Leaders of emerging companies, whether first-time CEOs or veterans, are bombarded with a daily stream of issues. A random inquiry from an investor. A new feature request from a key customer. A conversation with a potential hire. Countless others.
All are urgent. Only a few are truly important. As founder CEO, how should you allocate time?
The answer is Vision, Talent, and Cash.
Vision fundamentals.
Vision sets both ambition and tone, as well as guides everything that follows.
Here’s why: Vision lets you set goals that define path and progress. For each goal, whether it’s “10% market share” or “100K Users,” you can build a strategy. Once a strategy is in place, you select the tactics. For each tactic, you pick activities based on cost / benefit.
Internally, vision lets everyone know what direction they’re going, even in small teams. It helps you understand what activities are beneficial, and which ones waste time and money. It tells you when to say ‘no,’ and when to say ‘yes.’
Externally, your vision must have a shelf life. Never base your company around current technology, trends, or other companies. It’s about what you are doing for customers.
A CEO needs crisp, defensible answers to four questions:
- What is the product?
- How does it connect with a big, relevant change in the world?
- Why do customers buy?
- How do customers like to buy, direct or channel?
Answers will be told and re-told, all or in part, to employees, prospects, investors, press, and recruits.
Tip: Answers can’t be complicated. The mark of true knowledge is how well you can explain to the average person.
Talent quest.
Founder CEOs of emerging companies need to attract top-notch performers willing to bet their careers on a mostly unproven business. Attracting “tier one” talent is tough in the face of common constraints.
For example, potential new-hires must be willing to work for less-than-market rate. Options with the promise of a “big payoff” help. Lots of content exists for how much to give what role. Various techniques allow you to work through tight spots. But smart founder CEOs understand options alone are not a panacea. Other factors matter more like vision, culture, team, and early traction.
At the same time, existing employees must be continually re-recruited. Regularly share progress, whether development milestones, customer adds, or new investors.
Tip: There may be a need to re-set vesting schedules for key people ahead of a big raise like Series A so investors know there are incentives to stay. You can accomplish this objective in other ways as well.
Attracting and retaining talent is not limited to employees. It includes advisors too.
Since advising is not one-size-fits-all, different people will be capable of different time and energy commitments. Seek out “light touch advisors” and “board advisors.” Board advisors are not on the board, it’s just meant to signify deep involvement. Having these two buckets gives you, as founder CEO, more latitude to get talented yet busy people involved.
Tip: It is not unusual to have up to five board advisors, and 20+ light touch advisors.
Without cash everything stops.
Since lots of content already exists for raising capital from angels, venture capitalists, and strategic partners, my comments focus on three key points:
First, regularly analyze how much you are spending. Organize it into actionable categories. While all emerging companies think of themselves as “lean operators,” you will find inefficiencies to wring out.
For example, is too much being spent on sales and not enough invested in marketing? If so, re-balance. Should technology development slow until sales catch up because the minimum viable product has been achieved? Bank savings or re-invest elsewhere. Failure to regularly examine this means you are accepting a lower return per dollar spent.
Second, manage your investor relationships like gold. Every early-stage investor has a story where the founder CEO sends an unexpected business update one week, and then a request for capital the next. Don’t let this be you.
Build a quarterly cadence for investor communications. Report metrics and milestones. List accomplishments, and provide a “correction of errors” plan to fix misses. Investors love this.
Tip: When you need more money—and you will—it is faster to secure capital from existing investors, and get quality referrals to others.
Third, you should always strive to have six months of cash-on-hand. If you don’t, re-look at burn rate, pipeline value, opportunity value, and close rate.
Raising money takes enormous effort. A veteran founder CEO with track record and relationships can raise a Series A in three months. But this is still fast. If you are a first-time founder CEO, then expect nine to 12 months. Unless there is a good reason, always take more money than you initially think necessary.
Tip: Don’t overreach on valuation even if you can get it. Expectations may be impossible to meet. Failure is permanent: down round, loss of control, and damage to reputation.
Focus on what matters most.
As a founder CEO, you face countless distractions every day. Take a step back to gain perspective for what matters most: Vision, Talent, and Cash. Use this lens to determine where your time is best spent. Leading an emerging company is hard enough. Don’t make it harder. If you stay focused on these three areas, then unforced errors drop. Odds of success jump.
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