What Does A Start Up CEO Really Do?
by Jay Habegger
This blog is really intended to discuss the things we’re doing here at OwnerIQ. However, as a start-up CEO, I’ve received so many forwards and comments on this post by VC Fred Wilson that I feel compelled to comment on it.
Not to take anything away from the colleague who gave Fred the advice about the CEO’s job early in his career, but, to be honest, I thought it was incomplete.
As a two-time start-up CEO (one win under my belt and another one on the way – OwnerIQ) and an angel investing in start-ups (Common Angels), Fred’s job description seems pretty light and undervalues important parts of the job.
Most of the comments to me about Fred’s post from employees and investors past and present have begun with the phrase “hey, you do these things…”
That’s good, I guess.
According to Fred, a start-up CEO needs to do only three things:
“A CEO does only three things. Sets the overall vision and strategy of the company and communicates it to all stakeholders. Recruits, hires, and retains the very best talent for the company. Makes sure there is always enough cash in the bank.”
I think these things are the bare minimum qualifications for a successful start-up CEO.
There is plenty of room to debate how important each of these three tasks are. What constitutes “enough cash” for example? I know that I’ve spent many board meetings across multiple companies discussing that very topic. However, a CEO that can’t deliver on these things is like a sales person with call anxiety: s/he isn’t qualified to do the job.
But, this job description is not sufficient. Not by a long shot.
Exhibit A is the dot.com melt-down. There were plenty of companies that had lots of vision, lots of talent and lots of cash. Most of these companies didn’t produce good outcomes for their investors.
In my opinion the missing parts of the job description are not glamorous because they have to do with day-to-day execution and handling adversity. This part of the job is crucial to delivering success when things go wrong. Think about this part of the job as the “Sully tasks” (If you’re not familiar with this story, check out this New York Times article). When you have to crash land in the Hudson as opposed to flying happily on to Charlotte, how do you handle it?
I’ll agree that the rare blessed start-up that gets its model right at the beginning, gets the timing right and has well financed and faithful investors can make it with a CEO that has Fred’s three traits alone.
But, when things don’t go according to plan I think the other parts of the job description start to matter – a lot.
Here are the other big things that I spend most of my days worrying about:
1. Priorities. What is the most important objective for each part of the organization given the data we have at hand at this moment? This is related to vision, but its much more connected with day-to-day execution and making sure that activities are connected with the vision in an achievable way.
2. Challenging. I also think of this as “Leading from Out Front”. Every part of the organization has goals and metrics. How do I inspire and challenge to always do a little better? Can I use a directed telescope to ask critical questions that can result in performance improvements or a riff on an already good idea to make it even better?
3. Preserving Optimism. A fact of start-up life is that most things don’t go the way you planned and you are always just a quarter or two away from running out of cash. Choosing priorities and challenging the organization is important, but equally important, in my opinion, is to always be the person clearly articulating a rational and coherent vision of how the situation you didn’t plan on can be fixed and how it is all going to come out ok.
I understand that these three things are not always visible to investors. In fact, in many cases the investors also need to have their optimism rationally preserved and that’s part of the CEO’s job too. Performing these tasks also takes a tremendous amount of time to focus on the details. How do you challenge if you don’t understand exactly what’s going on? But, without delivering on these things the CEO better have a good dose of luck in addition to vision and cash.