To paraphrase William Shakespeare, some people are born leaders, some achieve leadership, and some have leadership thrust upon them. In the startup world, any one of these three types — and more — may be steering the ship. That said, what does successful leadership in startup companies look like?
It’s a good question, and one we’ll attempt to answer as simply as possible in this post.
Make no bones about it, leadership in startup companies is a myriad of challenges, given the nature of founding and running these kinds of companies. And let’s face it, very few of us are born leaders. We often have to learn on the job, or get thrown in at the deep end, especially if we’re the one with the big business idea but without the specific skills you need to turn that idea into a fledgling startup. All this makes being a good startup CEO quite the challenge.
Let’s have a look at what’s different about being a leader at a startup (clue: it’s not your pinball machine or ping pong skills); and then check out some characteristics which can help you, as well as some do’s and don’ts.
Leadership in startup companies: an introduction
Startups are up against the odds to being with. And without good leadership, your chances of success as a business are even less. As Liam Neeson’s defiant Dad character in the hostage film drama Taken, what you need is a person with a very particular set of skills. Skills that they have acquired over a very long career. Skills that make them a nightmare for your competitors. OK yes, I may have paraphrased again there.
Yes, being a figurehead of a startup means that everyone in your team — however small or large it may be — is looking to you for guidance, as well as motivation and inspiration. Inevitably, especially in the very beginning when you’re bootstrapping and sticking firmly to your capital efficiency, you’ll be wearing a few different hats. What does this mean from your side as a leader? A little something called dedication.
From finance and human resources to marketing and organization, your example will set the bar for those to follow. Last but not least, the key to leadership skills in startup companies, and this is important here for those who confuse the word “boss” with “leader”, you’ll need to keep learning as you grow.
What’s different for startups
There are some key differences between leading a startup and leading an established corporation that any contemporary entrepreneur worth their salt need to bear in mind. These are mainly attached to two areas:
- company focus and
- people management
For example for the first, at startups, managing cashflow effectively is an existential issue, as you try to scale and build value. With this in mind, you need to focus on experimenting with your business model and taking calculated risks.
On the second aspect of people management, the word “failure” should be embraced as part of the build-measure-learn process (or model). On top of that, in terms of people management, being a startup leader requires you to empower a team that is cross-functional, while you — as well as your team — may also have multiple jobs to do. This can be very confusing and needs great flexibility. At an established company, usually you will have reached a stage of sustainable growth. So in terms of leadership you are more often than not focused on sticking to proven processes; while roles are typically clearly defined and more structured. This doesn’t mean that in terms of leadership in startup companies you need to just “go with the flow”. Quite the contrary, there will be times when you will need to firmly go against the flow and have belief in your convictions.
Leadership in startup companies: the dos
Lead by example
You have to be the one bringing the energy, as well as the vision. Low-energy personas cannot be startup leaders. Also, let your passion for the project and its purpose shine through. This will inspire and motivate your team.
Pass on the fat monthly paycheck
Breaking even should come before high startup salaries.This is part of leading by example, but is important enough to have it’s own ‘do’ status. At a startup, cash is typically scarce in the beginning and you should do the right thing and ‘take a hit’ until your cash flow is relatively stable — and positive!
Focus on value
If you are building a startup mainly for financial gain then this one will be difficult for you. But try. Aiming to provide value to your customers first — over promos and special offers — will take your startup further. Aim to provide something that changes their view on things.
You simply can’t afford to procrastinate and avoid making decisions. This will lead to inertia and decision paralysis, as well as a stack of problems, both inside and outside your business.
Be an active listener and ask questions
Don’t just nod your head and wait for your cue to get your points across. Effective communication in a team is about employees feeling valued; that their opinions count. The art of listening is, in fact, a magical life skill. And, in a startup, especially for a leader, it gives the people around you the sense that you actually care about what they are saying. Something which should be the case, after all!
Be honest, open, and transparent
Give team members a platform to voice their opinions and/or grievances. Encourage openness every step of the way, so everyone feels valued and has all the info they need to feel happy and feel part of something bigger.
Be a personal stress ball for employees
Your team members will be worried and anxious about success or failure. Their livelihoods (as well as yours obviously) are probably depending on it. So, whenever they come to you with problems, worries, etc., try to be the shock absorber; a buffer if you will, to ease their concerns.
Leadership in startup companies: the don’ts
Be a know-it-all
Let’s face it, nobody likes a know-it-all. But to be in a leadership position at a startup and have this attitude will only see you go down a path from which only negative things will come. Because, even if you have been around the block, or have done a lot of research on something, it’s impossible to know everything. So, avoid this kind of mentality, as it can become toxic. Team members will be afraid to speak out, for fear of getting an earful of patronizing feedback, for a start. If you think you know everything, then it’s highly likely that you simply do not know how much you don’t know.
Ignore the competition
Believe it or not, this is a common deadly sin, as far as leadership in startup companies is concerned. It can be so easy to get stuck in a bubble, obsessing over your product, its features and marketing campaigns that you forget all about checking what your competitors are doing. Or worse still, not knowing who they are. Please, don’t do this.
Throw “curveball” challenges at team members
While you may be good at rolling with the punches, thinking on your feet, and [insert your favorite metaphor here], your team members or employees are probably not. Don’t throw unwarranted challenges at a new hire for example and hope that they will swim rather than sink. This can damage both your startup and the person given the challenge. You need to be building up people’s confidence, not knocking it down.
Focus on individual goals vs team targets
In startups, especially in the early stages, targets (whether KPIs or another form) should be set for the whole team or teams, not individuals. Save the virtuoso targets for when you start to scale up. At the end of the day, your overarching vision of your team should be your North Star. In this way, you eliminate people trying to be secretive and overly competitive against each other; and everyone will be clear on what they are working towards.
Be blasé about failure
Fail fast on your way to success, they say. Actually, we also say the same. And that sentiment is all good and well. Failing needs to be allowed. How else can you experiment and iterate with product features, A/B tests, etc.? But — and this is a big but — don’t justify failure too easily, by just saying “it’s okay”. Make the outcome more about “okay, what did we learn so we don’t repeat this failure”. At the end of the day, you have founded a startup to make a profitable business. So, you don’t want to send the wrong messages about ownership, accountability, and expectations.
Keep learning new tricks [and a few old ones]
Lifelong learning; it’s what everyone is talking about these days. And there’s a reason for it. It’s damn useful! Not only in ensuring that you don’t become obsolete — or rather your skillset does — but it can also open new avenues to success, for you and your startup.
There are many ways to learn new tricks, and they don’t have to cost you much. Books! Yes, remember those? Whether you read them on real paper, use a kindle, or even listen to them via an audio app it doesn’t matter. This is the cheapest way to top up your learning. On this note, it’s pretty safe to say that we’re lucky to live in a time where the volume and quality of business literature, advice on startup methodologies and entrepreneurship is unprecedented. Reading books help us grow, so read!
Then there’s learning from others. Actively seek out people who have been there and done that. Ask them for unofficial or official mentoring. Go to networking events where you can meet such people, connect with them and try to pick their brains.
There’s also a wealth of ways, online, through sites like Udemy and Edx, etc. There, you can enroll in courses at universities, colleges, etc. to do a proper course in virtually whatever subject you feel you need to learn about; to make your startup more successful or yourself a better leader.
Keeping to the theme of learning, while all of the above is some of the most basic and solid “at-a-glance” advice we have to offer from our side, it’s imperative that you also look into the subject of leadership skills for startups yourself. Stay informed. Because, one thing is for sure. Your leadership will need to change over time, as you startup beings to scale up.
The good news is, this means that your venture is making it. It’s making money and people want what you have to offer. The even better news is that it will open up more opportunities for both you and your team, to fine-tune your leadership skills as you move forward through new challenges; that is to say, your job role and responsibilities change, as the company grows or pivots.
Last but not least, something that a lot of leaders can be afraid of. Don’t forget to ask for feedback. Do an audit on your leadership skills. As Ron Ashkenas points out in the Harvard Business Review’s “The Leader’s Handbook”:
as a leader in any kind of organization you must candidly look in the mirror, get feedback about what you do well and where you are lacking, and then work to close the gap. In startups, however, the rapid evolution of the business requires those on the leadership team to engage in these activities in short, intense cycles.
And the bad news? There is no bad news. Remember, a positive mindset is part of becoming the startup leader you want to be.