Being the CEO of a scaleup — an early-stage business undergoing hyper-growth — is one of the most exhilarating experiences in a business career. It is also one of the most gruelling. Every part of the operation has to be set up from scratch; every problem has to be solved from first principles. And everything happens at a million miles an hour. How you provide leadership is key to the success and value of the business.
Before we start, look, I understand: you have no time to read stuff like this. Bear with me — I’ve been in your shoes. I built New Energy Finance from nothing to 150 people in just over four years and got it generating cash before selling it to Bloomberg.
I promise I won’t patronise you with tips on time management and work-life balance. In fact, I’m not going to talk about how you do your job at all, I’m going to talk about what job you do. Or, more specifically, the five jobs you have to do yourself, and how to fend off the pressure to do thousands of jobs you have to delegate to others.
Here are the five jobs of the hyper-growth startup CEO: product development; filling the sales pipeline; driving quality; building the team; and investor relations. All the rest is noise.
That’s it. every minute you spend on anything other than those five is a minute wasted and your company is a minute closer to failing.
Give me ten minutes of your time and I’ll explain why. Sorry it’s a bit of a long read: you can hate me forever if the next ten minutes of your life is wasted. I don’t think it will be.
I was once on the board of a hyper-growth start-up that failed because the CEO became too grand to work on product development. She figured she had recruited a great team, and delegated it to them. The company was walking dead from the moment the CEO took her eye off the product development ball: the company lost direction and all the best people left.In a scaleup, the majority of the team has to be focused on meeting today’s challenges, selling the hell out of what the company can deliver right now. Your team can do market research — they can probably tell the difference in today’s market between a must-have capability and a nice-to-have feature — but you’re the one with the vision to figure out what the market will need in the future. That’s why it was you who started the company, or why it was you whom the shareholders selected to run it. It is >you who are the clear-eyed seer of the future — and if you aren’t, then you’re in the wrong role.
It’s your job to make the big judgement calls. Should you bet everything on a single product? Is your company ready to deliver its development pipeline? Which competitive threats can you ignore, and which are life-threatening? What will the recruitment market be like for critical skills in three years’ time? Which partners should you commit to and which cannot be trusted? Only you can answer these sorts of complex questions.
And only you can integrate all the different parts of your team’s efforts. Product development doesn’t work as a silo, operating independently of all other functions. It is where all the strengths and weaknesses of your company come together to be judged in the harsh light of the market. Try to sell a product you can’t produce, or deliver a service the market doesn’t value, and your time as CEO will be short and difficult.
Product development in a startup is nothing like the same as it is in a mature businesses. There, your product development effort stalls? No biggie. You push back a launch date, brief the PR company, squeeze some more life out of the existing product line, fire a few people, hire some different ones, brief the board, have lunch, take a vacation. Life goes on.In a hyper-growth start-up you have no margin of error: mess up one product launch and the company is toast.
As CEO, you have to be building the plane while the others fly it. Delegate product development to someone else, and you are flying while someone else is builds the plane. Expect to end up in a fireball on some random mountainside.
As CEO, you have to take ultimate responsibility for delivering your company’s product or service. So why is job number two driving quality, not managing every aspect of delivery?
Because running the delivery side of an organisation is a full-time job. You absolutely have to have a senior executive — or a team of them — doing it full-time. If it’s you, then you don’t have time for your four other jobs (product development, filling the sales pipeline, building the team and investor relations).
If you are needed to deliver every deal, then your scaleup will never scale up. Say you provide a professional service and all of your big clients want you to manage their project personally — well, there are only so many hours in the day. If you are selling a physical product, and every client wants to speak to you before placing an order, or every supplier only prioritises your batch if you phone them personally, forget it. If you’re the head of delivery, I’ll guarantee you that you’re the head of creating bottlenecks.
However, just because you are not responsible day-to-day for the delivery of your company’s products and services, that doesn’t mean you are off the hook. Walk away from your customers and you are asking for problems.
The solution is to focus your efforts on quality
The first task is to figure out what quality means for your business, because it can take many different forms. It might mean producing the most sumptuous, high-end luxury goods; it might mean producing billions of identical Lego bricks; it might mean an absolute guarantee of overnight delivery, or matching a gig request with exactly the right service provider. In the case of New Energy Finance, it was the accuracy of our data, the clarity of our analysis, and the value of networking at our events.
Once you are sure you know what quality looks like, your job is to communicate it to your team, clearly, repetitively, relentlessly, at every possible opportunity. Chastise them when they fall short and praise them when they deliver. Again, and again, and again. Walk the walk — demonstrate your vision for quality in your every action. Mould the company’s founding myths around the delivery of exceptional quality to clients. Hey, did I mention that you have to be repetitive?
But remember, even while you insist on quality, resist the temptation to dive in and solve every operational problem. You have to push your team to meet your standards for quality — and then allow them the space to problem-solve and grow.
Beware of lazy assumptions about quality. Ask yourself this: what type of failure could lose you a client? What single thing really makes someone recommend your company over your competitors?
Filling the sales pipeline
As CEO, you bear total responsibility for your company hitting its figures, and in a scaleup the most important one is top line sales growth. Does that make you the de-facto head of sales? Well, no.
Your board may disagree with me. They may be telling you to act like the head of sales, particularly if you start missing targets. The problem is, they may also be telling you to act like the head of marketing, the head of PR, the head of distribution, the head of business development and the head of everything else to do with generating revenue. Trust me, you will work your fingers to the bone and still not do all those jobs as well as the board thinks they could.
You need to change your frame of reference. Think of yourself as the head of filling the sales pipeline. Everything else is ignored or delegated.
Take PR. As CEO and founder, you are best person to tell the company story, you are the person journalists want to talk to, and it’s fun being the centre of attention: you are Christopher Columbus, leading your team on an heroic voyage of discovery! You get in the papers and can say “Look mum! I’m finally using that expensive education you paid for!” But PR can take on a life of its own. How do you know when enough is enough?
Stop calling it PR, and start thinking of it as one of the tools you use to fill the company’s sales pipeline. If your PR is not creating identifiable new sales opportunities, on which your team can follow up, you’re wasting your time. Similarly, if your company has enough sales leads and is having trouble converting them, stop with the PR and figure out the bottleneck. There, I’ve just saved you weeks of your time and several exhausting trips a year.
What about marketing? Your main job is to make sure you don’t fall into one of two common traps into which your marketing team will try to lure you.
The first is wasting time and resources on generic market positioning. Your expensive CMO may believe that brand awareness is necessary and sufficient to ensure the success of your company, the fact is, it is neither. New brands speak more authentically through great products and services than through expensively-choreographed ad campaigns or slick launches. I recently spent a long and very dull evening being told by the CEO of an energy blockchain company all about his launch — which appeared to involve rafting down a river with some celebrities, getting drunk and possibly taking drugs. At the end of the evening I was left with the distinct impression that if his product existed, it probably didn’t solve any important problems.
The second trap into which your wonderful marketing team will try to lure you is to let them take over individual client relationships. But here’s a rule-of-thumb for when marketing has to stop and sales has to begin: marketing is about one-to-many communication. As soon as you’re communicating one-to-one with a client, that’s sales, and it has to be done by sales people. The reason is that marketing people want your products and services to be loved. Sales people want them to be bought.
Once your marketing team is not wasting its time and your money on generic market positioning or trying to close sales, get them entirely focused on filling the sales pipeline. Judge them purely and simply on results. Force them to track the effectiveness of every hour and every dollar they spend, in terms of generating leads that your sales team profitably converts. Oh, and if they find filling the company’s sales pipeline to be unglamorous work, beneath them, that’s no problem at all: fire them and hire some cheaper professionals who really understand how to contribute to the success of the company.
So PR and marketing fill the pipeline, while sales owns the client and closes the deals. Got it?
If sales are so important to your company, shouldn’t you at least be leading the sales team yourself? Nope: just like with delivery, you’ll never meaningfully scale your business if your sales team can’t close deals without you micro-managing them.
When I launched New Energy Finance, the point at which I knew we had a big success on our hands was when one of our former interns started closing sales (more sales, indeed, than our soon-to-be-fired Commercial Director, but that’s another story). That’s is when I knew we had a scalable business model, and started piling on sales people.
Sales is a professional skill — a complex one, and not one to be underestimated — but one for which there is a market. Hire more sales people than you need, and get rid of the ones that haven’t started closing sales after six months. Managing sales people is also a professional skill — if you don’t have confidence in your sales director, get a new one, don’t step in to compensate for his or her weakness.
That’s not to say you can’t close the company’s first few sales yourself — in fact you probably have to. You might even need to make the first few sales for each new product, or to help land a few huge new clients or distribution deals each year.
It’s OK for you to be in the door-opening business — helping to fill the sales pipeline — but you can’t be in the deal-closing business: there are simply not enough hours in the day.
Building the team
As every experienced venture capitalist will tell you, the single biggest predictor of a portfolio company’s success is the quality of the team. Your third job as CEO of a hyper-growth start-up is recruiting and motivating your team, starting with management but reaching far down into the organisation, and building the corporate culture.
It’s not just about hiring the smartest people, it’s also about developing the most flexible people, melding them into the highest-performing teams. If your company is going to grow by an order of magnitude every year or two, your people will need to grow with it. They must be able to shape-shift, change roles, learn new skills and deal with change.
You need to recruit some pretty special people, and its’ your job to explain why they should join your company. From their point of view, they have skills, knowledge, energy and time. Why should they devote these precious resources to your business? Here’s the deal you have to offer: they will work harder than anywhere else; things will be more chaotic; the company might even fail. But the quid pro quo is that they will have more responsibility; it will be more fun; they will learn and grow more; and if things go well, they will share handsomely in the upside.
Of course, another member of your management team, or even a head-hunter, could explain all this on an intellectual level, but there is nothing like hearing it directly from the CEO — even if you are only going to work in the mail-room. The recruitment process is not just about hiring someone. It is also a vital stage in integrating that person into the team and setting their expectations for their time with the company. Will the organisation value me? Will I gain skills? Will I have access to senior management? What will the culture be like? Will it be a fun place to work? If things don’t go well, will I be treated fairly?
At New Energy Finance I insisted that I meet — or at least speak on the phone — with every leading candidate before we extended a job offer. Usually I endorsed my team’s recommendation, but every so often I rejected it, and insisted they choose again. Why?
Recruitment is not just about resumes. Plenty of start-ups have had stellar management teams on paper, only to fail. At New Energy Finance, I was very committed to creating an AFZ — that’s an Asshole-Free-Zone — and by and large we succeeded. When we did have recruitment failures, we took action quickly. If someone is capable but doesn’t fit the corporate culture, as CEO it’s your job to take the tough decisions, not to delegate them.
To grow a scaleup, your people have to out-punch the competition, pound-for-pound, right across the organisation — from the call centre to the board-room, from the lab to accounts receivable.
Your final task as CEO of a startup is investor relations.
Hang on, you say, you have just hired a fantastic CFO, let her handle it! Or maybe you are paying a bank or a consultant to bring in investors, and you expect them to earn those hefty fees while you get on with running the business.
I’ve seen many start-up CEOs who are too busy to talk to investors. Or reluctant to share information, scared that if the business needs another funding round they will have weakened their negotiating position. Others simply don’t care about investors, ignoring them as soon as the money is in the bank, and only calling them when it’s time for another cash injection.
At New Energy Finance, I treated my investors as my unofficial advisory board. I had invited most of them to invest because they knew either publishing or the energy business, or because they represented the sort of people to whom we were selling information services (the rest were good old-fashioned friends and family). A number of them had been successful entrepreneurs themselves. Could I have run the business without their advice? Most of the time, sure — though their insights and contacts were always helpful. Then the financial crisis hit, just as we were at the deepest point of our funding hole, with only a few weeks’ worth of cash in the bank. All those hours crafting quarterly update emails and chatting with my investors suddenly seemed like a wise investment. I talked to them all, they listened, injected a bit more cash to give us breathing room, we sweated our accounts receivable hard, and disaster was averted.
Your investors are part of your team. Hopefully, you have chosen them carefully, so that they have something special to offer in terms of skills, connections or strategic assets. But even if they have no specialist knowledge, it always makes sense to keep them informed and talk them through every major decision. At best, you build a lifelong relationship with a serial backer of businesses. At worst, they challenge your judgement and force you to hone your reasoning, to practice your lines. Either way you are treating people who have placed their trust in you with the respect they deserve.
What if you are an intrapreneur, building a hyper-growth division within a large corporation? Think this stuff about investor relations doesn’t apply to you? It does. Your corporate owner is investing in you and your team in the same way as financial investors invest in a start-up. Perhaps even more so, since you hold its reputation and brand in your hands, not just its money. The people inside your parent company need to understand what you are up to, and you need to keep their support and resources flowing.
Especially if you ever need more cash in a hurry — whether to get behind a product launch, to make an acquisition or because you’ve hit a wobble — it is your existing investors or your corporate owners to whom you will turn first. You had better know them — likes and dislikes, investment goals, hot buttons — and they had better know you: what you are trying to build, how valuable it will be, why you suddenly need more money. They had better trust you, the survival of your business may depend on it and trust takes time to build. You need to spend as big a chunk of your time on your boss and your corporate network as the best hyper-growth entrepreneur would on investor relations
To be a successful scaleup CEO, never forget: your investors or corporate owners are your think-tank and your insurance policy. They are also, at the end of the day, who you work for.
There you have it. The five jobs of the scaleup CEO: product development; filling the sales pipeline; driving quality; building the team; and investor relations. The rest is noise — all of it. If you are doing anything not part of these five jobs, you have a problem. Find it, and fix it.
Most likely it will be because you have not yet hired enough of the team to fill in behind you. Get hiring! Delete a bunch of unanswered emails if necessary, and don’t feel guilty: nothing is more important than the core mission of the company, hyper-growth, and you can’t deliver it on your own. Fill those empty positions!
If your key team is complete but you are still being distracted from your five jobs, something is wrong. Maybe you have an underperforming team member for whom you are compensating. Maybe the company has not yet achieved the elusive nirvana of product-market fit. Maybe you have not created the right team structure, or culture. Maybe you are applying the wrong metrics.
Or maybe, just maybe, you yourself are the problem. Are you doing only the jobs which fall in your comfort zone, and avoiding the ones you don’t enjoy? Are you paying lip-service to hyper-growth but are not prepared to do what it really takes to achieve it? Are you unable to delegate tasks because your team can’t quite do them as well as you? Maybe you are just not cut out for the demands of the role. You owe it to everyone, including yourself, to be ruthlessly honest.
It’s not easy being a scaleup CEO, but it needn’t be impossible. It shouldn’t ruin your family life, or your health. Stick to the five jobs, do them to the best of your ability, and figure out how to eliminate everything else.
Thank you for reading this piece, I do hope you found it a good use of ten minutes. I would hate you to hate me forever!
Biographical note: I founded New Energy Finance in April 2004, built a team of 150 people and hit positive cash flow, before selling to Bloomberg LP in December 2009. I stayed on for a few years to help keep the business growing, and am still a Senior Contributor at the time of writing.
Creating New Energy Finance is the most wonderful thing I have done in my career, but boy, was it hard work! I wish I had had a bit more of a road map when I started, so hopefully this article might help others, particularly first-time entrepreneurs.
I also hope angel and venture investors — as well as start-up board members — might find it useful if any of their portfolio company CEOs needs a bit of coaching on how to focus their time.