The changing role of a start-up CEO: What to do and when
As managing partner of Forward Partners, Nic Brisbourne understands what's needed to be a great CEO at various inflexion points of a business journey…
One of the most striking things about working with start-ups from inception to exit is how much entrepreneurs develop, both personally and professionally, and how much their role changes.
In the first months of starting up we see founders spending all their time on the low-level tasks that make business happen – customer research, design, building product, marketing, sales, delivery and a lot of low-level admin.
Then, as the company grows, the role shifts and continues to shift; by the time you have 150 people (the magic Dunbar number) the role has become one of management and leadership.
In my latest blog, I’m keen to discuss the inflexion points on the journey from early stage star-up CEO, looking in detail at the early stage until a company has a team of around eight people…
The four inflexion points of being a start-up CEO
At Forward Partners, we see start-ups shift gears when they pass through around seven employees, then again at 50 employees, and finally at 150 employees.
When there are less than seven people in a company everyone works together happily with minimal planning. Everybody knows pretty much everything that’s going on and there’s no hierarchy.
The CEO mucks in with everybody else.
Then, as headcount grows past around eight people, some structure becomes necessary.
It’s not too different from the first phase, but there’s now too much going on for everybody to stay in touch all of the time and work starts to happen in teams. Each of these teams has a leader and a small amount of process is required to keep everybody coordinated.
Companies often introduce OKRs as a management tool in this phase.
As headcount passes through 50 people things change rapidly. The main difference is that as a CEO, you now have to work at it so that your people bond. You need to start developing processes to get stuff done.
You try and channel communications. You have to broadcast more information. You have a more formal decision-making leadership team. There is a light hierarchy.
Finally, as headcount passes through 150 employees people no longer know everyone in your company by name or know what everybody does.
It’s now essential to have a system (usually a hierarchy) to keep everyone pulling in the same direction and make sure that repeated and expected events are handled with predictability. By this point, your job is largely management.
Deep dive on the first year: Job one for a start-up CEO – Make sure there is a business
As CEO, your first job is to make sure there is a business rather than to build the business.
Your focus should be on building clarity around the value proposition and go to market plan, building a great product and testing the key assumptions by making sales.
Once there is more than just you as CEO, the first order division of labour is that everyone bar the CEO does what they’re best at and the CEO sweeps up the rest.
Most commonly that’s finding customers, fundraising and many of the low-level tasks required to keep the business moving forward.
At Patch, a bespoke urban garden centre and one of our 40 partner companies, that meant the founder Freddie Blackett initially did the hard work of distributing flyers, dealing with suppliers and doing customer deliveries, amongst other things.
During this period, headcount typically grows to around four people. As CEO, you will have many different tasks to do and it will often feel like you don’t have enough time to focus on higher level strategic issues.
Deep dive on the first year: Job two for a start-up CEO – Get the business ready to scale
Then, when your business is maybe six to 12 months old, there’s customer traction and promising metrics so it’s time to get you working on your business rather than in the business.
Instead of sweeping up after everybody else, the emphasis moves to building a structure that will allow your company to scale without you being a bottleneck. That requires the first elements of process needed as your team goes through the seven-person inflexion point and necessitates hiring to enable the delegation of routine tasks.
At this stage, for example, Patch hired interns, drivers and other staff to support their growth which freed Freddie up to focus more on growth and achieving operational excellence across the different functions of the business.
Conclusion: How to be a great start-up CEO
In the early months of starting a business, you should expect to take on many un-glamorous and often mundane tasks.
Only when the business is ready to scale should you start delegating and spend much more time on the higher level strategic work that most people associate with a CEO title.
Then, as your business grows through 50 and then 150 people, you should expect to spend little time at the coalface as your role shifts from doing things to managing people.
Nic Brisbourne is founder and managing partner of Forward Partners, one of the UK’s leading early-stage investors in start-ups.