Ali Rowghani has taught me a lot about navigating the crazy startup world — and specifically, about being a CEO. He wrote a great article on the second phase of a startup CEO’s job. After reading Ali’s article and reflecting on my own experience growing Atrium and running multiple startups, I wanted to share six lessons he’s taught me over the years.
1. Find product/market fit and scale the company
Being a CEO is simple but not easy. Your first job is finding product/market fit. Then you can scale the company. Scaling the company means:
- Making sure there’s money in the bank. This is your lifeblood. If you run out of money you die.
- Defining the company’s mission and vision. Alignment around what your company’s purpose is to allow your team members to prioritize the most important things they are supposed to do. Without alignment, your team might end up wasting their time.
- Hiring the senior team. Do you have the leaders who have the right experience, and will manage and inspire others to execute your mission? And does the leadership work well together (which goes back to the point above – alignment)?
- Doing the one thing you enjoy. (a bonus, if you’re lucky)
How do CEOs mess this up? Wishful thinking.
Most people don’t start a company because they’re excited about fundraising, company realignment, and hiring senior leaders. They generally become CEO because they’re really good at product or sales. They want to keep doing what worked to get them to where they are today, believing that focusing on their strength will extricate the company from any problems. It never works.
Personally, I really like developing the go-to-market strategy. I like creating content to share with the startup community. I like working directly with founders as we do at Atrium Scale where we help them craft their Series A pitch and get exclusive intros to our network of investors and partners. But as Atrium grows, I’ve had to remove myself from many of the tactical elements I love doing to focus on scaling our efforts. This blog post is evidence that I haven’t completely removed myself from these things, but many times they end up taking a backseat.
2. Translate mission into metrics
Your mission might be to “build a CRM to empower businesses to serve their customers better.” That’s a great sentiment, but what does it mean practically? No matter your mission, it must be broken into metrics. These could be:
- Acquiring a certain number of customers
- Reaching a certain level of customer engagement with your product
- Increasing your customers’ revenue from their clients
Each employee should have a metric they’re improving. To remain motivated, they also need to understand how their metric helps achieve the overall mission. Ali tells a clear and compelling story about a factory worker at SpaceX who recited the whole company’s mission to metrics framework when asked what his job is.
That’s the ideal, as it shows that this SpaceX team member knows how his job affects the overall company mission. To have each employee understand their role to this level of detail is of course very time consuming but the better each employee understands their role in the larger story, the more engaged and invigorated they will be to do their role.
3. Organizational structure mattersStartups tend to underestimate the importance of organizational structure, especially who reports to the CEO, but it signals what elements are of top priority to the company. Click To Tweet
For example, when Ben Horowitz was CEO, his organizational structure kept him out of jail, because his general counsel reported directly to him. This led to accounting decisions that kept the company compliant when similar tech companies were not.
When you change the organizational structure, people complain. They get layered. They get demoted. They act like it’s the end of the world. As CEO, it’s your job to rip the band-aid off and make the best decisions for the company. Organizational structure is too important to be held hostage by the status quo. But when you are making these changes, it is important to communicate openly and transparently to the company about why the changes are being made and how they will benefit the employees.
4. Have skip-level round tables
Getting honest feedback about your company is hard, and it doesn’t get any easier as you grow. You can get stuck in a box where all your information comes from limited sources (primarily your direct reports). Conversations with people who don’t report to you (also known as “skip-levels”) can surface valuable insights you won’t get anywhere else.
One-on-one skip-level conversations can make people nervous because you’re higher on the power-stack. And the people between you and the skip levels may be uncomfortable because they’re wondering what you’ll find out.
The solution to this is round tables with similar types of employees. Pull all the engineers or product people in a room and ask them: “What’s going well and what could be going better?” That simple question in a comfortable context will give you real, honest feedback.
5. Figure out your second act
In any successful company, your initial product/market fit will eventually get saturated. You need a second act. Most CEOs fail to navigate this. They get one lucky product and never build an engine to discover many products.
Great companies create a machine to develop or buy additional products. Google made search, then added Gmail and Google Maps. Facebook made Facebook, then bought a slew of companies like Instagram and WhatsApp.
As the examples above illustrate, successful companies tend to eventually flip from being product driven to being a distribution channel for products. Once you’ve built the core platform, you’ve also ideally built a channel that makes new product growth much easier.
6. If you put good energy in the world, you get it back in spades
Ali has been an amazing mentor and leader to many in Silicon Valley. This isn’t something he’s ever directly told me, but I’ve tried to follow in his footsteps.
I’ve tried to be like him and earn startup karma points by helping founders whenever I can. That’s one reason I started Atrium. The thing I’m most proud of, more than any company I’ve built, is the number of people I’ve mentored over the years who have gone on to achieve their own successes.
Mentorship can take a number of forms:
- People management: I’ve gotten the chance to hire extremely talented people and see their careers take off. When you build a company, part of your job is to be a mentor to the talented people you bring on. I’ve tried to keep this front and center as a priority when I build companies and hire people because frankly most management in startups suck – it’s just not something they have the time or money to invest in.
- YC: As a partner at YC, I was lucky enough to work directly with hundreds of early-stage founders. Since I’d been through the day-to-day roller coaster of running a startup, I was able to provide the kind of perspective you need during an especially tough week.
- Community: Between random intros, cold emails, Twitter, and friends of friends, I try to help people when opportunities arise. I get a lot of inbound requests and can’t reply to everything, but I always try to remember that there were many mentors that helped me along the way when they didn’t have to spend the time.
There’s no playbook to learn how to be a startup CEO, outside of consulting with people who have done it successfully. That’s why I’ve leaned on Ali and other friends with experience running companies in an effort to get honest feedback and new ideas as we scale Atrium.
For more from Ali, check out his Twitter and other blog posts. I also will be speaking on this topic in more detail at SaaStr Annual coming up in February. Please join me there or follow along on Twitter.