If there’s one thing startup CEOs have to excel at it’s managing the alignment of interests across a ton of different people. It’s a lot more complicated than you might think.
Alignment means everyone is pushing for the same goals and executing on their part in order to see the shared goals realized. It’s impossible for everyone to be perfectly (or even “reasonably well”) aligned all the time, and that’s where the role of startup CEO as Master of Alignment is so critical.
A startup CEO needs to align all of the following people:
- Board members
- Market analysts / pundits / bloggers
Everyone in that food chain (or continuum) needs to be aligned as often as possible. And the higher up the list, the bigger the challenges, and the bigger the risks. When you’re not aligned with investors and board members, you’re in for a world of hurt. As I’ve often been told, “The board is there to fire the CEO.” Fun.
If there’s misalignment with investors when it comes time to raise follow-on financing, you could very well crash and burn. Investors can (and will) push right to the brink with your company to test your mettle, promote their key agenda items, and see if you can hit the necessary milestones for them to re-invest. And when your existing investors pass (if they do end up passing), it sends a big negative signal to the rest of the marketplace.
A lack of co-founder alignment can kill a company before it gets off the ground. And this is one of the #1 sources of anxiety and frustration for startups.
The same holds true with employees, especially when a startup first starts hiring. Each of those first few hires is so critical — get that wrong, end of misaligned — and you’ll be set back for months.
Each of the above points is worthy of further discussion. But the key for startup CEOs is to recognize themselves as the people who focus on aligning everyone — to themselves and to each other. This doesn’t mean a startup CEO is a conciliatory peacemaker. Nor is a startup CEO a pushover bending to everyone else’s will. Quite the opposite. A startup CEO needs the confidence and conviction to state their point, push the debate, and align everyone around their vision. A startup CEO can’t be focused on aligning the interested parties around someone else’s vision and plan — those belong squarely in the hands of the startup CEO. But a startup CEO can’t assume that everyone will fall in line (or that their vision and plan are perfect), and that’s where he must be a Master of Alignment.
Communicate, communicate, communicate. And then, communicate some more. Transparency and openness are key. Structure too. You’re not managing communication and alignment by picking up the phone and “shooting the shit” with people (although you don’t need to over-manage this process either). It has to be structured, organized and with purpose. The communication has to be strategic. I wrote a bit more about this here: 4 Ways to Align Interests Between Startup Founders and Investors.
Startup CEOs need to be keen observers of people’s moods, and master interpreters of language. Very few of the listed parties above are necessarily going to spell things out for you (although at some point in time, when they’re really pissed off, they will). But if they’re being subtle, unclear or just plain old mysterious, you need to pick up the hidden meanings and intent in what people are telling you. Being a Master of Alignment takes practice and experience. It’s also not easy. And it’s not always obvious how important it is to keep alignment front-and-center as a key issue when you’re head down working your ass off to build your startup. Alignment is one of those issues that quickly and unfortunately gets pushed to the side, often only resurfacing when it’s too late.
Here’s some reading material that will definitely help:
- How To Communicate with Investors Between Board Meetings
- Running More Effective Board Meetings at Startups
- Give Your VCs Assignments
- First Round Funding Terms and Founder Vesting (Alignment issues start right from the very beginning – before you’ve raised capital!)
- Seeing Eye to Eye – Entrepreneur and Investor Alignment
- 5 Tips on VC Alignment: Discuss the Exit Before You Enter
This is the 2nd of a series (don’t know how long it’ll go) of blog posts about what it’s like to be a Startup CEO. The first one is here: Startup CEOs: Delegate Responsibility Don’t Outsource It.
Image from CG76.