It happens rather quickly.
Your new investors sign a shareholder’s agreement, a subscription agreement, and a corporate charter. Usually, you create a new class of (preferred) shares. You receive a notification from your bank that the wires from investors have cleared. Your lawyers file the company’s new corporate charter, and a new board of directors is named.
And, just like that, you’ve closed your series Seed/A/B/C/+, and you are now (officially) the CEO.
I often hear from founders and first-time CEOs that as soon as they take in outside capital, they feel lost.
“What am I supposed to do now,” they asked me.
“How do you define the CEO role?”
“What does it mean to you,” they often question.
I have had the fortunate opportunity to be CEO three times in the past 20+ years. I still remember the first time I felt this way.
When we closed our Series-A and brought on two new VCs, simultaneously creating a five-person board of directors, I suddenly felt lost.
I thought, “What is my job description now?”
Over the years, I have received varying answers to this question.
One of my previous investors and advisors put it like this, “a CEO’s role is about creating a vision, deploying capital on the right projects, selecting people, and creating culture.”
What I have learned is one thing…
The CEO role is multifaceted, probably one of the only ones in the company.
The question is not, “what is my job now,” it is “what are my jobs now?”
Here are five jobs (beyond fundraising) you should master as CEO.
1. Team Builder
After you close your round, look around. Do you have the right team for the current stage of your company? A CEO’s most important job is determining at every step of the company’s growth who should be “on the bus now?”
A classic executive management team has seven “boxes” or roles. It includes Marketing, Sales, Finance, Product, Engineering, People (aka HR), Services (now also called Success). It is your job to fill those roles. You may not need them all at once in an early stage pre-product company, but you eventually will.
But, if you have no experience with these roles, how do you hire them?
Here is a tip:
To hire a VP, Product, for example, you need to know one when you see one. Reach out to companies in your network, or get introductions from your new board members to strong product leads they know and invite them for coffee. Ask them what the role is about, how you should evaluate it, where you might find good ones. From these visits develop scorecards (an evaluation tool) for each position. Then develop a repeatable, data-based process for hiring.
One crucial thing to note is that as your company grows, you need to continuously prune the “seven boxes” to ensure you always have the right leaders in those seats as the company begins to scale.
(More on this in the future. For now, I recommend you look at each role and expect the leader only to serve a two-year term. At the end of that term, you need to re-evaluate whether they are the right leader for the next two years of your venture.)
a chief executive officer, the highest-ranking person in a company or other institution, ultimately responsible for making managerial decisions.
Operating a company is about decisions.
Should we go left or should we go right?
Should we expand our solution or should we enter a new market?
CEOs make thousands of decisions every week, tactical ones, incredibly strategic ones, and sometimes irreversible ones.
(It’s like standing on the bridge of a galactic starship and knowing when to tell your team to “engage.”)
Operators set the standards for corporate goals, budgets, communications, team coordination, crisis management, and company culture. They decide which projects in the company should get their precious capital. They also enforce accountability and perform careful reviews of the operational decisions of their leadership teams.
To make decisions, you need a system for making them, an “operating system” of sorts.
Your leadership team will expect it — often they just lived one in their previous companies.
“a CEO’s role is about creating a vision, deploying capital on the right projects, selecting people, and creating culture.”
Leadership is a charged term with so many definitions.
I won’t go into the classic ones here.
What I will focus on are two of the critical leadership characteristics of successful CEOs.
The best CEOs have these two things in common: (1) they are selfless, (2) they relentlessly live the values and culture of their companies.
First, being selfless means working for your team. In other words, your job is to remove obstacles to your teams’ success. Your job is to help your team solve the problems they encounter by removing those things that prevent them from seeing the solution. It is not about being a superhero and rushing to solve it for them. It requires you to empathize with them and help them amplify their strengths. This approach to leadership is now commonly known as “servant leadership.”
Servant leaders focus more on making their teams successful and less on themselves and the company.
Next, once you define the company’s core values, it is your job to exemplify them.
You must instantly become a role model for what it means to live the values and culture. For instance, if “we work hard and we play hard” is a cultural belief, well you’d better ensure that you are front and center for both the working and the playing.
Likewise, if “focus” or “testing assumptions” are core values, then you must always be the first to re-focus the team and ask for the list of assumptions behind every decision.
As CEO, you are the personification of the company’s “north star.” When things get tough and confusing, your executive team and the rest of the company expects you to be in the north!
CEOs who find reasons to skirt their core values lose credibility very quickly and could cause the company to unravel.
Often founder-CEOs represent the interest of the common shareholders (founders, employees, friends, and family) on the board. The board of directors is responsible for protecting the interests of all shareholders.
The CEO, therefore, is a bridge between the investors and the executive management of the company. As the chief executive officer, you have a responsibility to report to investors how their capital is being used to create value. You do this in varying frequencies. Most VCs start with monthly updates, then reduce the rate to quarterly meetings. At these meetings, you’ll need to report on the company’s goals, progress to date, and the status of capital to name a few. Getting good at making these meetings productive takes time.
Here are some tips:
(1) Get to know each of your board members personally. Make sure you spend 1:1 time with each of them on calls on a monthly cadence. Use these 1:1s to get advice for the challenges you’re facing as CEO and the capital needs of the business.
(2) Architect your board for success. Make sure you have one independent on your board that has already done what you are trying to do at scale. Use this person, whom you should trust, to vet new ideas you are thinking of floating by the board, help you with communicating bad news, and developing operating plans in crisis.
(3) Hold at least one board meeting that is just about strategy. Often CEOs are so focused on reporting metrics to the board, they lose sight of the fact that they have experienced investors, and operators (hopefully) at their disposal for two to three hours every quarter. I would often schedule at least one meeting where we’d discuss long-term prospects with the board, SWOT analysis, and grand challenges we face. This meeting offered me the opportunity to build trust with the board by immersing them in our vulnerability.
The CEO is by far the best storyteller in the company.
That’s right, you and no one else.
You are the face, the brand of the company. Employees look to you to understand what they should believe in. Customers look to you to learn what the future holds. The market looks to you to find out what they are missing. And, investors look to you to give them a significant opportunity to back.
I have to say it’s not easy to become good at selling a dream. I am an introvert, but I have had to learn to convince people to look to the stars and see the universe in motion. Because this is a skill that is such an essential part of the job, I often ask first-time CEOs to tell me their story before they even open a single PowerPoint slide.
I have written often about the importance of unlocking the “storytelling gene” and learning to deliver a strategic narrative. I invite you to read those stories and plays for tips and tricks to make you magical.
While there are more jobs the CEO will take on as the company grows, these are the foundational ones.
I suggest you master these five first.
In the meantime, here is another answer to the “what does CEO mean,” question from another mentor.
A CEO’s job is to maximize shareholders value, right? Wrong. A CEO’s number one job is to create value for his/her customers.
Through value creation and delivery, market share gained, [an] established brand, competitive advantage built for the long haul. It is only when market and product competitive advantage [are] built with [a] deep moat [does] the business maintain long term growth and profit. Wall Street will then reward the shareholders who own stock of [the] company.
Certainly food for thought.