Introduction

Startup CEO is not a book about how to start a company or find early-stage financing. While these topics are essential to entrepreneurship, they're well covered elsewhere. This book is also not about sales, marketing, engineering, finance, or other disciplines inside the company. It's not the story of my company, Return Path, though there are a lot of examples from Return Path in it. It's not my blog, Only Once (www.onlyonceblog.com), though my blog posts inspired bits and pieces of the material in this book and I still continue to write it.

I set out here to write the book I wish someone had given me on my first day of work as CEO of Return Path over 20 years ago. There is no instruction manual, no field guide, to being a CEO. If you become the CEO of General Electric or General Motors, you have been groomed for the job for decades. If you're starting your own company - and have never done it before - you don't have the luxury of that level of grooming. I believed I had as good experience as I possibly could have when I started Return Path at the age of 29. Management consulting. Venture capital. General manager of an Internet startup within a larger company, working for a CEO. Then I got into the job and realized that I didn't have a clue what I was doing.

There is a real craft to being a CEO and leading a full organization and there's no substitute for actually being in the job, especially early in your career. I've written a blog called Only Once since May 10, 2004, and I cover a few different topics but it is primarily devoted to posts about entrepreneurship, leadership, and management. My long-time friend and board member, Fred Wilson, inspired the name of the blog with a post entitled "You're Only a First-Time CEO Once." In that post, he says:

The hardest job in management is the "first time CEO." I have absolutely no data on this, but I suspect that at least 75% of firsttime CEOs fail at some level. Many get fired. Many go down with the ship when it sinks. Some quit. Many sell their businesses before they've realized their full potential because they just can't figure out how to do the job right.

But in venture capitalism, among the most pure forms of capitalism there is, failure isn't all bad. Because, as I said yesterday, "you are only a first time CEO once." Most talented business people come up the learning curve quickly. And the next time, they don't make the same mistakes. They move faster. They listen better. They spend less. They hire better. The list goes on and on.

So, what does this mean for VCs? It means back serial entrepreneurs who have done it before. But if you can't do that, and are backing a first-time CEO, recognize the risks of that. Mentor, coach, and pay a lot more attention.

What does this mean for entrepreneurs and managers? It means that the first time you run a business, you should admit what you are up against. Don't let ego get in the way. Ask for help from your board and get coaching and mentoring. And recognize that you may fail at some level. And don't let the fear of failure get in the way. Because failure isn't fatal. It may well be a required rite of passage.

As a CEO, I feel like I've made every mistake in the book at least once. I'm sure I've made a couple more than once. So this book is my hope to pay forward the lessons of my 20 years of experience as a first-time CEO to other entrepreneurs, whether actual or aspiring. If I can help just one of them not get fired, not go down with the ship, not quit, and figure out how to do the job, then I will call this book a success.

Let me issue three caveats before I begin. The first is that this book is based on my experience and the experience of a handful of other CEOs whom I know well. For the most part, that means American CEOs running U.S.-based companies, in and around the Internet sector, that got started between 1990 and 2010 and with fewer than 500 employees. I hope the book proves to be timeless and that it spans cultural and industry boundaries, but there will be some inherent limitations based on my own experience. I've tried to broaden that in asking a number of people to contribute sidebars, section openers, and section conclusions in this book, but that group of contributors is still largely made up of people generally like me.

The second caveat is that I don't have a single clever tagline or overarching premise that's going to answer all questions and challenges associated with the job. Being a CEO is an incredibly complex job at a company of any size and writing a book called Be Authentic or something like that wouldn't do it justice. That's why this book is designed more as a practical field guide than a lofty book on philosophy.

The third caveat is that I don't have all of the answers and I haven't figured everything out. The trouble is that no one else has, either. I have, however, figured out many of the questions to ask as well as the answers that come from my own experience. Running a company is situational. You can be a great CEO and miss the occasional curve ball that comes your way. This is my best shot at documenting what I've learned over the years in the job.

Being a CEO is also somewhat personal in nature. Because something works for me doesn't mean it will work for someone else. Each and every leader has a different style, different values and beliefs, and a different approach to the world. My intent here isn't to produce value judgments of "this is the only way to do XYZ task" so much as it is to document most of the primary jobs of a CEO in a company from the startup stage (fewer than 25 employees), through the revenue stage (fewer than 150 employees), and into the growth stage (fewer than 500 employees) and give some examples from my own experience of one or two ways of approaching each task.

Coming up with a framework for this book was challenging. I drew once again from one of Fred's blog posts, entitled "What a CEO Does," where he quotes another experienced colleague of his from the venture business:

A CEO does only three things. Sets the overall vision and strategy of the company and communicates it to all stakeholders. Recruits, hires, and retains the very best talent for the company. Makes sure there is always enough cash in the bank.

I like the simplicity of that framework and I've adapted it somewhat into the outline of this book. Part One of the book focuses on the ideal way to communicate your vision: "Storytelling." Part Two is entitled "Building the Company's Human Capital." The outline got a bit beyond Fred's framework. While I generally agree that those three things are critical, it's impossible not to add a few other important topics to the list. First, I think you have to broaden the third topic. It's not just about making sure there's enough cash in the bank. It's about execution in general, so Part Three of this book is called "Execution" - both about having the money in the bank and about using it wisely through disciplined execution. Part Four covers a very unique aspect of the CEO's job: "Building and Leading a Board of Directors." Part Five is more about the how of doing the job as opposed to the what: "Managing Yourself So You Can Manage Others."

I want to emphasize here that even though "Managing Yourself" is addressed in Part Five, you shouldn't wait to implement the practices and tips I outline until after you have gotten traction in your business model. By then it will be too late and all your time (and your sanity!) will be absorbed by the business. It's vitally important to build your business in ways that keep you refreshed, energized, and operating at peak personal performance. Part Five contains the tricks I have learned and the tools I use to bring the best of myself to both work activities and relationships outside of work, every day. Part Six, new in the second edition, speaks to the process of preparing for, executing, and recovering from, the sale of the company.

This framework encompasses nearly every challenge a startup CEO has to face but it leaves out one crucial area: management and leadership.

As a manager and a leader, I had a number of positive influence points over the course of my career and a number of negative influence points. I vowed to learn from those, both the good and the bad, and bring them with me to my job as CEO. In particular, some incredibly poor management practices I'd seen over the years motivated me to create a different kind of workplace.

Sometime after a few years running the business, I took a different approach. I didn't pause when making tough decisions to consider what others would do if they were in my place. I started developing my own reflexes, my own instincts, and my own way of talking through things.

I can't remember what the turning point was in finding my voice as a CEO. It might have come out of some specific critical incident. It might have come from working with my coach. It might have just emerged slowly, without a turning point, as I spent more time maturing in the role. From the rearview mirror, I wish I had done more, earlier, to help me find my voice. Mostly, I wish I'd been deliberate about finding it; that certainly would have hastened the discovery!

Throughout this book,...