After having helped launch over forty startups, we have been exposed to—and coached—a wide range of CEOs. Most are first-timers, others are on their second or third startup. But over time, we’ve culled the following best practices for aspiring CEOs:
Hire the core and outsource the rest.
Companies should distinguish early what is core to their business and hire to that – outsourcing and virtualizing the rest. These days every new position in a company should have to justify why it deserves a full-time employee in it. Once it passes that test, hire the best and pay appropriately, but stay flexible with the rest of the positions, especially those that can be done part-time (legal and early finance) or remotely (software development: see Ukraine and India).
When picking your Board, experience and true partnership trumps valuation.
You are going to be with these people for a long time, so be picky. A team of experienced investors and advisors who will help you with your planning, hiring, and early management challenges are worth their weight in gold. That doesn’t mean you should not worry about the structure and valuation of the deal—just don’t let it trump establishing a long-term relationship with someone with whom you would want to be in a foxhole.
Leadership often comes with a sell-by date.
The familiar tropes of successful startup leaders are the demanding dictator with a mercurial temperament; the brilliant engineer with stunted social and leadership skills; the cerebral and brooding visionary. These may be stereotypes but they are built on real people—we know, we have worked with all three types. But whatever the type of leader you initially are, if you can’t grow as a leader and adjust to change—in the market and in your own company—you are on your way to being an ex-CEO. There may be other—and better—roles in the company for you. But if you’re determined to still be CEO when your company is acquired or goes public, then quit being a stereotype and challenge yourself to evolve into a leader for the long run. And remember: the company’s success is the ultimate goal—your role and development is second to that.
The most important attribute of company culture is how you make decisions.
Successful startup cultures are not based on free lunches or on-site massages (though both are great). They start with how decisions are made and communicated. Weekly or monthly employee meetings are fine—recommended, in fact—but only if you have something to say of value and are open to being questioned by the troops. How you respond to questions and criticism is important—how you communicate your decisions and the logic behind them is critical.
Team trumps technology.
A good team can build an excellent product right out of the gate: it happens. More often the first go-round is lacking, maybe even a dud. But a great team will take what they learn and build a truly great product the second time around. Hiring that team is your number one job. And when you make a hiring mistake—and you will—recognize and respond quickly, turning your mistake into an open job req.
Diversity is critical to long-term success.
Most of our startups are models of ethnic diversity. Gender-wise, not so much. That’s a mistake: data shows that teams that include women are more successful than their frat-house contemporaries. But diversity in our world means more than hiring women (though that’s an obvious and necessary start). We also recommend psychological diversity (co-founders should be complementary, not identical), ideological (different backgrounds lead to healthy discussions that lead to fresh ideas), experience (mix of established vets with young pups who don’t know better but will run through walls for you) and geography. The result will be a more balanced company built for the long haul.
You cannot iterate corporate positioning and messaging.
These days the talk is about minimal viable product, which involves developing a minimum number of product features of your solution, getting it out quickly into the hands of early target users, then responding just as quickly to feedback, positive and negative. But that does not work with your corporate positioning and core messaging: Changing those elements repeatedly doesn’t make you nimble—it makes you indecisive.
Your company launch is a milestone, not a destination.
Too many of our clients martial – and spend— all of their resources in launching the company. This is admirable, except they will find themselves suffering from post-launch depression with no programs in place to sustain, nurture, and convert the market attention of launch into a sales pipeline. Early market interest wanes as the market moves on to the next pretty thing. Make sure you have an integrated marketing and sales plan—stoked by ongoing content—to ensure that you leverage the momentum of your launch and translate that into early and sustained sales traction.
According to market statistics, nine out of ten startups fail within their first twenty-four months of operation. The above best practices are no substitute for having a great product in a hot market, but taken seriously and implemented, they can go a long way to ensuring that your startup is one of the 10% that do make it and not one of the 90% that do not.
– Tom Hogan and Carol Broadbent founded Crowded Ocean, Silicon Valley’s top marketing firm for start-ups, in 2008. They are also co-authors of The Ultimate Start-Up Guide: Marketing Lessons, War Stories, And Hard-Won Advice from Leading Venture Capitalists and Angel Investors (CLICK HERE to get your copy). For more information please visit www.CrowdedOcean.com or @CrowdedOcean.
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