5 Habits of Great Startup CEOs

Being CEO of a startup is quite similar to being the parent of a newborn. The neighbors see a clean cooing newborn with smiling proud parents. But we all know what goes on inside the house. Sleepless nights, stress, no time to attend to other relationships. You are a slave to the new creature. It is ultimately incredibly rewarding, but parenting is very hard work and not at all glamorous. And just the way not everyone handles parenting well, not everyone is a good candidate to run a startup. As a matter of fact, a great startup CEO is as rare as a 70 degree day in March in Boston.

I have compiled the qualities that great startup CEOs share – you know – the CEOs that actually get multiple B-round term sheets in down markets and get that marquis exit at an unusually high multiple. These are the ones that consistently surprise their board on the upside, investors love to back, and that acquirers pay up to bring in-house. If you are a founder looking for a CEO to really grow your company, here are the five personal attributes you should look for:

  1. Attracts Great Talent. This is the best indicator of success, as it really encompasses all of the other attributes. If A+ talent flocks to work for someone, that person has got something special. Be careful though. An orangutan could be CEO of super fast growing startup and attract great talent. So, make sure it is the CEO who can attract talent, not someone riding the wave at a hot company.
  2. Networking God. A good CEO shortens sales cycles with contacts, shortens hiring time with contacts, and shortens fundraising time with contacts. A CEO who networks well can hence shorten time to exit and massively reduce dilution to founders. Give 8% to a great CEO, prevent 20%-30% or more in downstream dilution.
  3. High Intelligence. The CEO is usually not the highest IQ in the room. But he needs to be in the conversation. At high tech startups a certain acumen is needed to keep the respect of the troops and gain the respect of customers and investors.
  4. Strategic Thinker. The trick with a startup is to channel all of the company’s limited resources in the optimal direction. And to quickly alter course as markets dictate, so not a single moment is wasted by indecision. This requires strategic thinking, not tactical execution. Many line executives from larger companies struggle as CEOs of startups because they have not had the opportunity to deviate from a strategy that was handed down to them from above.
  5. Stamina, Energy and Productivity. This gets back to my point at the top about parenting a newborn. The CEO needs to be all-in, and one of those productive people that doesn’t waste a second of his or her day. The CEO sets the culture at a company, and that should be one of reward for achievement, productivity, hard work and accountability.

So, there you go. Every founder CEO should be very honest in his or her self assessment, and then when they see someone with the above profile, move quickly to hire them. But do your diligence. Hiring the wrong CEO can be every bit as costly as hiring the right one can be helpful.

Scott Johnson is a Managing Partner with New Atlantic Ventures. This post first appeared on his blog. Follow Johnson on Twitter @VC_Scott.

Photo of Scott Johnson from New Atlantic Ventures

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1 Comment

  • Hi, Scott. Your post has been retweeted 68 times (and counting) in just a couple of days. Are you getting much feedback from entrepreneurs, VCs and others about it? If so, can you share what you’re hearing?

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