Top Challenges for a Startup CEO

August 19, 2013

9:00 am

Being a tech startup entrepreneur is a lifestyle, so being the CEO of a startup requires an even deeper focus on the company’s vision and the ability to build a team that stays focused on that goal.

To plan ahead for their company’s future, a good startup CEO should constantly look for talent to join the company and for partnerships to support it, said Michael Chasen, the founder and CEO of SocialRadar, which designs social applications for Google Glass and other devices.

“Hiring and building a great team is the number one challenge for a CEO,” Chasen said.

Chasen was previously the CEO of Blackboard, the education software company he cofounded in 1997 and sold in 2011.

“Over a period of 10 years we had multiple heads of sales, not because each of them weren’t great at their jobs at the time – but as the company grew, different skills were needed,” Chasen said of his time as Blackboard CEO. “The leadership team today may be doing fine, but it may not be the team you need for where you are taking the company tomorrow.”

Ensuring that a team grows with its company is also the top challenge for a chief executive, according to Jamie Wong, the CEO of Vayable, which is a digital marketplace for tour guides and tourism experiences.

“Building the company team is one of the hardest things because you are not exactly building a group of friends or a family. You are also certainly not building a team of workhorses,” Wong said.

Before cofounding Vayable, Wong was a creative and strategy consultant working with tech companies including Adobe and Comcast.

A chief executive has to recognize people’s strengths to build a winning team, but being the CEO of a startup is “almost a misnomer,” Wong said. Startups with few staff members are creating a new kind of business culture, so a startup CEO should be careful not to get caught using a traditional leadership model, she explained.

“Keep a flat organization, listen as much as possible, and see your role as a support role,” Wong said. “A CEO in a startup is a role, not a position. You are not above anybody. You have a role, which is to guide investors, be a traffic cop, and raise money.”

A good CEO should focus on a company’s original vision as a “guiding light” to make tough decisions, Wong said.

“You have to ask yourself: ‘Is this the most direct path to the growth that we have laid out?’” Wong added.

Distractions that could take a CEO and their company off course include business deals that veer outside of a company’s target market, said Glen Hellman, chair of Vistage International, where he serves as a facilitator for CEO advisory boards.

Startup culture encourages more open, egalitarian workplaces than traditional businesses, but many companies fail to move faster than larger competitors because they do not firmly establish a CEO as the deciding vote, Hellman said.

“Don’t let perfect be the enemy of the good as a CEO,” Hellman said. “A CEO is not a perfectionist in terms of perfect decisions, but in the amount of decisions they make.”

Hellman once served as a turnaround CEO for companies including telecom company Astracon and Proxy Governance, an advisory company for shareholder proxy voting. CMS Communications acquired Astracon in 2013. Ernst &Young acquired Proxy Governance in 2011.

When a company lost the confidence of their venture capital investors, Hellman said he was brought in to replace the CEOs as a “repo man” on behalf of those investors, sometimes breaking up companies and laying off staff.

Failure is a constant risk for startups, and each CEO has to be self-reliant as a leader. Female CEOs need to be particularly inventive because there are fewer success stories of women starting and managing their own tech companies that could serve as guideposts, Wong said. Online groups including Women 2.0 can help female entrepreneurs build a network and seek advice, she said.

“You will have to go out on the ledge alone. It is about going alone as a CEO generally, but especially for women. As much as people want to focus on the gender aspect, you have to make sure that your narrative is built around you and what you bring to the table,” Wong said.

Guest author Tom Risen remembers LAN parties and custom-building computers before the rise of the smartphone. He started reporting on the tech stock market at the Medill School of Journalism, and has written about the tech industry for Government Executive, National Journal, Slate, Policy and Regulatory Report, and for newspapers in Maryland and California. He’s on Twitter @TomRisen.

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