Startup Leadership

(Initially I wrote this as the introduction to Who Do You Need In A Founding Team? but it didn’t fit. Hating, as I do, to waste good electrons I put it to the side for a better use elsewhere. Hopefully this is that better use.)

There is such a thing as the National Venture Capital Association (the name is rather self-explanatory). Like all good .ORGs they need something to do, and what better to-do than to commission a study?

With the engaging title “Emerging Best Practices For Building The Next Generation Of Venture-Backed Leadership” (PDF) it’s a real page turner. Er, Down-Button clicker. Or whatever.

I mentioned this study in the post What VCs Look For In An Investment, and I’m not going to repeat my thoughts here other than to say a few of the characteristics seemed to be a bit superfluous, and could mostly be summed up by the word ‘entrepreneur’.

(At this point I’d like to complain that ‘entrepreneur’ is an ungainly and annoying-to-type word and I wish someone would come up with something better and shorter that means the same.)

What I did like about the report is the tendency towards picking the “doers” over the “talkers”, and the realization that startups need CEOs who understand small companies over recruiting “trophy CEOs” from large corporations.

Leadership is the subject of many studies and university curricula. It makes me wonder if those who study it do so because they aren’t leaders themselves. We certainly have “natural-born” leaders who are able to motivate people towards a goal – even if it’s not a goal they set themselves, take charge in difficult and murky situations, start something on their own and attract followers, or even those who are reluctant to take leadership positions but are propelled forward by the crowd.

All of these seem to be a bit ad-hoc. Startups are fun, experimental and engaging, but do you really want to be flying by the seat of your pants?

You are starting a new company (good for you!). All of you are talented, all of you come from the same background, and all of you are on-board with the idea. Are you more likely to have success if each of you works independently towards your goal, or if one of you spends less time building and more time coordinating? And who sets that goal?

When a group of founders come together, it may be at the behest of a single person – and he is (probably) the leader. But if it’s a group that coalesces (StartUp Weekend anyone?), the emerging leader will by definition be ‘taking over’ and pushing people somewhat to the side. Part of leadership in this case is being able to deal with the other founders’ resentment and disappointment, and recognising any latent resentment is crucial.

Good leaders know how to give orders, great leaders know how to give others some rope and let them lead for a while. This should not be some vain trick to make others feel important, but instead build resiliency into an organisation by reinforcing the message that everyone has responsibility for success. And how does a great leader best do that? By listening. Not always by agreeing, but by realising that there are other viewpoints that count.

It’s not enough for leadership to hand out responsibility, they also need to give authority. I once had a CEO anoint me with “full P&L responsibility” for the company’s main product (ok, only product*), without giving me the requisite authority. How do you think that turned out?

Then there are the outstanding leaders.

There are two phrases that distinguish outstanding startup leadership: “No” and “I was wrong”.

It’s all too easy for, especially new, leaders to want to say ‘yes’ to everything. ‘Yes’ to every feature request, ‘yes’ to every guerrilla marketing idea, and ‘yes’ to every investor demand. True startup leadership requires you to understand that sometimes short-term gain will come with long-term pain. Instead the leadership accepts the short-term pain, and manages to convey the reasons to the rest of the team.

“Nobody got fired for buying IBM”. Or so I’ve heard. Going with the mainstream is certainly one way to not rock the boat. But you’re also going to be paddling along with the rest of the pack. Startup leaders will sometimes make “risky” decisions to move ahead. Those who are right are brilliant! And sometimes those choices don’t work out: bad hires, technology decisions, or competitive positioning. An outstanding leader gets up and says “I was wrong”, and will also suffer the consequences. It might mean firing someone, and behind each firing is a painful admission of guilt – “I was wrong about this person”. It might mean that the leader gets fired. So we’re clear on this: a leader who makes someone else a scapegoat just to cover their own ass isn’t a leader at all.

So how does this jive with the NVCA survey? Startup leadership showcases ethics, integrity, leadership, and the execution of the vision. Maybe we are pretty well aligned on “best practices in leadership” after all.

*So you should be asking yourselves if the CEO essentially made me responsible for the company’s only product, and therefore its business, what did the CEO do? Well, what he did do was teach me an abject lesson in what leadership isn’t.

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