Show Notes
The role of a small business or startup CEO
Tyler: In this episode, we're going to talk about what the role of a CEO should be at a small business or a startup. I always hesitate to call myself a CEO, depending on who I'm talking to because it seems a little pretentious. I run a 17-person company and some days, I don't do any CEO stuff: I just write code or design something. And some days I'm in meetings and brainstorming long term product vision and I feel more like a CEO. I'm a little unclear on when's the right time for a founder, especially a bootstrapped founder, where you're not representing shareholders or anything like that, when's the right time for them to let go of the individual contributor role and just really embrace, “my role is to be the boss of the company” and all the actual work that gets done is getting done by other people?
Rick: I don't know exactly where to start with this. I'm very interested in the subject too. My immediate reaction is, I don't think that this is written in stone. It seems very circumstantial and honestly, subject to what the person has decided what their role is going to be, how they're going to play the CEO role, how they're going to spend their time. I guess, you keep saying CEO role. Maybe we can start with, what is uniquely the CEO role at all stages of companies?
Tyler: Yeah and you probably know this better than me because I think you've experienced different stages. What I have seen myself is, there's individual contributor work. If you come from sales, go to sales. If you're a marketer, do marketing. There's management, which I feel like I've stepped into. We're big enough at this point where it's, “okay, there's a programmer who needs a manager.” We don't have a manager for that person, so I'm their manager. There's a manager of managers, where I've got someone who manages the customer service team but someone needs to talk to him and then I guess there's other stuff, right? Do you agree with those three categories at least? Those kind of evolutionary steps as a business grows?
Rick: I would say that that's the different types of management but not necessarily… I know CEOs who have one report.
Tyler: Yeah, absolutely. I kind of think of all three of those as not fully CEO work but I'm not sure what ... There's some fourth category which is CEO work. What do you think that is?
Rick: I guess I would look at it a different way. I wouldn't look at it as, primarily a ... I wouldn't look at it from a people management standpoint, I would say there are three ... I'm going to butcher this but someone told me this once and I'll try to remember it as best I can. The role of the CEO is three or four things. The first is making sure that there's enough money in the bank. The second is making sure everyone is aligned on what the priorities are for the company. The third is building a cohesive team to ... and whatever that means retaining, training, managing, recruiting…
Tyler: Just making sure it happens.
Rick: … making sure you have the right people and I can't remember the fourth.
Tyler: Yeah and I actually think I coincidentally saw someone retweet this today.
Rick: I kind of look at a CEO's role as, either those three things are happening or they're not and if they're happening, the CEOs doing a good job, right? If you've got enough money in the bank, everyone is clear on what the priorities are, the team is cohesive and you've got a solid pipeline of talent to fill future needs, then the CEO is probably doing a pretty darn good job. How much time is it taking him to do that?
Tyler: Right, maybe none-
Rick: Maybe none.
Tyler: -depending on the company.
Rick: And if there's free time, maybe there's some opportunities to dabble as an individual contributor. If it's taking all of your time to do those three things, maybe some of those things you're doing as an individual contributor.
Tyler: Yeah, I can relate to the second one, having a vision or whatever. At
Less Annoying CRM, we don't have a strategy aside from the product. The whole company is about execution and then the strategy is, where is the product going? And that's my individual contributor work. Product design. So I think that's an example of what you're saying.
Rick: Yup, yup and so it sounds like you do a lot of individual contributions on setting, what are the priorities for the company? And that's great.
Tyler: And I love that stuff.
Rick: And I guess stepping back, when you say individual ... I'm interested in why you brought this up, number one, is this something that's bothering you? And two, what do you mean by individual contribution? I understand now what you mean by CEO role but what crosses into individual contributor work versus non individual contributor work?
Tyler: Yeah, so I wouldn't say this is something I'm worried about or that I have a problem or anything but what I notice in myself is, from time to time, I enjoy having periods where I'm meeting with a lot of people and having high level brainstorming and stuff like that but I really really love it when I have a day or ... I never have a full week but a good chunk of the week where I'm just not talking to anybody, on my computer, either designing or programming. When I say individual contributor work, I guess what I mean is, I'm not managing or leveraging other people's work but instead I'm saying, "The work I'm doing is directly moving the company where it's going, rather than setting a vision that other people are going to follow."
Rick: Would you consider that, setting the vision, individual contributor work?
Tyler: Yeah, I mean I guess it's on the border. It's half and half but so for me, I'm doing the design because I think it's cool. Oh, I really want to design this, versus, I can't wait for the rest of the team to follow this grand vision, you know?
Rick: It sounds like, if we agree that the role of the CEO is to do those three things, make sure there's enough money in the bank, set the vision, make sure the priorities are clear, create clarity and then build the team, then anything outside of that, that is done as an individual contributor, on your own, would be what you're talking about.
Tyler: Right, so writing code is definitely individual contributor work.
Rick: Yeah, okay.
Tyler: Design is ... If it's like, we need this feature and I'm designing it, that's IC work. If it's what is the-
Rick: IC?
Tyler: Individual contributor.
Rick: Is this the new lingo? Is this an acronym?
Tyler: I don't know. That's how they write it on the Twitters.
Rick: The Twitters?
Tyler: Yeah but if I'm designing some future project that maybe we will or won't do but it's a strategic thing, then that's probably CEO work. Okay, I buy that distinction.
Rick: Okay. What types of individual contributor work do you see CEOs getting involved with? You say coding, writing is one.
Tyler: Yeah, writing a blog post or something.
Rick: Yeah, that's another one. Selling, closing a deal.
Tyler: Yes. Which is, in a sense, a subset of having enough money in the bank but it's being the individual contributor rather than helping someone else do it and that's the part I hate. If I'm ranking it, two is my favorite, three is my second favorite and one is my least favorite, but yeah.
Rick: Yeah, yeah.
Tyler: You're probably different from that. Well, maybe not.
Rick: Well I like the product the best. I'm definitely more of a product person but I would say less on the design, more of the how do we get people to buy it.
Tyler: Yeah.
Rick: And so it's a merger between sales, marketing, and product. I don't know what exactly to call it but it's talking to customers, talking to potential customers, talking to people who have no idea what the company is doing and trying to turn that into words, as few words as possible to tell someone else to make them go, that makes total sense and that can be applied pre product but it also can be applied multiple times as you use the product.
Tyler: Yeah, this is a little bit of a tangent but have you read,
Product-Led Growth, the book?
Rick: No, but I love the concept of product-led growth. Who wrote this book?
Tyler: I'm in the middle of it but I don't have it on me. I forget. It's yellow.
Rick: I didn't think you read? I thought you were a podcast guy.
Tyler: I occasionally do. I get most of my stuff from podcasts and blogs but I'm trying to follow your lead a little bit here but I recommend it because what you're describing sounds to me like product-led growth a little bit, which is ... It's about growing the company and getting customers but by doing it by making a product that kind of has those natural dynamics versus just cold calling people or something like that.
Rick: Totally.I don't have a problem with cold calling people, that's what I'm doing this week actually with customer development. Although, I'm trying to leverage people I know to introduce me to people that they know, which is much more successful for everyone but the goal of those calls is not to create a scalable cold call process, it's to gather the information necessary to design an experience for the nonprofit consultant, so that they can just be themselves and interact with the product and the company and everyone wins. I love those puzzles.
Tyler: Absolutely. I know you read like a million books, you should check this one out.
Rick: Product-Led Growth.
Tyler: Product-Led Growth.
Rick: It's a very creative name.
Tyler: It says what it is. Anyway, we were talking about the roles of the CEO and stuff like that. I have one question we kind of talked about but I want to dive a little more in. Should an executive at a company be a manager or is the idea that they're just kind of coming up with the vision or whatever and someone else, management is a whole different thing?
Rick: What do you mean by management? What do you mean by executive?
Tyler: People manager.
Rick: Okay.
Tyler: Imagine a 100 person company that has, still probably the lowest level person has met the CEO before but there's a VP of something or that type of role, a C something officer. Is that person, the chief technology officer or whatever, a manager? A people manager?
Rick: Is the CEO a people manager?
Tyler: Yeah.
Rick: I mean they have to be, right? I don't know what you mean. They're at the top of the org.
Tyler: Yeah, I guess this isn't a fully formed question here but, I go back and forth between, do I think of management as the high level lofty CEO work or is that me being an individual contributor and the goal is to eventually have someone else take over, at least maybe then I'm that person's manager but ... I sit in a lot of meetings with programmers, helping them get their programming done, that type of management.
Rick: Okay and do you differentiate between leadership and management?
Tyler: I could make up an answer to that but I don't have one fully formed. What do you think about that?
Rick: Here's an example, over the years at
PeopleKeep and
Zane Benefits, I hired a lot of people. Also, a lot of people didn't work out as I was learning how to do that. I had no idea what I was doing. I made a lot of mistakes but one of the really positive experiences I had is when I hired someone who was the first person I could give a really big outcome to and manage the outcome, manage to the outcome, versus managing the how to get to the outcome, and that is a very different experience than what I would call people management. It's more, "Hey. Yeah, you report to me. I'm going to do the one on ones with you. I'm going to maintain the relationship. I'm going to make sure you're aligned and there's a bigger team here that we're managing to but I'm not focused on the how you go get this done, that's up to you with buy in from the rest of the team. I'm going to hold you accountable to the outcome that we've set." That's very different to me than people management as you're describing it, which is more of a coaching, helping someone get the job done role.
Tyler: Yeah, that's interesting. This is almost like a KPI type of thing, right? It's saying, here's the goals I've set for you. You do whatever you need to do to make those goals happen and then it comes back up the chain.
Rick: Subject to the clarity that I have provided to the company in job number two, it needs to be aligned to that and if the outcome you've set aligns to our company goals, this is why OKRs are so popular, right?
Tyler: Yeah.
Rick: It's outcome based management versus priority based management.
Tyler: Okay, yeah. This is really interesting.
Rick: Or task based management.
Tyler: If I can relate this to my experiences, I am kind of ... I am the direct manager of a handful of people and then one person I guess I directly manage is the direct manager of a handful of other people. I think that guy, Michael, he's the head of customer service. I think he's what you're talking about as ... I forget the terminology you said but the ... Not the people manager, outcome manager.
Rick: You manage him on an outcome basis?
Tyler: I mean I've never thought about it in these terms, but I meet with him and say, "Okay, the goal is for customer service to be better. Tell me how it's getting better," whereas I'm still more of a day to day manager of the product team, like the programmers and designers and people like that, where I'll sit in there and be like, "What are you working on right now? What are your next two weeks going to be?"
Rick: Before you go into what you do on the product side, when you go back to what Michael is doing, is he doing people management in your mind, with his reports?
Tyler: Yeah.
Rick: Got it and so he's very focused on how that goal is getting accomplished?
Tyler: Yes.
Rick: Got it. If you're at a five person company and everyone reports to you, you probably have to do that unless you've hired some really amazing people, which you probably shouldn't have because you probably couldn't afford them but this is also the benefit of co-founders and having some people early on that you can delegate to.
Tyler: Yeah, this was a bit of a mistake I made early on is I hired very talented people and thought that meant they didn't need to be managed and I was completely wrong about that, that even if they can go do their individual contributor work very effectively, they at least need the outcome management, which I don't think I was providing them.
Rick: Yeah, they probably didn't see ... Take Michael as an example, you're probably managing him on an outcome basis right now unintentionally because he's stepped into that role and probably asked for that without asking for it. He's naturally just moved into that position but I would argue that Michael is not the CEO but he is a leader of people and if he could transition to where his people are outcome based more so than then task based, he should be able to get a lot more done, get a lot more out of those people, and he should even have more time for doing things that he's excited about doing.
Tyler: Yeah, I hear you and I hear exactly what you're saying. I think that probably doesn't apply quite as well to his team because customer service is a fairly repetitive thing, so everyone on the team including him is mostly answering emails and talking on the phone to customers but I hear what you're saying. Okay.
Rick: I would challenge that and say, you can build capacity. I know you're one of the ... I took this from you, man. You were the guy who told me, "I want everyone to have a project that they can work on that has nothing to do with their core job."
Tyler: Absolutely. He doesn't manage those projects, I do.
Rick: Okay.
Tyler: When a new hire starts who's on his team, we say, "Four days a week you're doing customer service, he's your manager for that. One day a week you're doing whatever your 20% project is, I'm your manager for that."
Rick: That's interesting. What if you just budgeted that 20% time into ... I don't know if we're getting into something you don't want to talk about right now but what if you said, "Michael, you take over this 20% time and you manage all of this and get everyone focused on outcomes," and I bet ... I'd be interested in more on how that would play out based on how they could make themselves more efficient. Let me take a step back, what I'm advocating for is giving people time in a transactional role, which is like customer service, a front line transactional role, building in capacity to their role to allow them to think about how to do those things better on an outcome basis.
Tyler: Yeah, okay. I mean that's what Michael's 20% project is, so I think that part of it is already happening. Some CRM coaches have kind of decided on their own, “I'm going to try to improve the customer service experience as their flex time type of thing.” Some of them say, "I'm going to follow the game plan and go work on marketing or whatever," but yeah, I hear what you're saying. It'd be nice if everyone had enough time to do self-improvement on that.
Rick: Yeah and freedom to try things and fail fast. Less bureaucracy, less being managed, more freedom to explore.
Tyler: That all makes sense to me but the big takeaway for me here is that I kind of knew there was this distinction in my head already because I have this relationship with Michael and then I have the relationship with all the people on the dev team or the product team. One of the people on the product team is sort of easing towards a Michael type of role but it doesn't feel the same yet and what I realized is it's because I'm ... He's maybe a people manager in a sense but I'm still managing people instead of managing outcomes on the product team. It's not going through him exactly. Anyway, having that term, people versus outcomes is going to help me here.
Rick: Yeah, I'm interested. Maybe you just can't do that with an engineering team. Maybe it's all pretty task based but do you see how that would work if you switched to outcome management?
Tyler: Yeah. Part of it is you said this happened with Michael where he just kind of eased into it. Part of it is that's happening, it's just not finished yet. This other guy is easing into it. The other side though is product is not one thing to me, it's two. It's the design/strategy and then it's the technical implementation. He's taking over the technical side and so I don't do code reviews anymore, I don't deploy the code. A lot of that stuff has been taken off my plate.
Rick: I look at there's three roles in product development, as I summarize it. One is engineering, the second is user experience design, or I just call it user experience but it's basically design and then the third is product management.
Tyler: Okay.
Rick: Do you kind of see those things?
Tyler: Yeah, I mean I would argue that you could have a separate product manager from a technical leader but I don't think you necessarily need to. Product management I guess, or project management rather, seems almost like a dotted line to both of them rather than a third core competency.
Rick: Yeah, I always look at it as kind of a three way Venn diagram. I don't know if it's called a Venn diagram or not but three overlapping circles where they're all touching each other. UX is really important for product, product is really important for UX and they're both really important for engineering, to work together as a team.
Tyler: Yeah but sorry, so one is project management though, right?
Rick: Product.
Tyler: Product. Oh okay, sorry.
Rick: Yeah, it's like, what is actually being built from a business, from a customer point of view? Engineering is, how technically can we implement this and scale it and user experience is, how can we make this function from a usability standpoint and an aesthetic standpoint and deliver on whatever the brand standard is?
Tyler: Okay, sorry. My previous comment was project management, not product management. I hear what you're saying, although to me, I don't know that you can separate UI design from product management. I just view product management as leveling up at UI design, if you're really good at it, you're managing the product.
Rick: Maybe, most of the product people I've worked with that are really good on the customer side, which I think is the real value is being able to take what customers are saying and turn it into a solution without actually listening to what they're asking for.
Tyler: Yeah, I'd love for a designer to do that though. I don't think that a separate person needs to.
Rick: But typically the designer isn't good at that and the person who's good at that isn't good at design. That's how it's been in my experience. We're getting off subject here but ... I would love to go through ... That would be a great deep dive topic one day is to go through the roles of a product team and how to successfully start with that and then scale.
Takeaways
Tyler: Yeah, I like that. In terms of the, what is the role of a CEO thing though, I mean what I'm hearing, eventually probably a CEO may still be an individual contributor although it's mostly to satisfy their own desire to do that stuff but there's the three things you named. There's making sure there's enough money in the bank, there's setting the vision and communicating it to people and then there's a recruiter basically and retention and all that but that almost orthogonal to all that or kind of as another layer, there's always going to be managing for outcomes.
Rick: Oh yeah. I think that's number two.
Tyler: But there doesn't need to be ... Well, number two is setting the outcomes you want, which is different from managing.
Rick: Yeah, number three is all about cohesive team and I would say yes, the answer is yes to your comment.
Tyler: Okay but that the other kind of management that we are not talking about [is the people management]. It is not necessarily inherently a CEO's role. If I'm spending time doing that, that's not necessarily a mistake but it's not what a person in my role at a much larger company should probably spend their time doing. Is that fair to say?
Rick: I mean I don't agree. I forget the guy's name but the CTO of
HubSpot. Do you know who I'm talking about?
Tyler: There's Dharmesh and Brian something.
Rick: Yeah, that guy, Dharmesh. He's a CTO, he's not the CEO but he is a founder and a significant leader of the company. My understanding is he still dabbles in individual contribution and he set up his team to do so.
Tyler: No, sorry. I wasn't saying you shouldn't individually contribute. I was saying, you should separate out people management from outcome management and that the type of management that a CEO has to do is outcome management.
Rick: Yes, I think that that's true at a larger company, unless they have someone that they've hired on their team to specifically do that and that's a lot of the ... That's a lot of where a good ... You hear these COOs or presidents come in, they're the ones that they've delegated that to.
Tyler: Yeah. I mean I would argue that then they're the CEO, you haven't changed the name. The founder wanted to keep it but okay.
Rick: Sure. I can think of one example. One of my favorite CEOs locally is a guy named Karl. He is a master recruiter and he focuses really on number three and he delegates a lot of ... I don't really know actually... but I assume he delegates a lot of number two to his long time COO and I believe he does a ton of individual contributor work around recruiting and relationship development. Not leveraging recruiters, not leveraging a team, although he has those in place but I think he goes the extra mile to do that because people are really important to him and he's a later stage ... I mean ... They're a big company relative to what we're talking about here.
Tyler: Yeah, I mean I really like hearing that because my approach has been, when I am feeling productive on a certain thing, I don't want to ... Whether it's CEO work or individual contributor work or whatever, I don't want to distract from that but recruiting is the one thing I've always said, "If something comes up, if a candidate would benefit from talking to me or I can go present at a student group to help get some applicants or whatever, that's the one thing I've always said, I'll interrupt whatever I'm doing to do that. It's good." And I don't want that to stop, I don't want to like, "Oh we're so big, I'm not doing that anymore," so I'm glad to hear that even at a company that size, that still works.
Rick: Absolutely. I mean that's my opinion at least but I think there's probably some other people who might be more passionate about focusing on the people management, right? And saying, "I actually get more out of people management." These are CEOs who say, "I get more out of people management than I do any individual contributor work I would do," so maybe that's where they're getting their juice but I can't imagine, for me personally, based on my personality type, I can't imagine for you based on you, we have to have those puzzles that we can play with and try to solve individually because it really hits that creative component and if I didn't have that in my life, I wouldn't be as good a leader because I'd be unhappy.
Tyler: Yeah. I wonder at a sufficiently large company, maybe solving whatever vision problems there are for the company is kind of individual contributor work but you don't actually do anything, you just say some words and then everyone else takes those and goes and does it.
Rick: Well I think maybe it gets more complicated when the messaging is more complicated. I could see where ... Let's say I walked into a company that was a later stage company, that was a turnaround situation and I was the CEO. There'd be some pretty interesting individual contributor work in terms of talking to employees, applying all of this customer development stuff to the market to come up with a new vision and that's kind of interesting. Sure, you can employ people on that but that is a very much a ... The CEO in that situation is going to set the direction and there's a lot of decisions that need to be made by that person in a very short amount of time and so I could see that being a situation in which I would be pretty happy because lots of puzzles, lots of thinking in my head, and yeah, you're definitely going to leverage people to influence that but ultimately, it's not going to be a decision. The situations are not decisions by committee, they are decisions typically by a dictator.
Tyler: Yeah. Interesting. Cool. Any closing thoughts before we wrap this up here?
Rick: No, my takeaway is just reminding myself that different stages of companies need different things. Right now in the early stage of some of these companies I'm working with, I'm probably leaning too hard on outcome based management.
Tyler: I actually kind of wanted to ... I thought of this earlier in this conversation and forgot to bring it up that it does seem like you're, to some extent, still in the mode of the CEO of a 40-person company, which obviously serves you very well when you are the CEO of a 40-person company but I wonder what that transition is like.
Rick: I'm not sure yet. I actually think it's good to think about outcomes. For example, at
Group Current, David and I, we started it in June, we've already got ... We've reached over $20,000 in revenue in two months.
Tyler: Congrats.
Rick: He gets frustrated with me. David, transparently, he gets frustrated. He's like, "It's time to go do stuff," and I'm the guy going, "Well what are we trying to go do and how are we going to know if it's successful?" And there's definitely kind of a grind there against styles and the way we've compromised is, and I think this is the right thing to do is, short goals. Instead of trying to set an annual goal right now, we have a vision of where we want to be in a year but it's very soft and it is not measurable. It's very high level and then we focus on one month goals. What's our goal this month? And we focus on it and we're not afraid to change the goal based on what we're doing. But what's important about having outcomes is it creates focus and it draws a line, especially early on, when you have all these different things coming at you, right? It's easy to get distracted with 50 different things early on because you are nothing. You are everything, often times, and so I think outcomes early on, when not overdone, can create some blinders that are healthy.
Tyler: Okay. That's fair. I think I'm probably more on the other side than you are but like you said, there's probably kind of a healthy balance between the two. Okay, cool. I think my takeaways are probably similar to yours but I'm specifically thinking, how do I apply this to, what should I be doing and one, I think I'm walking away from this conversation feeling permission to do the IC work and not feel guilty about it. Two, knowing that outcome management should be now and will always be a part of my job and that I shouldn't think that's something to delegate but that people management could be a part of my job but it could be delegated if the company grows to the point where that makes sense. I think that gives me a lot of clarity around that.
Rick: Yeah, totally. I totally agree that if the outcomes are clear and you have people who are capable of delivering on those outcomes without help, then people management is a lot easier. It becomes more about team management and team dynamics.