Like all people, a startup CEO may come in many different varieties and some share some or all of the traits below. As in any self help program, or attempt to survive, step one is self awareness and that is being able to identify the startup CEO trait. The ability to label the trait, or removing this element of surprise, should put you on a better footing for future dealings with CEOs who have these or similar traits.
The Penny Wise and Pound Foolish Startup CEO
This startup CEO type tends to get confused by an absolute dollar amount, does not conceive of the appropriate context of the expenditure as well as the hidden costs of not spending. For example, the penny wise and pound foolish startup CEO may object to an executive event that would provide the sales team with access to 20 targeted senior level executives (the right companies and the right role or title) because the stated cost is $30K. A typical response may be that it is too expensive. Let’s think about that.
If a sales rep (about $2K per day fully-loaded) does not have a full qualified pipeline, then there’s a good chance they are nowhere close to bringing in the $10K per business per day needed to make quota ($2M number and 200 business days). So, two factors are at work:
- The $2K in costs each day
- The $10K shortfall in bookings
To take it a step further, what would be the cost of 20 sales calls to 20 separate companies? Well, typically either a sales rep and a sales consultant would go on the call. To be conservative, let’s just use the cost of the sales rep (about $1,600 per business day-fully loaded base, variable, T&E and benefits). The travel and expense is probably $1,500 and it will take the rep out of the field for at least a day (travel to and from). So, 20 calls multiplied by $1500 is $30K–just for the cost of T&E (then there is the $1,600 for the cost of the sales rep fully loaded). However, because those 20 sales calls will occur over a month or so, the sales rep will be out of the field for at least 20 days. Obviously there is no way to leverage additional resources effectively in a 1:1 sales call (conference calls are not bad but a runner up). Also, this does not take into account dinner and drinks for each individual meeting. Finally, what is the cumulative cost of marketing and sales activities to secure these 20 meetings with 20 different people in 20 different companies? The rule of thumb is about $1,500 – $2,500 per meeting (buying lists, emails, building offers, nurturing programs, cold calls and lead management follow-up) with a VP or C-level executive. So, is the $30K really that expensive to secure 20 high level meetings in one location at one prescribed time in a controlled environment with multiple resources available to interact in a relaxed setting?
What about the cost of that meeting where 15 executives have a two day off-site or planning meeting. Not to say an off-site or planning meeting can not be a good thing (if there is an objective, detailed agenda, pre-work, potentially a facilitator and an action plan that has a detailed follow-up with names, dates and tasks that will be proactively managed), but is the startup CEO applying the same logic applied to determine if this meeting is too expensive? Typically, a fully loaded executive at a startup is about $1500 per day so 15 executives in one place at one time is burning over $20K per day, not to mention the travel and entertainment expenses. Sometimes, these meetings have not been properly planned and key meeting members are late or have to step out of the meeting for hours at a time so the meeting turns into a group session for participants to read and write emails. Has that ever happened? Is that meeting too expensive?
The Optimistic Startup CEO
Another type of startup CEO believes there is only good news—i.e. the glass is always half-full. Either everything is positive or there is a positive spin to everything. While a positive mental attitude is good, trying to paint over dry rot does not provide long-lasting results. Communicating at a level that does not represent or reflect the current state of the organization — or worse, the way an organization behaves — is not beneficial for anyone. It simply reflects that there is no grasp on reality or a focus exists to distort or deceive.
As with most things, there is a cycle and it includes ups and downs- the financial markets, a relationship or even one’s luck at the blackjack table. A down turn or negative news is inevitable and it should not be ignored, it should be addressed. Trying to apply lipstick to a pig is a poor attempt at dealing with the issue. In the end, this approach will backfire as intelligent people see right through this facade. In the end this type of startup CEO only dilutes his or her credibility.
If we’ve learned anything from the 2008 financial crisis and the hundreds of “bad-behavior” celebrities in the news over the years, it is to face the music. In short, come clean, acknowledge the issue, take responsibility, accept the consequences, embark on a plan to move forward in a positive manner—and never repeat that same mistake (Hollywood excluded).
There is nothing wrong with optimism—it’s a good thing and it should be embraced. However, optimism is not always the right approach. I am not advocating negativism or a defeatist attitude; I am only saying that if the news is not good, the startup CEO should deal with it and not try to put a smiley face on it.
The Glory Days Startup CEO
Friendships are a great thing, but when it comes to business, it’s all about providing value. In short, it is an employee’s responsibility to continue to gain knowledge and insights and to incorporate them into their role. It’s the organization’s responsibility to extract that knowledge and information as quickly as possible from each employee. What should not be acceptable is to place more importance on who you know versus what you know and most importantly, how to apply it.
It’s very common for founders or longtime employees who rose through the ranks to become CEOs to reflect and embrace the past as it often re-lives better than it was. The issue however, is that startup CEOs tend to keep the same cast of characters around them that were around them from day one. The CEO is most likely a gifted individual who continued to grow and advance, but in many instances, not everyone in the startup CEOs “inner circle” from the early days progressed at the same rate or to the same degree as the CEO. Unfortunately, the personal relationships form the “inner circle” provided a gateway to the startup CEO and the CEO trusts those sources . . . but the data or information coming in from these sources may not be good. In some instances, the startup CEO figures this out and protects the employee based on tenure or “glory days” and usually creates a new position (that doesn’t make sense to anyone else in the company) and moves the person or persons—sometimes they will actually promote them so it does not look like a demotion.
The Perfectionist Startup CEO with Separation Anxiety
These startup CEO types have a tough time letting go. Often times the startup CEO is a perfectionist and they just can’t help themselves. Unfortunately, there has to be a finish line with any project and ideally the startup CEO does not have to be involved in every detail of every project in the company–micro-management is almost never a good thing and if it is required you probably have the wrong team in place.
Separation anxiety is a real psychological condition where a startup CEO experiences excessive anxiety regarding separation from a project or from people to whom they have a strong emotional attachment. Startup CEOs with separation anxiety can’t let something go because it is part of them, they are fearful it can not be replaced and the chance that they will lose something is overwhelming. A good first step is to not involve this startup CEO type in anything where they are not an absolute required participant.
Another scenario is when a startup CEO is involved in a project and they continue to evolve the project as it becomes clearer to the CEO what they want with each iteration. However, the end target perpetually moves into the distance like a greyhound chasing the rabbit on a track-round and round in a circle. And worse, a lot of these projects tend to be about 5 pay-grades below the startup CEOs pay-grade. The concept of “good enough” is incomprehensible to this CEO type and the fact that “better is the enemy of good” is something they will never understand.
Often times these startup CEOs are simply inexperienced with the job of being a CEO- setting the strategic direction of the company, lining up financing, forging partnerships, managing investors, ensuring execution of the pan and all the other activities that are a required to build a successful business. As a result, they gravitate to the easy things and obsess about minutia as it provides them with relief as they find errors and that justifies them allocating a disproportionate amount of time to a non-CEO task.
The Afraid to Make a Decision Startup CEO
Everyone has probably worked for this startup CEO before, but before delving in here we need to draw a distinction between being cautious and being paralyzed. In short, if a decision is framed properly it is usually quite obvious which key factors and people should be incorporated into the decision-making process so logic can take its course. It’s true that you don’t know what you don’t know, but the interaction of relevant people tends to flush out the right content and people to have a full and rich conversation on a topic that can result in a directional correct decision. Also, it needs to be understood that some data and information is going to be quantitative and other information will be qualitative in nature.
The goal of a decision-making process is typically not to arrive with 100% certainty about what to do—the focus should be about making informed decisions. The decision-making process should be directional in nature and the degree of accuracy will be guided by the magnitude of the intended and unintended consequences. Unfortunately, some startup CEOs do not deal well with the concept of directional, and use this as a loophole to procrastinate. There is no understanding that not making a decision is making a decision.
It’s critical for an organization to be able to make informed decisions and to empower teams and individuals to make decisions, in order to remain agile. By doing so, an organization can move quickly, generate momentum and put or move a stake in the ground. Depending upon the scope of the decision and the timeline it impacts, the decision-making process may be a “living process” meaning that it will be refined over time as more or updated information becomes available. However, the key to progress is movement and decisions are typically prerequisite to motion.
What not to do is for a startup CEO (and I have worked for these types), to make a decision and then totally reverse it or abandon the effort in a day, week, month or quarter without any indication of a change in direction. These are generally people who are out of control and are grasping at straws and react to which ever direction the wind is blowing. As mentioned earlier, the key is to get the direction right and move the organization based on a vision, goal, objective and corresponding strategies. Movement is typically characterized by course corrections. Course corrections are typically 10-20 degrees in nature and happen over time and are based on new or updated data, assumptions actions or inactions.
Not making a decision IS making a decision, and it is expensive and demotivating to those who know what to do when a CEO does not make a decision.
The Startup CEO With Shiny Metal Object Syndrome
Have you ever worked for a startup CEO who was really bright, very passionate and had a monstrous work ethic? I have, several times—and a number of times these were rookie CEOs. The issue that may develop is that the startup CEO may drive for a tremendous amount of time, energy and resources be set in motion to generate activity -which in and of itself is a good thing- but it is more often than not that the current directive is not directly connected to any stated goal, objective or strategy. This could be referred to as the mantra of the day, week, month or quarter.
A huge issue that a startup CEO can make is to advocate the next thing with even greater urgency-usually before the prior thing has been accomplished-that sometimes is the complete opposite of the first thing requested. To make matters worse, the startup CEO may place even greater urgency and push even harder for each subsequent directive-usually before the prior thing has been accomplished-and that can result in erosion in the credibility and confidence the team has in the CEO.
Worse is when no one says anything so the team chases the next goal the startup CEO mandates. After a year of feverishly running at 150%,, the organization is usually in the same place or slightly further along, but a huge amount of wasted energy and resources and time is gone, forever. More importantly, the leader has lost credibility and the team is tired of chasing its tail–easy for the team to see upon reflection. When this happens, there will always be a small group that will follow the “leader” to the end of the earth. There will also be a group on the other end of the spectrum that will pay lip service to the CEO knowing that if they simply stand still, they will end up in the same place as where they started as the startup CEO will soon be distracted, again.
The People Pleaser Startup CEO
It’s unfortunate that wanting to be liked can be a detrimental thing in business but often it is. For instance, this type of startup CEO has trouble dealing with conflict and avoids it at all costs. Healthy conflict is a good thing as multiple viewpoints and data points can be added into the pool of knowledge for an even richer conversation. The tough part of conversations is staying in the heat of the moment—when it gets uncomfortable—to ensure that the highest ranking, loudest or most dominant person does not prevail and that the discussion has run its course.
Specifically, this type of startup CEO tends to have trouble firing people, addressing non-performance issues or delivering bad news. The downside of not addressing these issues is a real problem for not only the investors, organization but the team and the person. Another place where this tendency is detrimental is in terms of reorganizations. If an organization follows the Tom Peters discipline of strategy, structure, and staff, this can be a real issue as the right organizational structure is a dream never to be realized as the CEO tends to resort to staff then structure.
In short, startup CEOs of this type tend to avoid doing anything unpopular because they crave approval–they want to be liked. It’s been said it is lonely at the top and there is some truth to this. At the end of the day, the startup CEO is the visionary, the leader and as such he or she sees something no one else does. It is their responsibility to establish the True North for the company and they must drive the organization to that goal. Unfortunately, not everyone is going to agree on all of the decisions to get there, but this is not a place for compromise as there can only be one visionary. Allowing a committee to “draw a horse” will result in a camel and that benefits no one in the end. Larry Ellison, Steve Jobs and Bill Gates were not people pleasers.
The Activity Based Startup CEO
Another variation of a startup CEO is Mr. or Ms. Activity. Here, the CEO is focused on everyone being busy all the time. Often there is a mandate that everyone be in the office so the startup CEO can see everyone and whether they are busy or not. This behavior is typically characterized by lists that begin on Sunday night and continue throughout the work week with little similarity between lists, or worse, contradiction.
While activity can be a good thing, if it is not structured activity it tends to result in people burning a lot of cycles without much progress and this results in burnout and low morale. Activity must be focused around desired outcomes, and outcomes must be tied to stated objectives. In this scenario, quarterly goals and monthly milestones need to be established and this can replace the daily or weekly to do list from the startup CEO. This allows an organization to get some traction and focus by organizing around a known objective for a period of time. Of course, there will be some fire drills here and there but if an organization has a leader and the leader and the team builds a plan, then people, time and energy can be laser-focused and attention can be placed on outcomes, not lists. If no plan exists with objectives, strategies and tactics, activity will be concentrated on whatever the CEO is thinking about at that moment or the last conversation he or she had and that will fuel list creation.
CEOs will all have some set of traits and it is certain that some traits you will like and some will get under your skin. Knowing that you are not alone in dealing with a specific startup CEO trait is a good thing as misery loves company. However, it’s important to be able to label the behavior and proactively address it in future interactions that you have with your startup CEO. The element of surprise should be removed now that you have labeled the trait and you should be able to anticipate the conditional response of the startup CEO, based on historical interactions.