So you’ve been doing this for awhile now. Maybe you’ve gone through the initial excitement of idea / team / frenzied MVP development / seed funding. Maybe you’re even further along — reached some level of product-market fit, raised an A or B round, and are trying to grow the company and the metrics.
Here are some things you’ve most definitely noticed already:
No One Prepared You For This Job.
Unless you’ve been through the wringer successfully multiple times, sooner (usually) or later you’re going to be doing things and finding yourself in situations you’ve never been in before. Maybe it’s going to investor meeting after investor meeting and getting rejected despite your obvious preparation and great results. Maybe it’s dealing with a co-founder or board member that just doesn’t see things your way, or a troublesome star employee. Maybe it’s a VP of Sales that you need to hire and have no clue how to build a compensation plan for. Or maybe it’s even that meeting with the celebrity public company CEO that suggests to buy your company long before you were ready for any of these.
Having a Stanford MBA, reading everything you can about it in books with aptly named titles like The Hard Thing about Hard Things, even seeing it from the sidelines as an employee or co-founder helps, but you can’t learn to fly a plane from a book, or in a class, or by sitting in the flight engineer’s seat. The situations you will go through are never exactly what you read about, the people involved are never exactly the same, and your personal demeanor is not Steve Jobs’ or Ben Horowitz’.
Doing the right thing is easier mentally and emotionally when you are presented with some perspective — here’s where you are, here’s why you got here, here’s what typically happens afterwards if you do this or that.
Guess what — dozens of thousands of CEOs were in similar situations before. Without tapping some of that experience you’re flying blind.
It’s the loneliest job, and your state of mind counts.
Saying that a startup CEO is the loneliest job in the world is almost a cliche (don’t believe me? Google it!). No one is really, fully aligned with you. Your co-founders share interests with you, but have a narrower perspective and typically only want to get their own job done well and go home expecting you to do yours (anything else and you have a different kind of problem). Your investors want you to succeed, but don’t have the time and attention to understand exactly what you’re going through (more on that below). Your employees are your employees. You have a responsibility for them, but you’re the driver and they are the passengers. The last thing they want to hear is that the driver isn’t sure where he’s going or how to drive.
Sooner or later the loneliness and stress will get to you and affect both the quality and the pace of your decision making. Furthermore it will affect how you relate to the people actually doing the work — writing the code, designing the products, meeting the clients. Lastly, it’s going to screw up your ability to persuade investors, partners and clients to give the company what it needs.
Your level-headedness affects results, and you need help maintaining it.
A good CEO Advisor brings perspective and experience and is with you in your predicament — but is also apart from it, because it’s NOT his full-time job. As such he is able to provide you a mirror, perspective, management advice, a soothing voice — helping your perform.
You Need To Perform, Consistently
Even if you’re the most experienced CEO out there, doing phenomenally well in a break-out company, every day is going to present hard choices, time pressure and stress. Just like pro sports, the best athletes need the best coaches. To guide them, to help them deal with the challenges and the anxiety. Getting the most out of yourself is your duty to your shareholders, but you’re only human. So the best performing CEOs get the best coaches. Don’t believe me? Read The Trillion Dollar Coach. Equipping yourself and the company for growth is the solid business choice.
Every day in your life as a startup CEO offers an opportunity to screw up — and an opportunity to grow.
Who Can / Can’t Help You
Evidently, perspective and experience count. What you want is:
- Someone who’s been in your shoes — direct experience as a startup CEO, because that’s the only way to understand both the business and the human aspects of what you’re going through.
- Someone who’s seen it multiple times — perspective is a function of seeing things from multiple angles, experimenting with different solutions to similar issues. The more, the better.
- Has time and attention, and is focused on your success – One can’t parachute into a situation last-minute and really provide assistance.
- Communications style that’s right for you. If you don’t have chemistry and good communications, you will not share enough and he/she will not be able to guide you. Either you won’t be heard or you won’t really be listening.
- Got the network to support you – A lot of what you’ll need is relationships – investors, partners, 3rd party advice. Not having a network is a red flag that the person hasn’t done enough / is not appreciated by others.
While most of these points are obvious, I’d like to re-iterate the first one. Many people can offer you specific advice on their area of expertise — lawyers, bankers, management consultants and so forth. But your job is to fuse these considerations, apply them to the conditions and constraints at hand and make decisions. That’s where the forces pulling you in different directions put so much mental and emotional strain on you.
People who’ve not been in that situation will have a very hard time helping you effectively, but won’t necessarily know that they’re wasting your time. They may provide bad advice because they only understand one aspect of the situation (like the lawyer who will focus on your legal exposure while totally disregarding the business opportunity / risk of not taking the risk…). They may provide good theoretical advice that totally misses the capabilities of your team to execute or the long term effects on them (like the McKinsey guy calculating in Mythical Man Months).
“Best advice for a new CEO comes not from VCs or other ‘advisors’ people tend to put on PowerPoint slides, but from more experienced CEOs who have been in their shoes before…ideally multiple times over.“ – Bilal Zuberi, Lux Capital
Wait A Second, Isn’t That What My Board Members Are For?
Unfortunately, no. Officially the board is there to provide corporate governance and oversight. What this translates to in most cases is really protecting investors’ interests. And while it’s generally the shareholder interests that you do a good job, in the vast majority of cases they are not equipped to help you do it, for some or more of the following reasons:
Many of them have never been in your shoes
While many venture investors have entrepreneurial backgrounds, the majority are either finance guys who never worked at a startup let alone founded one or successful executives / early employees who’ve helped grow a tech company but not as the CEO nor necessarily in the early stages. These people may have seen a lot, but never felt what it’s like. Often investors boast of an entrepreneurial background based on a couple of years of experience as founders of a company. Guess what — whether you managed to get rich with your first company after a few years, or struggled for awhile and realized it’s easier to make money investing other people’s money — your experience as a startup CEO is limited. Then you have the corporate VC people, typically manned by corporate executives who are super-knowledgeable about their domain, but frankly have not spent a day of their lives working at a startup.
So what about the 20–30% who do have the right background?
If they’re good at their job — they are too busy
Doing a good job as a VC or professional angel means spending a lot of time at board meetings, deal-flow meetings and fund-raising for your fund. The best venture capitalists don’t have enough time / attention span to be with you in the trenches. VCs typically look at thousands of deals a year, many hundreds per partner. That’s multiple meetings per day for deal flow and a half day partner meeting every week. On top of that if you’re sitting on 5–10 boards you add about that number of formal meetings a month for “1:1 CEO Update” and a total of at least one board meeting per week which should gobble up a whole day with preparation. And then VCs have to fund-raise too, which means everything from schmoozing with LPs regularly to 6 months of preparations and road-shows. Bottom line is they don’t have time / attention to meaningful time focusing on your needs every week.
Finally, for the few that do…
There is a built-in conflict of interest.
When you have bad news (“we didn’t make our numbers this quarter” “my co-founder is not a good enough manager”), or just decisions that may conflict with the investors goals (“we have an acquisition offer but the investors don’t want to sell yet”), the help you need is with crafting the approach that will get these people on your side. Obviously you can’t do it with them.
Honestly, many investors don’t like CEOs that show vulnerability, it scares them into thinking they need a new CEO.
You need someone with whom you can be vulnerable.
OK, I’m Convinced — How Does It Work?
In my experience, to make this relationship a success requires a measure of discipline. This is not about getting $0.02 worth of advice, it’s about having a structure in which there is deep understanding and commitment to doing the hard things — whether it’s executing on difficult decisions, or changing habits and attitudes. On your end as the CEO you have to commit to:
- Coming prepared to meetings / calls — make a list of the top 3–5 topics that are important to handle, then dive deep.
- Truly listening, you should be responsive but not reactive.
- Commit and deliver — agree on actions, then come back to the next meeting having really good excuses if you haven’t done them. Or better just do.
- Set a framework — Meet weekly. Preferably at set times. Share an agenda, share action items. Report progress. It shows commitment and creates positive habits.
Don’t treat it as a therapy session. Treat it as a management process.
The advisor should be committed as well:
- Commit to schedule and mutual expectations about process.
- Always available for urgent stuff — via email, messaging, calls.
- Involvement with co-founders, board members and possibly other execs as needed.
- Using her network for your benefit – investors, experts, business partners.
Possibly the most important thing to remember is that this is a normal, welcome business activity, just like having board meetings or weekly management meetings. I mentioned Bill Campbell’s work (“The Trillion Dollar Coach”) with some of the most outstanding CEOs you’ve seen on the cover of BusinessWeek. These guys worked with him because he made them even better.
The CEO Advisor is not there because you are a flawed CEO, but because you are a CEO and you are human. There’s no stigma, it’s not Denpok Singh, the spiritual advisor from HBO’s Silicon Valley. It’s a business function helping the CEO be 10% better.
At an early stage company, a CEO that’s 10% better is often the difference between survival and demise.