The Evolution Of A Startup CEO
The transformation of a start-up CEO requires personal and professional growth.
Every start-up CEO goes through an evolution. Company founders invariably must master and embrace new skills as the company scales. While all business leaders evolve, the transformation of a start-up CEO – from a founder with one or two colleagues to the leader of a business with hundreds of employees and customers and a formal board – requires personal and professional growth.
I have seen CEOs attempt this journey many times over the past two decades. After some time leading a business, founders occasionally recognize they are not suited to the next stage.
“Everything that made you successful at the start becomes a problem as the company scales,” Bipul Sinha, the CEO of the rapidly growing zero trust data management company Rubrik, told me.
How can a leader successfully make this transition? I asked four founders with companies at various stages to reflect on how their time allocation has shifted; what skills they had to develop as their companies grew; and what kind of advisors proved most helpful at various points.
When Evan Reiser, founder and CEO of Abnormal Security, began building his company, he spent nearly all his time listening to prospective customers. Although his team has now launched a highly differentiated email security solution, he started with no preconceptions.
“If I was going to spend 10 years building a world-class business, I thought I needed to spend about a year making sure I was pointed in the right direction. If you push an initial idea down the wrong path, the business is unwinnable no matter how much energy or money is invested,” said Reiser.
Reiser started every thirty-minute meeting with enterprise CIOs and CISOs by asking, “What could we deliver in six months you would be willing to pay $250,000 a year for?” He estimates he conducted over 100 interviews before he and his co-founders wrote their first line of code.
Three years in, Reiser finds the CEO role demands a narrower focus. He often thinks of himself as the chief behavioral reinforcement officer. “I take every opportunity to give feedback and reinforce culture across the company.” He encourages his senior team to allocate 80% of their time on current projects, and 20% planting seeds for the future.
Bipul Sinha followed a similar path. “Initially, the CEO’s responsibility is figuring out the product angle: what problem the market needs to be solved.” Like Reiser, he spent much of his time setting up meetings with what he calls “qualified customers.” He wanted early testers of his product to have skin in the game, so he offered a $3,000 contract for the beta version, and then access to the bigger product for 30 days.
Today, Rubrik has more than 3,300 customers and 1,600 employees. Sinha remains obsessed with product direction, but now realizes the importance of a world-class management team. “I had no understanding of how important HR and recruiting would be in creating large-scale success.” Once he figured out Rubrik’s core product, he spent 70% of his time recruiting team members and developing a high-functioning team.
“I had to move from being a disrupter to being an asset manager,” Sinha reflects.
Like many founders, he realized that the “asset” was not just the product, but the team he had to grow and energize.
Both Evan and Bipul confirm that most founders devote the lion’s share of time to getting the product-market fit right, the first test of any start up. Once the product has been established, the CEO must learn how to build and leverage a team – first to execute a go-to-market strategy and create an operating culture. These “jobs” are time consuming, but they define the role of an entrepreneur during the first two years of a new company.
Cultivating the right start-up culture is a skill that Jiajun Zhu – known as JZ – co-founder and CEO of Nuro, developed during the rapid growth of his robotics company, which has designed driverless delivery vehicles now used by Domino’s, Walmart, CVS, and others. In the first year, JZ spent more than half his time recruiting an early team. Finding people not only skilled but with the “right fit” – both personally and professionally – was time consuming, but critical to forging the company’s culture. Today, Nuro employs more than 900 people; a majority of the early team hired by JZ remain part of the organization.
Once Nuro’s team surpassed 100 employees, JZ shifted his attention from recruiting to designing and tweaking the organization’s structure: who reports to whom; how to define each role responsibility; how to build and nurture a leadership team. It was an entirely new area for JZ. “I realized that every leader has a multiplying impact on the people around them,” he told me.
“With success, it became important for me to place people in the right roles and give them the ability to manage performance,” said JZ.
Despite previous executive management experience, it took time – and frequent reps – for Solv Health’s CEO and co-founder Heather Mirjahangir Fernandez to get comfortable talking to external audiences. Shyness was never a problem. Solv takes the friction out of finding a doctor and scheduling appointments and has grown to become a premier solution for booking health care appointments online. Heather spent the entire first year testing the product-market fit for the company’s platform. Starting in Dallas, she personally visited doctors’ offices and began talking to the receptionist, trying to get time with doctors willing to listen to her pitch. Early on, she also made cold-calls and reached out to experts on LinkedIn.
As the company grew, a bigger audience of investors and health care professionals wanted to hear Solv’s story. “I knew how to talk to customers and our team, but I wasn’t used to telling our story on stage.” It took practice, but listening to other entrepreneurs helped her simplify the story. “The longer you’re out there, answering questions, surrounded by people who have been in the industry a lot longer than you, your confidence in the role you play in the ecosystem grows.”
JZ and Heather both believe that key decisions a maturing CEO makes today will have outsized consequences down the road. JZ wanted to build an initial core team that would define both the culture and technology of Nuro. Heather understood she needed to build Solv’s service around specific conversations she had with doctors – her future customers. Understanding which decisions will have long-term consequences is not always immediately clear to most CEOs. But successful CEOs quickly learn that identifying “one-way door” decisions — that is, decisions from which there is no turning back — is critical to company success.
Evan Reiser’s advice-seeking strategy has shifted across the different stages of the business. During his first year, Reiser sought market, product, and customer-oriented feedback from “leaders a year or two ahead who were familiar with the company’s present zone and could provide warnings and feedback.” Three to four years later, he is turning to experts in “behavior reinforcement” and “resource allocation” as Abnormal Security expands its workforce from 200 to 300 people. “What’s relevant now,” he says, “is identifying mentors that can support the development of a high-performance culture.”
Heather Fernandez always has stayed close to other start-up founders. But in recent years, her most important sounding board has become her board of directors. She found that the informal structure of start-up boards allowed her to seek advice from directors whenever she needs it – not just at scheduled meetings. “I call or text my directors nearly every week,” she reports. She describes them as part trusted advisors, part executive coaches. The result is a virtuous circle of information flow.
“The more I share my thinking and questions with board members, the more useful they become to the company,” said Heather Fernandez.
JZ found that listening to a varied set of investors has also helped. “Our early investors still provide me with quick replies and invaluable advice,” he says. In Nuro’s Series C funding round, the company attracted larger investors like T. Rowe Price and Fidelity. “I feel I can ask them questions about building a larger enterprise.”
CEOs discover they need outside perspective and reliable sources for unvarnished advice. The “kitchen cabinet” they form helps them evolve as a leader. The most successful come to understand that the purpose of the board is to provide advice. It is up to the CEO to learn how to take advantage of what board members have to offer.
A persistent theme for these entrepreneurs – and hundreds more I have interacted with – is that start-up growth is not for lone wolves. Yes, many companies start with a single person and idea. But the most successful startups thrive because the entrepreneur learns how important relationships and counsel can be.
“Silicon Valley companies are good at disrupting and coming up with new ideas,” Bipul Sinha reminds me, “but the technology business is ultimately all about people. If you don’t have people, you don’t have anything.”