There are just a few things you need to launch a business.
You need a vision (the ability to spot an opportunity or solve a previously unsolved problem), confidence, desire or passion, and a high tolerance for the probability of losing everything.
Fundamentally, this is all you need. These four things will get your business off the ground and, probably, help you land your first few customers. You don’t need much money to make this happen, and when it does, you’ll become a startup founder.
Growth, however, will bring new challenges.
Growth means you’ll probably need more employees, maybe a partner or two, a board of directors, and likely investors. You’ll need to learn new skills—what I call “adding tools to the toolbox”—so your business can scale and so you can become more effective as a founder. You’ll need to learn how to become flexible, accountable to others, and comfortable leading rather than dictating. You’ll need to improve your communication skills. You’ll need to define, develop, and maintain a culture and figure out how to deal with internal and external conflicts (Eisenmann, Howe, & Altringer, 2017). These basic skills will carry you far, particularly if you are self-aware, introspective, and understand your shortcomings. With these “tools in your toolbox,” you’re on your way to “Chief Executive Officer (CEO)-material,” but you’re not a CEO.
This point in your growth is where you get yourself into trouble as a founder. You want that CEO title because it gives some prestige and respect. While you may be the highest-ranking individual in the company, overseeing the corporate decisions and managing operations, it’s disingenuous to claim the CEO title when you have only a few employees and you’re flying by the seat of your pants, which is usually the case in a startup. You’re not fooling anyone with the title, let alone an investor.
When you take on investors, you must become a CEO, not just call yourself the CEO. The desire to have the CEO title without accumulating the skills necessary to be the CEO is the fastest way for you to lose your company as it grows. Many founders choose a voluntary succession approach when they see their investment or wealth tanking because it forces a founder to come face-to-face with the limits of their skillset (Wasserman, 2012). This decision to let go can help a founder preserve wealth and maintain involvement in the company.
Conversely, some founders are so ego-centric they never bother to learn the skills necessary to become an effective CEO, and they are surprised when they’re forced out by their board (Wasserman, 2012). Steve Jobs is but one example. Although Jobs was not the CEO when he was fired, he was a founder who never bothered to learn the management and leadership skills necessary to serve in senior roles as the company grew (Siegel, 2011). The driving and demanding personality that served Jobs well as a founder did not serve the company well as it grew and played a part in his firing. Returning to Apple later, he acquired the necessary leadership skills (Siegel). Unfortunately, a founder rarely gets a chance to return to his or her company once fired.
The individual who can get a company off the ground is usually quite different from those who can run it well as it grows. The skills and abilities required of each are very different. A founder must take the time to learn new skills to transform from a founder to a true CEO if this is indeed the goal. Sometimes, though, it is not the goal. The key for entrepreneurs is to consider and develop an exit strategy from the very beginning to have a clear path toward the end goal, whatever it may be.
Remember this, though: It’s certainly fine to be the founder but not the CEO. However, don’t claim to be the CEO until you have acquired the skills to lead and manage and have a track record that supports your claim. Investors already know where you are on the founder-to-CEO spectrum, so all you’re doing by claiming a title without the requisite skills and experience is creating an identity crisis for yourself.
Eisenmann, T., Howe, R., & Altringer, B. (2017, June 21). What Does an Aspiring Founder Need to Know? Retrieved from hbr.org: https://hbr.org/2017/06/what-does-an-aspiring-founder-need-to-know
Siegel, J. (2011, October 6). When Steve Jobs Got Fired By Apple. Retrieved October 1, 2018, from abcnews.com: https://abcnews.go.com/Technology/steve-jobs-fire-company/story?id=14683754
Wasserman, N. (2012). The Founders Dilemma. Princeton: Princeton University Press.