I regularly tell people the CEO has three responsibilities.
- Communicate the Vision.
- Hire Great People.
- Don’t Run Out of Money.
Full stop. End of story. Next blog post…
But just in case you wanted more…
There are lots of variations on those three responsibilities, and many books, articles and TED Talks will attempt to break them up, sprinkling in bullshit language to make five, seven or 10 things every CEO must accomplish. After all, the more responsibilities a CEO has, the more likely they’re doing SOMETHING that supposedly matters. But a good CEO is strategic, and even if there’s a list that’s 25 items long, they all boil down to three simple directives. Communicate the vision. Hire great people. Don’t run out of money.
The order is important, because the last two almost entirely depend on the first one. In order to hire great people, you must inspire them with your vision. In order to sell, you have to communicate that you both understand your customer’s pain and have a meaningful and valuable solution. In order to raise capital, you need to communicate the hidden market trends and why your company is uniquely positioned to capitalize on them. Everything comes from communicating the vision. Simply put, it is the foundation upon which startups stand or fall.
Hiring is the greatest force multiplier a CEO has. Even if you could do everything, you don’t have the time. Hiring enables a great CEO to fill skill gaps and attack multiple objectives simultaneously (mythical man month, aside). It is the only way that a venture-scalable business can grow in a market over time. I know I’m not blowing your mind here.
The number-one question I get from non-technical entrepreneurs is “how do I find a technical co-founder?” While I’m tempted to tell them they don’t deserve to have a startup if they can’t figure that out, I generally give them the following answer.
- Talk to as many developers as you can find. Be promiscuous as hell with your idea. Some small percentage of people will show some basic interest.
- Ask those people how to solve a specific problem. Occasionally, someone will decide it’s easier to just spend an evening coding the solution than explaining it to you.
- Keep telling *those* people about your progress. Keep asking them for help. Eventually, you’ll have a technical co-founder.
The same strategy works when poaching people from other companies. Make contact. Communicate with the people who show interest. Rinse and repeat.
After you’ve successfully hired someone, communication is still your top priority. A successful CEO articulates the “why” and the “what” and empowers their employees to figure out the “how”. It’s not enough to communicate the vision (the “why”). As CEO, it’s up to you to communicate what success looks like. Without clearly defined conditions of satisfaction (the “what”), an employee will flail, creating ineffective solutions, ignoring constraints they didn’t even know existed.
One successful executive I know generates a ton of new ideas and then assigns them to their management team without fully describing what success looks like. “Here’s a grand vision, go make it happen.” It’s as if the CEO asks for a rock, and when the manager comes back with whatever she found, the CEO asks for something bigger. So the manager finds a bigger rock and the CEO says, “I wanted something a bit pointier.” And on, and on.
Hiring is what enables a CEO to tackle larger problems, and communication is how they orient their team.
The buck truly stops with not running out of money. Depending on who you ask, somewhere between 80 to 95 percent of startups fail, and the vast majority of them fail because they run out of money. When the company goes out of business, no one is pointing fingers at the sales team.
Lean startup methodology demands that a founder proves they can sell a product before they build it. It’s such a simple philosophy, yet founders and successful CEOs constantly skip that checkpoint, myself included, because of hubris (“I know the market”) or fear (“what if the market rejects my idea”).
A successful founder is constantly out in the marketplace validating the company vision.
- The pain they are solving keeps prospective stakeholders up at night.
- Solving the problem is creates enough value that the idea is worth pursuing.
- Prospects believe the proposed solution will succeed.
Once the company has acquired 20+ customers, the CEO should understand the sales cycle well enough to create a playbook that a sales team can follow. Until then, no one can articulate the vision better than the CEO.
OneTrueFan, a company I started after successfully selling MyBlogLog to Yahoo!, ran out of money a year into the business. Inspired by how Dennis Crowley created Foursquare on the back of Dodgeball’s failed acquisition, we built MyBlogLog 2.0 before we asked whether anyone wanted it. We found out that answer the hard way.
I’m a product guy at heart, and I was excited about building the product with a team of great people I had worked with before. But I didn’t like communicating our vision, and I hated sales and fundraising. I didn’t just ignore my CEO responsibilities, I actively hated them, so it’s no surprise that OneTrueFan tanked.
What should I have been doing? And what should you be doing as CEO of your startup?
- Communicate the vision. Both internally to your employees at meetings and lunches, and externally by attending conferences, giving media interviews, writing blog posts and setting yourself up as an expert in your industry. Talk. To. Everyone.
- Hire great people. Even if you’re not actively hiring today, find people you want to work with six months from now and start getting them excited about what you’re doing.
- Don’t run out of money. Fundraise and actively sell your product. Every damn day.
If you’re not doing one of those three things, you better have a good reason for it. Spoiler alert: there’s no good reason. Because if you’re not doing one of those three things, you’re not being the CEO.