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10 Key Lessons for Startup CEOs and Founders Posted: 26 Nov 2019 05:54 PM PST By Richard D. Harroch, Mike Perlis, and Mitch Zuklie CEOs and founders of startup businesses face many challenges: raising startup capital, building a management team, developing competitive products, starting a marketing program, finding early customers, and more. The prospect of launching a new startup can be daunting. We have collectively been involved in hundreds of startups—as founders, CEOs, angel investors, Board members, leadership coaches, venture capital investors, and business and legal advisors. In this article, we seek to provide advice and lessons for startup CEOs and founders based on our many years of experience. When trying to motivate a team to perform at the highest levels, it's critically important that a shared understanding of what constitutes success is crisply and clearly communicated to every member. Spell out in no uncertain terms, for the core management team, what success looks like in 18 months, in three years, and beyond. The ten key lessons below then become strategic priorities to achieve the well-defined success that is your ultimate goal. 1. Hire the Right TeamOf course, you should hire the right people for your team—that is a truism. Smart hiring is an incredibly important factor to get right for the long-term success of the business. And CEOs should not be reluctant to terminate those employees who just are not working out. Here are some key questions a startup company should consider before hiring an employee:
2. Focus on Keeping Employees Motivated and HappyA big part of the job of a startup CEO or founder is to put programs in place to incentivize employees and keep them satisfied with their jobs. Here are some ideas that many startup companies use to motivate employees:
DON’T MISS:The surprising business lesson I learned from salmon conservationists [Business Insider] 3. Be in Continual Fundraising ModeRaising angel, seed, or venture capital financing for a startup is often difficult and time consuming. Savvy CEOs and founders know they must be in continual fundraising mode, or at least always be fundraising ready. Being ready entails a number of things, including:
4. Expect Big Challenges and Be Prepared for ThemThe biggest challenges to starting and growing a business include:
5. Build a Great Product But Don't Take Forever to LaunchYour product or service has to be at least good, if not great, to start out with. It has to be differentiated in some meaningful and important way from your competitors' offerings. All else follows from this principle. Don't dawdle on getting your product out to the market, as early customer feedback is one of the best ways to help improve it. But you do want to launch a minimally viable product to begin with. 6. Focus on Becoming a Great SalespersonMost CEOs and entrepreneurs are not natural born salespeople. But high sales numbers are often the biggest indicator of business success. Here are practical ways to become better at sales:
7. Make Sure to Continually Monitor the Company's Key Financial MetricsEven if a CEO or founder does not have a financial or accounting background, it is imperative that he or she constantly monitor and analyze the company's key financial metrics. Failure to do so can have serious negative consequences for the business. Depending on the nature of the business, the following monthly key metrics will be important:
8. Be Open to Suggestions, Advice, and CriticismIf you have a good team, you should listen to their suggestions and advice. Be open to new innovations and changes to your products, sales approach, and marketing strategy. Here are some ways other successful entrepreneurs have done this:
9. Keep Your Board of Directors and Investors Up-to-DateBoard members can be a great resource for challenges and problems faced by a CEO or founder. Keep in mind that Board members hate to be surprised at Board meetings with bad news. One useful strategy is for the CEO to have a 30-minute call with each Board member individually before a Board meeting, previewing what will be presented at the meeting. This will allow the CEO to inform the members in advance and obtain advice that might impact what is actually presented at the Board meeting. The CEO should also contact each Board member promptly when material developments occur. Depending on the nature of the matter, such contact should typically be by phone versus email, especially if potential litigation is involved (to avoid litigation discovery issues). Material developments could include:
It's also good practice to keep your investors updated on a monthly basis via email. The updates don't need to be incredibly detailed, but here are some general items you should consider including in your updates:
You want to maintain great relationships and connections with your investors. And you don't want them to be surprised when you need to go back to them for additional financing. 10. Be Aware of Important Legal IssuesIgnoring key legal issues can sink a startup. CEOs and founders should ensure that the company is taking steps to comply with applicable laws. Here are a number of the key legal points to focus on:
ConclusionFor startup founders and CEOs, it's key to articulate to the team a clear vision of what constitutes success for the company. Offering that clear, shared vision of what you are all trying to accomplish helps to galvanize and energize the entire company. Incorporating the ten key lessons set forth in this article can help a CEO or founder achieve this success. Related Articles
About the Authors Richard D. Harroch is a Managing Director and Global Head of M&A at VantagePoint Capital Partners, a large venture capital fund in the San Francisco area. His focus is on Internet, digital media, and software companies, and he was the founder of several Internet companies. His articles have appeared online in Forbes, Fortune, MSN, Yahoo, FoxBusiness, and AllBusiness.com. Richard is the author of several books on startups and entrepreneurship as well as the co-author of Poker for Dummies and a Wall Street Journal-bestselling book on small business. He is the co-author of a 1,500-page book by Bloomberg, Mergers and Acquisitions of Privately Held Companies: Analysis, Forms and Agreements. He was also a corporate and M&A partner at the Orrick law firm, with experience in startups, mergers and acquisitions, and venture capital. He has been involved in over 200 M&A transactions and 250 startup financings. He can be reached through LinkedIn. Mike Perlis is an accomplished CEO, investor and Board member. He served as the CEO and Executive Chairman of Forbes Media LLC. He was a partner at Softbank Capital, a venture capital firm. He served as the President and CEO of Ziff Davis Media Inc. He was the President at Playboy, IDG Peterborough, and Runner's World. He is on the Board of Directors of Conde Nast, IDG, and other companies. His expertise includes media, Internet, venture capital, angel investing, startups, corporate governance, mergers and acquisitions, and digital media. He served on the Boards of Beliefnet, Buzzfeed, GSI Commerce (sold to eBay), Enpocket (sold to Nokia), and was Chairman of Associated Content before its sale to Yahoo! Previous Board observer positions include Huffington Post (sold to AOL) and KickApps (sold to KIT Digital). Mike speaks regularly on leadership, digital transformation and branding. Mitch Zuklie serves as Chairman and Chief Executive Officer of Orrick, an international law firm. Under Mitch's leadership, the firm has pursued a strategy to be a leading advisor to the global Technology & Innovation, Energy & Infrastructure, and Finance sectors. Mitch is an experienced business and legal advisor who has completed hundreds of venture capital financings and numerous public offerings, mergers, acquisitions, and licensing transactions. He counsels technology companies at all stages of their life cycles, as well as their founders, advisors and investors. He serves on the Board of the Berkeley Center for Law and Business and the Advisory Boards of the Stanford Law School Center on the Legal Profession and the Harvard Law School Center on the Legal Profession. He is also a member of the Board of the Wild Salmon Center. Mitch posts regularly on social media about Orrick, venture capital, innovation, and other interests. Follow him on Twitter and Instagram. Copyright © by Richard D. Harroch. All Rights Reserved. The post 10 Key Lessons for Startup CEOs and Founders appeared first on AllBusiness.com The post 10 Key Lessons for Startup CEOs and Founders appeared first on AllBusiness.com. Click for more information about Richard Harroch. |
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