Subscribe to Inc. magazine
LEAD

What It Takes to Be a Great CEO

Make sure to expand your leadership skills as your startup expands.

If you're running a startup, how do you know if you have what it takes to be great? The answer is complicated, because startups go through fundamental changes as they grow. For example, the skills of a great CEO at Stage I, when a startup has a product but no customers, are not the same ones required at Stage II, when customers start to pay for your product.

To find out what a great startup CEO must be able to do at these two stages, I spoke with Doron Reuveni, CEO of Framingham, Massachusetts-based Applause, which provides an app dashboard. The company has 2,500 customers, 150 employees, and has raised $80 million from investors including Goldman Sachs. Reuveni broke down the two stages of startup leadership. 

Stage I

There are two, yin-yang leadership traits of a successful early-phase CEO, he explained: passion and calm. 

  • Passion. According to Reuveni, "a natural leader has the passion to convince great people to join a startup before it has customers. He can make them believe in the vision and persuade them that if they leave a stable job to join the startup, they will be rewarded by being in on the ground floor of what will become a big company."
  • Calm. "At the stage before product/market fit," explained Reuveni, "the CEO must be able to live with the highest highs and the lowest lows. He must be able to take a mellow perspective, gather opinions from many sources of people inside and outside the company, and make decisions. A bad CEO at Stage I gets overwhelmed by the emotions and can’t make decisions."

Stage II

Once a company starts to generate recurring revenue from paying customers, it is in Stage II. And at that stage, the CEO can no longer be intimately involved in all company decisions. In order for the same individual to lead the startup into Stage II, he must focus on humility, openness, and long-term vision.

  • Humility. As Reuveni explained, "Once you are in Stage II, the CEO must hire experts in marketing, product, sales, and technology who are smarter in those areas than the CEO. The CEO must let them make the decisions, becoming a mentor to them. Instead of them working for me, I work for them. As CEO in a Stage II startup, I need to identify the things in the organization that are the biggest pain points that make it hard for them to do their jobs."
  • Openness. "I need to create a culture of transparency and open communication and ask team members challenging questions," noted Reuveni. "If they think that I am trying to do their jobs, they will be confident in telling me, 'I got this. I will keep you informed and let you know if I need your help.'"
  • Long-term Vision. As Reuveni said, "The Stage II CEO needs to let go of running day-to-day operations and focus on the bigger things. He must develop relationships with investors, the media, other CEOs, and bankers. He needs to get involved with sales conversations and help people close deals while bringing in new leads. And he should be ready to go out and raise funds to fuel future growth."

If you care about your startup's success, take a hard look at yourself and decide whether you have what it takes to take your startup from Stage I to Stage II. If so, make it happen. If not, hire someone else who can.

More:
IMAGE: Getty Images
Last updated: May 13, 2014

PETER COHAN

Strategy consultant, startup investor, teacher, corporate speaker, pundit, and author of 11 books, Peter Cohan has invested in six startups, three of which were sold for a total of $2 billion. Before founding Peter S. Cohan & Associates in 1994, he worked with HBS strategy guru Michael E. Porter.




Register on Inc.com today to get full access to:
All articles  |  Magazine archives | Livestream events | Comments
EMAIL
PASSWORD
EMAIL
FIRST NAME
LAST NAME
EMAIL
PASSWORD

Or sign up using: