TL;DR: There are 3 core jobs of a founder-CEO in a Series A+ startup. They are prioritization, hiring and fundraising; in that order. Communicating, meetings or reviews which is how the founder-CEO spends her time, are only enablers of the above jobs. They should not be confused with the 3 core jobs. The article below unpacks these 3 jobs at length. As always feedback and criticism welcome, and I would love an opportunity to improve this piece.
Moving from 0 -> 1, achieving product-market fit and securing Series A is often accompanied by the founder-CEO moving from a hands-on doing job to a hands-on but directing role. Thanks to the funding, the CEO now has the luxury of having managers take over any functional roles she was doing in addition to the CEO role.
If the CEO’s overwhelming operational focus before Series A was to do what it takes to achieve product-market fit (PMF hereonwards), typically by running experiments to arrive at the right combo of product features, price and sales channels, then her focus after Series A and achieving PMF becomes keeping the growth machine chugging. After all there is a reason that capital from Series A to C investors is called growth capital.
Adding these two together, we can see that the CEO’s key focus area after achieving PMF and garnering a Series A round is to keep the growth machine cranking along through her team. The CEO would ideally align the entire org around this task, to achieve the maximum growth possible on available resources, chiefly money and time.
How does the CEO do this? How does she enable alignment around the objective, and ensure optimal allocation of time and money, so as to generate the highest growth outcomes? By prioritizing. Setting out what the key priorities are to the organization, and ensuring that they are communicated downwards. When she does that the entire organization can see what is important to the org, and this context determines their decisions.
Let us see how this works at Spotify. The following are my notes from a podcast featuring Gustav Soderstrom.
One product prioritisation and development mechanism that worked for Spotify take the kanban board and product development prioritisation all the way to the C-suite. There are 5-7 items there on the product development board, which the company needs to do and Daniel (Ek, the CEO) owns this. Gustav says that one agreed rule is that 2 things can’t have the same priority.
Podcasts was the #1 company priority for two whole years. Everyone in the company knew it. If you don’t have this clear priority laid out, you push these decisions out to managers and it creates conflict in the org. Daniel can’t have an idea in such a large company of what is going to clash with what resources. But what this this meant was that when decisions had to be taken at a company level on what resources to allocate if there was a clash then people knew what the priority for the company was.
As you can see from the above excerpt, if you set the priorities and ensure clear visibility of this across the org, then you dont necessarily need to get involved in decision-making at lower rungs. The team will use the priorities you have set to take the right decision.
Now what should you prioritize? The following, in this order: first values, next opportunities and finally features aligned to values and opportunities. Let me clarify what I mean by values.
One of Apple’s values is perfection. So if it comes to a decision of shipping fast to grab marketshare vs taking more time to refine the product, you know what decision it will take. For a consumer tech startup, the value is speed. So shipping fast has greater priority over the risk of customer dissatisfaction. Setting out your organization’s values clearly is a great way to make decision-making easier in the org.
One important point to remember with values is that the opposite of your value should be seen as a legitimate value too. Your value cannot be customer delight or profits – nobody will not want to disappoint their customers or make losses. Product perfection, as in Apple, is a value because there can be products that are designed to be less than perfect – such as low-end phones, of lower quality and lower pricies that are acceptable to the customer.
Prioritzing opportunities and products / product features
The othe two axes of prioritization are more straightforward. Spotify in the example above prioritized podcasts, and made sure the entire org knew this mattered, from the CTO and Product Heads to HR to everyone in the org, they all knew where to allocate time and money if it came to a choice between two competing projects.
Related to this is prioritizing products or product features. Ideally these have to be aligned to your values and opportunities or markets that you are after. So Uber prioritized payment by cash and Youtube prioritized downlaod to watch in less developed markets, because to succeed in this market, your value had to reflect inclusiveness, or we can say that we prioritized the low income market as a priority.
Beyond prioritization – hiring and fundraising.
Having understood prioritization and the three axes, let us now move on to the two other jobs of the CEO. The first is hiring. Hiring the A-team, the team that reports to the CEO, as well as signing off on key hires reporting in to the A-team is the next most critical job of the CEO. A key enabler of hiring would be org design, so that there is clarity on which priorities need to be served by new hires or internal transfers. This is something that either the CEO can draw out, or delegate to a colleague, but sign off on.
Making values explicit can help in hiring as well. Having those values upfront makes easier to choose between talent, or even for talent to self-select themselves. Travis Kalanick’s Uber celebrated the value of toe stepping as they called it,where you were encouraged not to overstress social cohesion meant a certain kind of employee profile.
Lastly, fundraising. On fundraising, there is a tendency for founders to see fundraising as “Oh I will focus on fundraising for 3m, get my termsheet, and then get back to business.” Fundraising is seen as a toggle switch, to switch on when the runway is <9m, and worked on. It is seen as a distraction from ops. In my view this is a mistake. The best startup CEOs see fundraising as an integral part of the business. The best startups see continuous investor interest and the CEOs of these cos factor in investor discussions into their day to day schedule.
This albeit controversial tweet by Semil Shah of Haystack VC reflects my sentiments.
When the CEO meets a potential investor and takes her through the opportunity, the CEO ends up articulating the company’s proposition, priorities, strategy and potential. Also, the very act of articulating it again and again gives the CEO new ideas. And investors dont sit back and absorb everything the CEO says. They often push back and the debate that ensues again gives the CEO a lot of grist for her intellectual mill. Not to forget that these meetings are a valuable source of feedback and temperature check.
This is also the same reason why the CEO should aim to hire continuously, or at least be open to meeting high bar candidates frequently (and not hiring only when there is an open slot on the org chart). Articulating the company’s vision, values and growth opportunities as you sell the co, learning from the best candidates and getting feedback on the company are all huge benefits of this process.
What about communication or reviews or meetings?
To me these are not jobs per se but how you execute the above 3 jobs. As a parallel, let us say storytelling is your job, and you can choose to storytell through writing, or talks. Similarly you set priorities by writing out a memo (communicating) or doing regular 1:1s (reviews) to clarify priorities and make sure they are on track. Or do meetings to fundraise (pitches) or hiring (interviews).
What about decisions? Isn’t that the CEO’s core role?
Well, the CEO is where the buck stops on all decisions, i.e., he is accountable to the board for all decisions taken in the org. That doesnt mean he should use that as a reason to take more and more decisions. That is a slippery slope to infantilizing the company by stripping your A-team of their ability to take decisions. Or really taking bad decisions, for you will never have the ground level perspective and data and customer connect to take the most optimal decision alwauys. Instead, when your A-team comes to you with a dilemma, you should highlight the important values that govern this decision, clarify the context and leave them to make it. As far as possible.
There is a great illustration of this in the recent book ‘No Rules Rules’ by Reed Hastings and Erin Meyer on a mid-level executive’s dilemma to bid for a promising show, and how the then head of programming helps him, not by taking the decision, but by detailing the context he should be guided by. My notes from the book.
At Netflix, decision-making and especially decisions on new, big ideas are delegated to the person driving the initiative. After all you paid top of personal market to get this person. So ensure that you give her the complete context, and then leave her to make the judgement. Then, trust her judgement and move ahead. The more the boss moves out of the decision approver role, the entire business speeds up and innovation increases.
Netflix states this philosophy as ‘lead with context, not control’. Control is fine in mission-critical highly operational roles (manufacturing, medicine etc.) but in creative professions, where innovation is the goal, the risk is not making a mistake but becoming irrelevant, because your employees are not coming up with the best ideas.
There is a case for making some decisions. And these would be around what Bezos refers to as one-way doors – irreversible decisions with high impact. In a similar vein Roelof Botha refers to crucible moments which come 1-3 times a year in a startup’s life. These are moments when the entire company looks to you. And certainly these are the ones that the CEO could weigh in on visibly. Beyond this I do think the CEO should minimize her heavy hand.
Alright, but what about strategy then? Isnt the CEO accountable for that at least?
Well, yes, the organization certainly needs a strategy, but then strategy isnt a one time creation or even an annual creation that doesnt need any revisiting. Strategy is closely tied with execution. It is through continuous operational decisions that strategy is enforced. If you are pursuing DMart’s value retail strategy, then there are set of interconnected operational choices and actions enabling that strategy – including buying real estate cheaply or locking in inexpensive real estate in high traffic areas and offering every day low prices that are driven through rapid settlement of outstandings with suppliers and extracting higher margins from them. These form their strategy but it needs thousands of decisions at every level of the org to be effective. Their buyers need to buy per this principle, the managers need to track that they are offering the lowest prices and so on. Strategy is the weighted average of a 1000 daily decisions.
Hence the best way for CEO to decide and enforce strategy is to set the values, and thereby priorities and leave the strategy to be determined and enforced by the team.
This excerpt from an article by Avery Pennarun, a startup founderis illuminating in this regard.
…in a large organization, executives don’t set strategy. Not even the CEO sets strategy. Why? Because it’s an illusion to believe you can enforce a strategy…if the person at the top is trying to “set a strategy” by making operational decisions, those decisions will be based on insufficient facts, because there are simply far too many facts for one person. That means, if your decisions should be based on facts, you will make worse decisions than your subordinates. That’s scary.”
“What executives need to do is come up with organizational values that indirectly result in the strategy they want. That is, if your company makes widgets and one of your values is customer satisfaction, you will probably end up with better widgets of the right sort for your existing customers. If one of your values is to be environmentally friendly, your widget factories will probably pollute less but cost more. If one of your values is to make the tools that run faster and smoother, your employees will probably make less bloatware and you’ll probably hire different employees than if your values are to scale fast and capture the most customers in the shortest time.
The 3-and-a-halfth job
There is perhaps one additional item the CEO can take up apart from the above. The idea for that came from an interview of Swiggy cofounder & CEO Sriharsha Majety in The Ken. In the interview (screenshot below, TK = The Ken, SM = Sriharsha Majety), he talks about adopting one of the priorities that isn’t getting the attention it deserves, and focusing on it. Of course, I am not recommending that you spend 40-50% of your week on it like Harsha does here.
An adaptation of this for the CEO to take one item, typically one of the priorities or an enabler of that, and take it on fully and by that I mean work with the team driving this. If she is able to do this across 5-6 priorities or challenges through the year, then those 5-6 would have seen some movement and she would have gotten to know serveral colleagues in an expanding team as well.
To sum up
First, focus on setting the company’s priorities – make sure you prioritize both values and opportunities / products – and make sure the same is clear across the org. Ensure that in your mails / memos, 1:1s and group meetings, you stress these priorities and clarify them. Push decision-making down the org, so that the people with the best data can make those decisions, and also gain greater ownership from making the decision. Next, take charge of building your org chart and hiring your A-team – meeting high quality candidates continuously should be a key part of your job. And then there is fundraising. The more you see fundraising – the persuasion and articulation of your startups’s proposition and competitive advantage, and the feedback you get – as a core part of your job, the more likely you are setting up the startup for long-term success.
So there you go. Now, I would love to know your thoughts. Do you think I have missed something? As always feedback and criticism welcome, and I would love an opportunity to improve this piece.
February 9, 2021 @ 3:56 pm
Your 3 Jobs of a Start up CEO post was fantastic ; there is one more category of a Start Up CEO usually the world does not understand is the CEO and a Founder of a Start Up who gets rejected by the Angle investors and the VC multiple times.