A critical, perhaps THE most critical, part of our job as venture investors is to identify great entrepreneurial leaders. Once identified, we back them with not only capital, but also our networks, our advice, and any other form of value-add we can muster. We need great entrepreneurial leaders because they are the ones we are backing and counting on to build a great company. Ideally, we want to find founders/CEOs that, with the right support and coaching, can “go all the way,” i.e. take the company from startup to scaled-up highly valuable business.
As you might expect, we put a lot of thought into the question, “What does it take to be an effective successful entrepreneurial CEO?” There are many ways we try to assess a potential entrepreneurial CEO and their ability and capacity to build a great business. One of the reasons it is so hard to be a successful entrepreneurial CEO is because it combines two roles – entrepreneur and CEO. There are many great CEOs who could never start a successful company, but they can brilliantly lead one that is already established. Likewise, there are great entrepreneurs who can’t scale a business to be truly valuable. Sometimes, it’s skill and training, sometimes it’s experience, and sometimes it’s simply desire.
As a result, the “checklist” is long and varied. It’s not just a few skills and aptitudes; it’s a couple dozen or more. Consequently, it’s pretty rare to find an individual that has all those attributes at a sufficiently robust level of development for each. That’s why the world is not full of Bill Gates, Elon Musks, Larry Ellisons, or Steve Jobs.
Here is my list of the attributes and aptitudes required to be a great entrepreneurial CEO. The list is not necessarily exhaustive. A person doesn’t have to be great at all the items on the checklist or even a majority, but they do have to be able to perform them all at some minimal level of sufficiency, and be brilliant at a few. Some are teachable, some are learned via experience, and some are a product of genetics and upbringing. If you aspire to be an entrepreneurial CEO, be prepared to be…
A Visionary who can envision a highly desirable future state and map a path to it.
A Great Recruiter of “A” Talent who has long coattails. Many high quality people trust you and respect you, and want to work with you again.
An Inspirational Leader who leads from the front, one who knows how to motivate the troops and stoke their passions and commitment.
A Good Manager who can plan and execute on time at a tactical level, in a way that is efficient with resources. Note: oddly, a great entrepreneurial CEO doesn’t have to be a great manager. Leader does not equal manager. You can always hire great managers to do a lot of the heavy lifting.
A Disciplined, Focused Executor who can work with very limited resources and focus those resources appropriately without succumbing to distraction. The old adage that more companies die of indigestion than starvation is so true. It’s imperative to avoid the shiny objects in the corner.
A Flexible, Adaptable, Agile Leader who knows when it’s time to shift gears. One of the many quandaries of being an entrepreneurial CEO is that you must be focused and stick to your convictions and your plan – until its clear the plan isn’t going to work. It’s a fine fine balance and one of many reasons why it’s such a difficult job.
A Great Listener who, like great sales people, listens intently, usually to many different points of view, to inform their own. A great entrepreneur is like Spock -- they drain your brain of all useful germane information.
A Thoughtful, Big Picture Thinker who can be conscious of the business from 1 foot to 10,000 feet. Thoughtfulness is an attribute that is important both for managing the balancing act enumerated above, and it’s also important for leadership purposes. People like to follow someone who has clearly heard them, considered the facts, and weighed their position.
A Respectful Colleague who inspires trust. A key foundation of trust is respect, and a great entrepreneur has respect for every aspect of company building: respect for the challenges; respect for the team; respect for the customers; respect for the suppliers and partners; respect for the investors. Even respect for the competition.
A Pragmatist who effectively balances vision and execution. You have to be bold, even crazy, in your strategic vision, but pragmatic in its execution. You have to know when to hold them, and when to fold them.
A Promoter (Fundraiser) who can convince others to back them with capital, so that they can build the great company they envision and desire. All growth companies consume cash, and the fundraising process will most likely be a necessary part of the process.
An Evangelist (for the market/category/company) who, in addition to inspiring investors, must be able to inspire customers, consumers, and influencers. To do so well often requires intimate knowledge of the market you are serving, and the customers’ pains, needs, and desires.
An Analyst who knows how to collect and sift through a large quantity of changing data and to find patterns and trends, to develop insights into market dynamics and competitor intentions, and to forecast the future with a high degree of accuracy. Although not often mentioned in a list of entrepreneurial attributes, I think this one is critical.
A Strategist who can build on the analysis and formulate a strategy and supporting tactics to take advantage of the trends and opportunities discovered through the analytical process. As various military historians say, “No plan or strategy survives contact with the enemy.” You must be able to adapt your strategy as new information comes available, as markets shift, and as competitors react.
An Experienced Business Person and/or Domain Expert with preexisting knowledge and experience that can inform them of the challenges and requirements of the different functions they will have to oversee as the CEO. While we celebrate the fresh-faced wunderkind entrepreneur in the press and in popular culture, the reality is that 99% of successful entrepreneurs have a lot of experience, both specific to the domain they are tackling, as well as practical business and life experience. In many cases, while they often haven’t been a CEO before, they have been a leader and have a broad experience base as a result of having held or interacted closely with many different functional roles.
A Confident (but Not Arrogant) Personality who knows the difference between the two. To be fair, there are some arrogant, even very arrogant, successful entrepreneurs (although it’s funny how that tends to wear off or get chiseled away as they get older and more mature). You don’t have to be one. There is a fine line between confident and arrogant. You MUST be confident, but arrogance eats away at your ability to be great at a number of other attributes on this list (listener, good manager, respectful, thoughtful, etc.).
A Competitive Force who loves to win. Competitiveness is a must. Building a company is hand-to-hand combat. You must have a strong desire to be #1, because it’s very hard to build real value if you aren’t one of the top companies in your market.
A Motivated Driver who has a chip (or demon) on the shoulder. I always look for the “motivation.” It’s what adds the fire or edge to competitiveness. In some ways it’s as important in the context of trying to understand an entrepreneur and predict their ability to succeed as any other attribute. There are many hurdles, challenges and pitfalls along the way to building a great company. You need a strong motivational reason to keep pushing through.
An Impatient Doer who wants to move fast without being impetuous or reckless. This is an interesting attribute I learned fairly early in my entrepreneurial career from a mentor. Impatience is not something you can teach, per se, but I had spent a lot of time trying to curb my natural impatience. After a long discussion with my mentor about how tied to the entrepreneurial mindset impatience can be, I stopped being so worried about curbing my impatience (at least any further). Speed kills, and start-ups must be fast and nimble to kill the competition. Impatient entrepreneur CEOs provide that sense of urgency and the need to go faster.
A Frugal Spender who understands that capital is finite, scarce, and brutally expensive in the early stages. A great entrepreneur makes sure that all the money is being carefully accounted for and well spent, and that none is wasted on lower priority or frivolous (logo beach chairs, anyone?) things that won’t make a difference.
A Courageous Crusader who realizes that courage comes in multiple forms. Courage that your plan and strategy are right, even in the face of early difficulties and naysayers. Courage to roll the dice and risk it all at the right moment. Courage of your convictions when it comes to a key cultural or ethical challenge.
A Fighter who is unwilling to fail. Starting a company is an irrational act, and making it a success is an unnatural act. To persevere through the barriers and hurdles requires extraordinary grit, determination and confidence and the refusal to think that failure is an option.
I’m sure others would add their own favorites that might not have made this list. Point being, have your eyes wide open if you chose to pursue the entrepreneurial CEO path. It’s not the life of Tony Stark! It’s very demanding, bears tremendous responsibility, and requires much preparation and sacrifice.
