If there is any universal truth in the startup world, it's that there is no time to get bored. Changes, iterations, scaling, new phases for which one was unprepared... this is especially true for a startup CEO, since throughout the process of validating, scaling, and then maximizing a business, their role changes significantly.
Although the main responsibilities of a startup CEO have been discussed on various occasions, the reality is that their role not only evolves, but changes profoundly over time... and it is difficult to adapt to each new stage.
Every startup goes through 3 distinct phases (although the boundaries sometimes blur):
1. Build / create a great product that users love
2. Create a company that maximizes the opportunity revealed by the product
3. Reinvest the profits of the model to keep building new products and disruptive ideas.
And while there is plenty of information about what to do in the first stage (where the vast majority of startups are concentrated), it is complicated to learn what happens next... where curiously, and contrary to popular belief, things don't get easier—they get much more complicated.
THE ROLE OF THE CEO AT THE START OF A STARTUP
At the beginning, and for much of the first phase, rather than CEO, they tend to be the "CPT" – Go-To Person for Everything, meaning they are not only deeply involved in building the product/service, but also take care of marketing, providing support, and solving most of the new problems and tasks directly related—or not—to the product (which are not few). It is a role 100% focused on execution.
In fact, an interesting perspective (though one I don't 100% share) is to view them as the "unstopper" of new areas (a role that later "should" be passed to the COO):
Is it necessary to set up an operations team? Is it time to launch the human resources role? Processes need to be defined and certification ensured. First, the CEO learns how to do the tasks, establishes a set of basic processes, and executes... and once the area starts to stabilize, they should hire someone much better than themselves to run it.
On the flip side, this implies an overloaded CEO (since unfortunately in startups things don't happen sequentially, but as Americans say, SHTF), and the CEO is likely not working on the key elements of their job in this phase:
The advantages of this approach are clear: there is deep knowledge and a clear awareness of how each area works, and above all, a criterion for what the candidate who will later fill this role should know, and what qualities to value in them.
• Talk every day with users and customers, and validate initial business hypotheses through experiments.
• Create a product/service that is 10x better than the competition, as a result of prior validation work.
• Carefully manage cash flow, and if necessary seek financing, so the money lasts until the market responds to the product/service.
In any case, the CEO in those early stages is often in the trenches, knee-deep in mud fighting for every inch of ground alongside the rest of the team, with little time to think about the kind of company they are building, or about delegating... which is normal, but could become their Achilles' heel.
If the business doesn't work, no matter how well you've structured the company, you've wasted your time. It's the same feeling as pushing a huge boulder uphill: every arm counts.
WHAT IS THE ROLE OF A SCALEUP CEO AND HOW DOES IT EVOLVE?
However, if you're very fortunate and the company manages to do things right (and the market validates it with sales), a gradual change begins to occur in the company. The boulder we were pushing reaches a point where the ground starts getting flatter... and if all goes well, we find ourselves on an increasingly steep downhill slope, sometimes running after it.
In this new stage, where there will be more and more people pushing the boulder, when it is crucial to keep running and driving the boulder forward without anyone falling along the way while making increasingly more decisions, the role of the CEO has to change. Initially, the role of a startup CEO is to work *in* the business, but then it must shift to working *on* the business.
Once the startup has confirmed that real demand exists, where sales (and all other areas) begin to accelerate, a maturation from startup to scaleup occurs. From searching for a business model to executing and scaling it. Some people quantify this point in terms of team size (when passing 20-40 people, and multiple offices start appearing), but it depends heavily on the business model and market... although it is certainly true that a turning point occurs here, as new problems and requirements arise for which we were unprepared.
What is clear is that at this point, the CEO's agenda and goals must change, focusing much less on the day-to-day and more on working to *build* the company... something that is enormously complicated, since the natural impulse is to remain daily involved in every product decision, continuously interacting with customers, and even working directly on the product. But no, this is a time when the key is to delegate to the great team you've started building in the previous phase.
In case company growth has exceeded expectations and is growing at double-digit percentages year after year, the CEO should even consider forming an advisory board (Board), taking the position of Chairman, hiring a new CEO who can make a new qualitative and quantitative leap and lead the company into a new growth stage. Here, the real challenge for the creator, founder, and startup CEO will be learning to "let go" of their position and learning to visualize, act, and relate in a more executive manner with company staff.
It is a moment where tensions often arise within teams and with co-founders, as the CEO's priorities and focus change... and if this hasn't been properly explained and communicated, it can create unnecessary friction.
That being said, in my opinion, and as long as it is humanly feasible, the CEO should continue:
• Being involved in strategic recruitment decisions (final stages only)
• Ensuring that product evolution is aligned with the vision (but not in the day-to-day)
• Communicating to the team at all times where the company is headed and the main business milestones (I am a big fan of hyper-transparency) and, above all, sharing the learnings and results achieved by the entire team.
In addition to these tasks, there are a number of key points where the company's CEO/Chairman must absolutely focus:
1. CULTURE
Ignored or even dismissed by many, company culture is one of its main competitive weapons; it is what defines it as a company. Although we will discuss it in depth later, culture emerges from day one, and in the first phase it is relatively easy to manage due to team closeness, great communication, etc. But once the company begins to grow, deliberate work by the CEO and the entire team to maintain, evolve, and share it becomes essential.
2. TALENT
Beyond trying to be involved in every hiring decision, at this stage it is critical to formalize and scale the talent retention and attraction system. Furthermore, given that as CEO you won't be able to be involved in daily operations, you should ensure you have a top-tier senior management team perfectly aligned with the company's strategy, principles, and culture... something much easier said than done.
What is a fact is that having a top-tier person dedicated to people and talent as early as possible is one of the signs that define great companies.
3. PARTNERS & STAKEHOLDERS
Managing the company's current partners, as well as identifying and working with the various stakeholders in the scaleup, is an absolute priority. That's why it is important to dedicate significant time on our calendar to speaking with them, understanding their motivations, and leveraging their role... ranging from partners or investors to third parties such as media, suppliers, or regulators, for example.
4. FINANCING
There is one task in your set of responsibilities that will never change, and that is making sure there is cash in the bank. Perhaps at this point the situation has changed, and you no longer have to worry about the company's survival (having reached break-even)... but you must always remain aware of the company's position, and how to finance potential expansion projects, growth, new business lines, etc.
5. STRATEGY
Just as the role of the CEO changes, company objectives also tend to shift during this transition, and designing a measurable strategy that remains aligned with the vision is one of the greatest challenges. This involves dedicating time and effort to understanding why things happen (what really drives growth? why is this line of business growing faster than the other?), and defining actions to capitalize on what was learned.
In this phase, much like in a game of chess, the key is to think several moves ahead of the current situation. You surely know the famous saying: "Good hockey players are where the puck is. Great hockey players are where the puck is going to be."
6. INDICATORS AND OBJECTIVES
One of the most obvious aspects when analyzing today's business landscape is that the objectives and metrics we use trigger behaviors... and one of the most complex and important tasks in this phase is defining objectives aligned with strategy and culture not just for the company, but for the individuals and teams within it. Much easier said than done, but understanding how to influence growth and align the company in that direction is key.
There are many startup CEOs who do not feel comfortable with this shift in role from "creator" to "manager," from "search" to "execution and scaling"... and that's okay; if there is one thing that defines most entrepreneurs, it's the passion to create. That is why something they should consider is whether they remain the best person to lead the company, or if someone else is better suited, and move into a product role or similar. After deciding to start a business, this is the hardest decision of all.
What can never be done is to abdicate founder responsibility, maintaining the vision of where you want to go. This is where an era begins that is as exciting as it is complex... just as it was from the very start.
What do you think?
alejandro-correia.com