Overview
I once heard that a startup CEO needs to do three things right:
- Set and maintain direction
- Hire great people
- Raise money
After founding three companies, I’ve found this to be true about my entrepreneurial journey so far.
First, as the Founder and Managing Director of the Indonesian office of a digital marketing agency, my major focuses were direction and people. But raising money was the responsibility of my superiors.
Later, as the founder and CEO of a failed gaming startup, I succeeded at hiring great people, but not so much at setting a clear direction—and I didn’t succeed at all at raising money.
Oops.
As the co-founder and CEO of Butter—where we're trying to build the best virtual platform for planning, running, and debriefing workshops—I’m trying for the first time to succeed at all three.
Here are the lessons I’ve learned along the way about what a CEO should and should not be responsible for.
1. Set and maintain direction
The success of an early startup is highly dependent on the organization:
- Going in the right direction
- Going in the same direction
- Moving at a rapid velocity
Going in the right direction
In the early days of a startup, it’s very hard to tell what the right direction actually is. But it’s the role of the CEO to constantly question and sharpen this.
To figure out the right direction, the CEO has to:
- Be clear and resolute on the vision and the problem that the startup is supposed to solve
- Listen to user feedback and filter it based on how they’re actually using the product
- Gather and consolidate opinions from team members
This means that in the early days (and throughout the lifetime of the company), it’s incredibly important for the CEO to stay close to the users and their challenges. To set the right direction, you need to be absolutely sharp on who it is you’re trying to solve for and what you’re solving for them.
At StreamCrux, my previous video game streaming startup, we failed because we didn’t listen to users and didn’t solve a real problem for them.
So in the first half-year of Butter, I did between 30 and 50 user demos a week and continue to have tons of conversations with our users.
I'm actually the high-scorer on our internal Intercom dashboard 😉 . I respond to hundreds of user inquiries a week.
Going in the same direction
Going in the same direction is a matter of communication and leadership.
Communicating the right direction is a matter of being clear and concise. Then, you have to ensure that everyone buys into this direction.
Don’t think for one second that “I’m the CEO. They will of course do what I say!”
The biggest way to get buy-in from your team is to provide a ton of transparency and clarity on the business’s direction through frequent communication while staying vulnerable and open to criticism.
At Butter, we provide transparency in several ways:
- We give all employees access to the most sensitive documents (e.g. investor updates).
- We have an open question and feedback culture towards the leadership. At our town halls, we answer literally any and all questions people might have—especially sensitive ones (e.g. questions about runway)!
- We have a “default to public” culture on our Slack channels, ensuring that conversations happen out in the open as much as possible.
Moving at a rapid velocity
Maintaining the fastest-possible velocity is perhaps the most tricky of these, as “fastest possible” should not entail all-nighters and weekend work.
It’s knowing when to work hard and when to work smart. It’s about instilling a long-term work-life balance while maintaining a sense of urgency and ownership within the team. It’s instilling a mindset that every day counts in helping us achieve our goals.
I’m still personally trying to balance this, erring a bit too often on the edge of throwing hours at the problem. But when I feel exhausted, I do try to rest—not just push through.
Personally, this means staying in tune with my own energy levels, and every day focusing mostly on the activities that give me energy (Matt Mochary’s The Great CEO Within has very concrete tactics on how to do this!).
Getting the team to move at speed while still maintaining energy is more difficult because everyone is different.
However, I tend to stick to three principles:
- Lead from the front: I cannot ask others to do what I don’t practice myself. I work hard, but also show myself resting when needed.
- Build a sense of urgency: In a startup, you have to create the sense of urgency yourself to make sure you move the fastest. We do this by constantly setting ambitious goals and communicating these.
- Provide psychological safety: Everyone needs to be able to say when enough is enough or when we’re working stupidly. We want to allow people to speak up when they are exhausted or when things aren’t working and demotivating them.
2. Hire and empower great people
The success of a startup rests on the caliber of its early team members. This is especially true for the executive team. And this keeps being true for later-stage startups as well!
Hiring great people can be broken down into several components:
- Structuring: knowing which people you need
- Sourcing: knowing where to find them
- Closing: knowing how to convince them
Structuring your team
For structuring, sometimes it’s obvious (e.g. that you need a CTO), whereas other roles are less obvious (e.g. when do you need your CMO?). Hiring the right person at the wrong time is not good.
We’ve for instance put off hiring customer success people at Butter until a later stage (and not just to save money). We believe it’s important for all our employees to stay close to our users at the early stage.
On the other hand, we believe very heavily in being design-centric, so we’ve hired several product designers early in the journey.
Sourcing great people
In the beginning, sourcing can be strongly based on your network. But to get the best people on a global scale, you need to move beyond that quite quickly.
We’ve found the most effective methods to be cold-sourcing on LinkedIn, working with the right recruiters in specific geographies, and leveraging remote-work job boards.
My favorite way to identify great people has been to look for diamonds in the rough, or people that for some reason or another have not yet had the chance to unleash their full potential.
This is often found in people that have extraordinarily hard skills (make sure you do those tests!), yet where their career stories are very different from the top-uni, straight-arrow types. So their current position doesn’t necessarily show off their skills.
Closing great people
Closing great people is a matter of personal pull and external company reputation.
Having personal pull and the ability to “sell” your startup to potential candidates is key. I meet personally with every candidate during the interview process.
But establishing a strong employer brand for your startup externally as a great (and quickly growing) place to work is a more sustainable approach.
With Butter, we’ve sought to do so by being very transparent about our culture and remote work practices—both on our LinkedIn page and our Careers page. We’ve even posted videos from company social events to make people feel what it’s all about being part of Butter.
We’ve also made the vibe of our company apparent even with the screening questions candidates need to answer when they’re submitting their application.
Once great people are hired, it’s simply about setting the overall direction, motivating them, and getting out of their way.
3. Raise (or ensure) money
It’s the responsibility of the CEO to make sure the company never runs out of money. In startups (especially in the earlier stages), this is normally done through raising money from investors.
This comes down to planning and executing any fundraising rounds.
But most importantly, it’s shielding the rest of the team from even worrying about fundraising. The more security you create in the team, the better.
Concretely, this means being transparent about the fact that a process is ongoing, but not over-informing your team on the specifics of with whom you’re meeting and the outcomes of every single meeting.
Any investor-related communications are also the responsibility of the CEO. At Butter, this means that I write up our monthly investor updates, sourcing and consolidating information from the rest of the team.
But CEOs also have to do other things?
I’ve also reflected on many other things that a CEO is often expected to drive, including company culture, sales, and user understanding.
But these responsibilities can’t fall directly to the CEO.
Culture: Yes, a CEO is often a key component in driving culture. But the CEO can’t be the sole or primary person responsible for this. This needs to be driven from the entire founder team—and very often also from the early 10-15 employees!
A culture solely driven by the CEO will come to resemble a non-scalable personality cult.
Sales: Many of the roles that a CEO takes up are sales roles (talking to customers, hiring, raising money). Therefore sales is a key skill for a CEO. But I do not believe that doing actual sales is the key responsibility of a CEO—at least not at later stages. Another early team member should shoulder this responsibility.
User understanding: I believe a CEO should be very close to understanding the issues of the users. Otherwise, it’s not possible for them to set the direction correctly. But that doesn’t mean that a CEO should be the main responsible for driving user research or understanding processes. This job often rests with the Chief Product Officer.
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