How Can You Tell If Someone Will Be A Great CEO?

Let’s go through these traits.

 

Trait number one: Successful early stage startup CEOs learn from their failures and mistakes.

 

The first stupid mistake I made building my company was working with the wrong co-founders. “Jim” and especially “John”, the VP Engineering, were toxic.

John was a wolf in a lamb’s clothing. He tried to steal the idea of my company, down to stealing our IP and investor pitch deck, when he quit. It nearly killed us.

However, I learned from the mistake. When I recruited Jeroen to replace John, I was really careful to make sure that Jeroen and I saw eye to eye on how we should grow the company. The result was Jeroen became my true partner.

Unsuccessful early stage startup CEOs just repeat the same mistake over and over again. For example, “Robert” had a business whose revenue had stalled because he didn’t want to build out his management team.

It was clear to me what the problem was, but, no matter how hard I tried explaining it, Robert always had an excuse why he should just continue on as he had. The result was a startup with minimal revenue growth.

 

Trait number two: Successful early stage startup CEOs are clear communicators.

 

The ability to simply and clearly explain your vision to your employees, investors, and customers is an underrated skill. “Fred” and “Michael” were two early stage startup CEOs that I worked with.

I asked Fred, “How do you want customers to think about your company?” Fred’s literally took fifteen minutes answering a question that should take less than twenty seconds to answer.

Was it a surprise that when Fred surveyed his customers, customers gave wildly different answers? It wasn’t to me. That’s why Fred’s business was stuck.

Michael, on the other hand, was clear and concise in his communication. His team knew exactly what they were supposed to do. His customers knew exactly how Michael’s company was 10X better than the competition. And Michael’s investors are happy with his continued growth.

 

Trait number three: Successful early stage startup CEOs can recruit.

 

You should be spending at least fifty percent of your time recruiting your team in the early stage of your company. There’s arguably no more important task than recruiting top talent because there is no company if you can’t recruit.

“Ray” has grown his team from zero employees when I started working with him to well over two hundred engineers. The competition for the talent Ray’s recruiting is fierce, yet Ray, because he prioritized recruiting, has been able to build what is considered the most talented team in his space. Is it any surprise that Ray’s company is now worth well over $2 billion?

Robert, the CEO I highlighted in trait number one, didn’t prioritize recruiting. He hasn’t been able to recruit the caliber of talent necessary to build a great product.

You want to be like Ray, not Robert, when it comes to recruiting.

 

Trait number four: Successful early stage startup CEOs care deeply about the company culture.

 

“Kevin” has been obsessed with his company culture since I started working with him. He understands that every new employee will either improve or hurt the company culture.

So Kevin vets his potential new hires, not just for their ability to do the work, but for their fit into the company culture. The result is a dynamic work environment where the team works well together, constantly improving the products and customer experience.

Again, not surprisingly, Kevin’s company has been growing at a significant clip. His investors are very happy with his progress.

I’ve only worked with a few CEOs that didn’t put a premium on culture (I do my own vetting :-)). The CEOs that didn’t put a premium on company culture had a much higher turnover rate than the CEOs that cared about company culture. The result was increased costs, lower productivity, and reduced sales and growth.

 

Trait number five: Successful early stage startup CEOs are fanatical about their company.

 

Fanaticism stands above all the other traits in importance. You’re going to experience at least one, if not several, near death experiences where your startup’s existence hangs in the balance.

I’ve seen it time and time again. The reason a startup survives is due to the CEO’s fanaticism.

Let’s go back to Ray. Ray was raising his Series B funding, and one of his existing investors was blocking the round from closing by throwing roadblock after roadblock in the way. The new investors terms were very reasonable, so it didn’t make sense what his existing investor was doing.

Ray’s new investors were getting frustrated. The new lead investor told Ray that he had until midnight to get the existing investors to agree to the terms.

If Ray failed, it was likely the company would have to shut down. Ray tried everything he could to get in touch with his existing investor, but his existing investor went into hiding.

He drove over to his existing investor’s office to meet with him face to face. The existing investor literally hid in his office, refusing to meet with Ray.

Ray easily could have just given up, but he didn’t. In parallel, he was putting pressure on his other existing investor to help solve the problem. Finally, at 11:55 PM, the existing investor relented and signed off on the deal.

That’s fanaticism. I’ve seen every successful CEO I’ve worked have some major problem they had to solve or the company would go away. And every time, it’s the CEO's unwavering belief in their company that has allowed them to prevail.

That’s why this final trait is the most important trait you need to succeed. Fanaticism, along with the other four traits I outlined, is what makes you a phenomenal early stage startup CEO.

 

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