Each week, I send out an email to my network of contacts highlighting current open positions within JumpStart client and portfolio companies. It's exciting stuff, since we've got over 50 open positions we're trying to fill right now. But most people receive more emails each day than they can reasonably keep up with, so I like to insert some relevant message or commentary to spice things up.
Last week, I cited a recent post from one of my favorite blogs, A VC: Musings of a VC in NYC by Fred Wilson of Union Square Ventures. In his post, he offers an answer to the question, "What exactly does a CEO do?"
"A CEO does only three things. Sets the overall vision and strategy of the company and communicates it to all stakeholders. Recruits, hires, and retains the very best talent for the company. Makes sure there is always enough cash in the bank." This little quote generated a lot of responses to my usually mundane portfolio jobs email. It also inspired several follow-up posts and commentary from other bloggers like Matt Blumberg and Mark Suster (another one of my favorites), each adding their take on Wilson's simple quote on the essential tasks of a successful CEO. Both are definitely worth reading.
The bulk of responses I received were from CEOs themselves, making a point to tell me that there are many other jobs that a CEO must do. That is true, of course, especially at the early stages where most of our companies play. (If you're in the mood for some humor related to what the CEOs of startups actually do, check out Seeking CEO*, a post by my colleague, Becca Braun). However, Wilson's point, and that of those that followed, is that it doesn't matter what else a CEO does if they do not do these three things very, very well. Of course, this is easier said than done. But no one, especially me, is claiming that the job of leading and growing a company from nothing is easy.
But that wasn't why I included the quote in my email. My primary point focused on the second of Wilson's three things a CEO must do - recruit, hire and retain the very best talent for the company. As evidenced by the many open positions and recent hires made at JumpStart Ventures portfolio companies, many of our CEOs are doing just that. However, at the early stages of a startup's life, when the CEO and/or founding team must do everything, bringing in top-quality talent is something that is often neglected in favor of perceived nearer-term priorities.
CEOs often think that they've got it covered already. In cases where they know that they have skills or knowledge gaps, they don't have the sort of coin it takes to bring in top talent - an understandable dilemma. Even if this is true and your current team can move you forward successfully, the challenges that your business will face as it grows will only get more complex and require new skill sets. That is why CEOs of the companies that successfully transition out of the early startup phases into growing and competitive businesses are those that recognize when it's time to bring in great talent and different skill sets, while implementing a culture and structures that both retain these superstars and develop them into new levels of high performance.
As Suster puts it: If you want to attract world class talent you have to be inspirational, persuasive, and persistent (they best people always have other offers). If you want to retain the best talent you have to be able to devolve power, coach people for performance, resolve conflicts, find ways to create growth opportunities, balance carrot/stick motivational techniques, etc... And if you want to really be an effectively leader you need to know when & how to get rid of under-performers or bad seeds.
To address the concern over the cost and resources required to attract top talent, hiring an all-star management team is not the only way to bring talent into your business. One of the things that distinguish our top performing companies is that they have a great board of highly-skilled and engaged board members. Great CEOs surround themselves with great advisors, who often provide needed skills, experience and contacts that they themselves do not possess.
Aside from equity (which is the typical compensation vehicle for startup board members), creating and managing an effective board costs the company very little, keeping precious cash in the business for other purposes. In a later post, I'll go into more depth about what a great startup stage board looks like, how to get the most value from your board and some of the benefits that come from having an effective and engaged board.
My point is...it is never too early for a CEO to prioritize talent in their business. In fact, the single biggest reason a once destined-to-succeed startup slows down is that the CEO didn't bring in (or keep) the right talent soon enough. In some cases, this involves handing over the reins of the CEO position itself to someone with the skills and background needed to move the company through its next set of challenges.
The jobs of the CEO are certainly complex and varied. However, Wilson's simplified view is truer than most entrepreneurs want to believe. But if you look at those companies who either fail outright or fail to maintain high growth through transition periods, it is almost always because the CEO failed at one or more of those three things.
Robert Hatta is the Vice President of Entrepreneurial Talent for JumpStart Ventures. He has worked at several startup companies in Northeast Ohio and Silicon Valley, as well as other high growth, technology companies across the U.S. and Europe. Through these experiences, Robert has gained an extensive understanding of the culture and needs of high growth companies with a particular focus on talent.