universities are used to working in a good environment. That’s easy. The tier 2 candidates are not that spoiled and can also win with limited resources.
Once you have found your potential candidates you should not delegate the task to interview them but you should do this yourself - especially for your C-level / management team. Of course don’t just rely on your gut but also have others in your team interview them. The first initial hires will shape the culture of your company and it is super important to get this right. Hiring yourself forces you to pitch your direction a lot (see chapter 1) and you get to speak with lots of talented people in your industry which will give you tremendous insight into the industry you are working in. Use this opportunity.
In a typical startup team you have the following main positions you need to fill if these aren’t your co-founders anyway: Product (CPO/CTO), Go-To-Market (CMO / Head of BizDev) and maybe “Operations” (COO/CFO) - if you as the CEO will not do the last role yourself. How exactly you draw the lines between those different teams should be mostly based on the people you have at hand. First hire great people and then shape the responsibilities around that - not the other way round. We will discuss this further in chapter 3 about creating the right structure.
Once you have hired your first people see how they perform and interact with the rest of the team. If somebody does not perform fire him/her rather early than late. If in doubt over weeks/months, rather fire than not fire. You started this journey to build something great and “dragging along” underperformers will cost you and the rest of the team too much energy. It also sends the wrong message to the team in terms of “performance culture”. You will be afraid to fire the person - I certainly was when I did this the first time - but by now this happened a few times and ALWAYS afterwards the rest of the (high performance) team appreciated the move and forgot about it 1 week later. Do it.
Culture is a good next topic in the context of shaping your team. I used to think that team culture just comes out of working together in a certain way and does not need special attention. I was wrong. Invest in setting up the team culture in the beginning of a new venture. Do kick off workshops where everybody in the team tells a bit about themselves - if only for a few hours. A good format is that everybody talks about these 3 points:
- Some background what the person has done
- Things you should know about the person to work well with him/her (we call this “stinky fish” at BCGDV)
- 2 truths and one lie - this always nicely brings up interesting hobbies etc.
As the CEO you should also share some of your beliefs around team culture and that it’s important for you to have a good atmosphere in the team - and not only good results. Here is a team culture slide I am using to get the discussion going - but also ask your team for input.
The most important thing of course is that you also live the team culture you want to have in your team. Be open & approachable yourself. But also expect awesomeness and show it/tell them. You need to establish the attitude that people need to bring their A-Game on your venture. This may mean that you will not be friends with everybody but that’s ok. Don’t demand anything from the team you are not willing to give yourself. If the team has to stay late, stay with them even if you don’t really have anything to do. Go through the valley of despair with them and also celebrate the successes together. If the organization of social happenings is not your thing find somebody in the team who is a social magnet and delegate the organization of the celebrations to that person. However your job is to give a small speech to the team on those occasions.
Don‘t fall into the trap of micro-managing the team. The more short term, the more should come from your team. Live a culture where you can disagree easily based on good arguments. Encourage people to challenge your own decisions as well. Sometimes i on purpose make an early decision because only then people sometimes wake up and come up with their counter arguments. Then publicly change your opinion if you get persuaded by the team with good arguments. You don’t have to be right all the time as the CEO. Your most important job is not to know all the answers - it is even more important to have the ability to see greatness if it comes from somebody else. For the success of the company it does not matter if the great idea came from you or somebody else in the team.
For this to work take time for every new employee coming in to give them your pitch for the direction of the company and culture in an 1:1 setting. Ask what they want to get out of this job/journey with you and about their ideas. Treat them like a person and not like a small part in your startup machine. This 1:1 will make it easier for them to approach you later when they have input for you.
Enable Co-Leadership with your whole team and do 1:1s with your leadership team at least every 2-3 weeks - otherwise it’s super easy to get lost in the daily job. Do the 1:1s even if you think nothing is there to discuss. At least every quarter do a leadership dinner where you can talk longer in a nice setting and with alcohol ;) Also have a running agenda for your leadership meeting where everybody can put up topics. Nothing is worse than a group of yes-sayers around you who don’t correct your mistakes anymore.
To sum it up:
- Hire a great team. Shape the position after looking at the people not the other way round
- Actively invest to shape the team culture. This includes a culture where the best argument wins - even against you
- Correct your hiring mistakes early when needed
3/ Establish Structure
You drive the team in a great direction, you have your team in place - now the next step is to establish a structure in the team so it can perform like a well oiled machine.
The first part of that hopefully well oiled machine is to give the right tasks/roles to the right people. The best coder may not be the right choice for the CTO position - maybe it’s good to keep him/her in a more IC (=individual contributor) role and leave the management role to somebody else. I have also made good experience in hiring rather a bit too “junior” (but talented) people and giving them more responsibility than they had before. They will be very motivated to fill up the shoes and will also be more “hands on” - which is what you need as a startup. Learning on the job is the best training they can possible get.
With people in the right roles you need to encourage those people to take over responsibility for their role. They need to become “decision-making capable” (German: “entscheidungsfähig”). If you made somebody a CPO this person should really own the roadmap and drive product decisions. If somebody is the CTO this person should really have the last word in terms of how to build the product. Companies are not a democracy and making this clear from the beginning is helpful. Nothing is worse than pretending to have a „everybody’s opinion counts the same“ culture and then afterwards make a top down decision anyway. Rather make clear who is responsible for which decision (who is the “decision captain” as one of the CEO’s we hired for a BCGDV built company nicely put it) and then this person should actively reach out to the team and get their input for that decision. Treat them like adults. Get everybody’s input but make sure they don’t expect to vote on something where you don’t plan it to be a vote. Some hierarchy is needed for speed. A good rule of thumb is that if you have more than 5-6 „reports“ you should think about creating more hierarchy. In a startup you will always make decisions under uncertainty so there is no way to find the “right decision” if you just discuss/research long enough. Nobody knows the answer upfront for sure. That’s why enabling your teams to be „decision-making capable“ by creating clear roles & responsibilities also includes creating a culture where it‘s ok not to be right from time to time. Because when you (or your leadership team) make calls under uncertainty you will sometimes be wrong. However it is better to make a wrong call and realize it quickly than waiting months for a decision and then potentially still be wrong. Even worse is being forced by the circumstances into a decision and not actively driving it.
If you are working for a corporate and reading this: no this is not a confirmation that your current system is great. Very likely your company does not include/value the opinions of your most talented employees enough. From my experience startup teams tend to be “too democratic” while corporate teams are way to hierarchical. Find the golden balance ;)
One good way to make decisions and share this decision with all stakeholders in the team is to establish a regular meeting structure. I am a big fan of establishing a weekly or bi-weekly meeting schedule with the people / teams who report to me. This takes the „craziness“ out of the startup life and gives everybody an option to „have your time“ on a regular basis. This is especially important if your calendar is busy and you can’t just meet whenever it is needed. I have made good experience with having a „running agenda“ on a confluence page or so where everybody can put topics to be discussed so we can use those meetings very productively. Those meetings should be decision focused and not „reporting what has happened“. Make sure the discussions are on the right level: rather do 1 big decision right than 100 small ones. Don’t have more than 5-6 people in the room to be able to have real content discussions. However treat this only as a baseline of meetings. You will need to talk more for certain topics. If you have serious disagreements in these bigger meetings stop the topic, acknowledge the disagreement and continue to do the discussion a little later in a 1:1 setting. It is both for you and the discussion partner much harder to agree on certain points if you have an audience listening in.
You can adapt these meeting cycle over time - a more mature startup needs less of those meetings. Normally I start with a leadership meeting and meetings with every workstream on a weekly basis (e.g. with Product, GTM, ..). Later maybe only having the weekly leadership meeting is enough.
You just need to be careful that not everybody in the team starts adopting that approach and only meets once a week. Very likely If you are in the working team you should just clarify points with your colleagues immediately and not wait until next week. It‘s a matter of altitude (“Flughöhe” in German). The decisions of a CEO can mostly wait for a few days - the topics of the operational team should not.
Another element of increasing the productivity of your team is to encourage the usage of the right tools. Make sure they use a proper Todos, Notes app etc. This task can be delegated to the CPO/CTO or somebody else but you need to make sure this happens. Tools can have a tremendous effect on the productivity of your people. While you are at it: check out AllDone.app which I am developing right now as a hobby - work in progress but already great :)
Another important part of team productivity is to be approachable. Sit with the team. Only when you are there the team can use you and you see what’s going on. Make sure your team has regular physical time together. This does not need to be always but in a startup setting you want the random interactions between all team members. Having a regular meeting schedule does not mean you should only meet and talk then. Magic happens when smart people sit together in a room and you can just yell an idea in the room and get immediate response and feedback loops.
To sum it up:
- You want your team to run like a well oiled machine
- To achieve this clarify the roles and make your team decision capable
- Empower your team in a way that you are not needed at least for some time. Success is when you can go on holiday without things breaking down. Success is not when you are so important to the team that the team cannot live without you.
4/ Be Responsible
As the CEO in the end you are responsible for everything in your company. Even if you delegate tasks you stay responsible. When you notice something is off, do something about it. However to avoid falling into the micro-managing trap the trick is to talk privately with the manager responsible for the specific problem and not directly do it and/or publicly shame the responsible person. This way the person learns and you empower the team moving forward.
That being said some jobs are just for the CEO („Chefsache“ in German). Fundraising is one of those “Chefsache ” tasks. Most investors don’t really know the markets and/or technology they are investing in. Therefore they mostly rely on market trends (“if everybody invests there, i cannot be fired for doing this”) to pick a market / technology and then base their individual investment decisions mostly on the team they are investing in - next to business model and GTM approach which is easier for them to assess. Since you are the representative of the team it is your job to make a good impression on the investor. One tip which i cannot stress enough: Always talk to several investors at once. You need to create a sense of urgency to get good terms. Having competition is the only leverage you have to persuade your potential investors to actually close the deal. Otherwise it’s only smart for them to wait longer. Always do this even if you seem to get along with your investor very good.
Once you have closed your investment rounds, your investors become some of your most important stakeholders and probably end up in your board. This board you will need to manage personally as well. Use the board as a sparrings partner. I know it’s super tempting to try making nice slides and painting a bright future for the board. However they will appreciate if you openly discuss (selected) real issues with them. If they contributed to solving a problem they will get much more emotionally attached to the company ;) Also nothing is worse than being surprised by bad news. Tell problems early and at the same time propose to them options how you could mitigate the problem. Be open to their suggestions but don’t blindly follow their advice. In the end you need to make the call and drive your own direction.
Especially If you are in B2B you will probably have a very important key customers who make up or control a significant part of your revenue. Those people are even more important than your investors. Spend time on them and build a personal relationship with them. You need to have such a relationship with them that they will personally call you if something bad happens before they cancel your contract or stop using your product. You will need the chance to make it up to them. In the end the investors will always be happy if the money is right. If your key customers are gone even the nicest investors will not put more money in your company.
With all the structural work, stakeholder management and other strategic topics the best startup CEOs still find the time to do hands on work. Especially in the beginning do things that don’t scale. If needed personally handhold the first 10-20 customers until they are really happy. Only then think about how to make this scalable and economically viable. If for some reason customers are not happy personally investigate and talk to them. Sometimes you have to force success :)
Your job is also to figure out the complicated stuff. Especially if things don’t work out as planned. Have the courage to do a real pivot if needed - and not just a minor optimization. But first find out if you are doing it wrong or if you are doing the wrong thing. Remember that you can also be too early to the party - timing can be everything. One last potentially counter-intuitive point especially for bad times: go on holidays. If only for a few days. When things go wrong it’s too easy to put on blinders and just move faster in the same direction. This is very likely wrong since you also may need to change direction. You will need the mental distance from a holiday to make such difficult decisions.
To sum it up:
- Some jobs are just for the CEO: Fundraising, stakeholder management are part of this
- If you see problems in your teams, talk privately to the responsible manager/person and don’t publicly shame him/her
- Don’t just be strategic: be like the greatest leaders in history who are with their armies on the front line. Do the hard jobs. If you only want to work strategic, go to a corporate :)
5/ Push, Push, Push
While in the beginning of any new startup the points above are probably more important, over time pushing the team will become the most important thing and will massively influence the success of your venture. Especially after the initial enthusiasm has worn off but the big money is not yet there. Pushing the team can mean pushing in terms of speed, quality and/or cost.
You as the CEO are uniquely positioned to do this. Let’s step back a second to understand why. There is not a single company who managed to keep their dominant position over a really long time. If you look at the most valuable companies in the world only 2 out of the top 10 by market value have been founded more than 30 years ago. Yes sometimes the reason is technological change - but why haven’t those companies been able to drive this change themselves or at least react to this change accordingly? They have the customers, they have all the cash, they have the talent. Why is it that they all lose against companies who started small and had none of the advantages above? There are a 1000 reasons and other people have written books about it. The point I want to emphasize here in this article is that every organization has the tendency to optimize for themselves - the “insiders” if you will. And in a way this is great - otherwise companies would not share their success with their employees. It is only human and good to try to optimize for the people around you. However the downside of this is that over time your employees will get a little “spoiled”. If something goes wrong they will not simply focus on how to fix it but rather cry for more resources. The focus shifts away from the external customer to the internal organization. Even promotions are more dependent on how good your colleagues grade you and not that much anymore on the actual impact/value your work had in the market with your customers.
This is different if you have a real founder who is hungry for the big payout. As a startup founder you are incentivized based on the valuation of the company which is mostly depended on actual traction of your product with external customers. (Yes there is also crazyness happening on the startup valuation side but that’s another problem ^^). So if you have to sacrifice a bit of convenience for the success of your company you will. To be clear this is not a recommendation to burn your team. You are in a marathon together with your team so if you burn them they (and you!) won’t make it to the finish line. This is rather a recommendation to give (vested) ESOPs to your (leadership) team. Let them participate in the success of your venture. This way you are all in the same boat and you all share the same mindset.
Not doing it alone also brings me to the last point: pushing the team forward will cost a lot of energy. Have somebody as your sparrings partner - ideally this is your C-Level/co-founders but sometimes this can be junior person as well. Don’t be the lonely wolf having to decide and push on your own. From my experience having 2 co-founders is probably best because you can’t have a tie when you vote on a decision.
To sum it up for the last point:
- Push for Speed, Quality & (less) costs
- Do ESOPs with your team to all share the same output/value driven mindset
- Don’t do it alone
I hope this article has helped a little to get an overview about the role of a CEO in a startup. However unfortunately knowing all of the points is not enough to make you successful. At the end you win or you loose based on the quality of your decisions. You can check all the boxes above but you will still need to make the right calls under uncertainty. For this you need experience - and experience means doing a few mistakes on your own. Maybe just different ones after reading this article. Anyways: due to the uncertain nature of startups at least 50% of any real startup success is luck anyways - so do everything you can to optimise the other 50% and don’t forget to enjoy the ride :)