Mastering transition from founder to ceo

Founder to a Successful CEO

Mastering the Transition

Naeem Zafar UC Berkeley-Haas Business School, Charter Member TIE SV

www.NaeemZafar.com Twitter: @naeem

1 Entrepreneurship All rights reserved © Naeem Zafar

http://www.naeemzafar.com/

Personal Background • Faculty at Univ of Calif Berkeley Haas business school • Founder Concordia Ventures – advisory to entrepreneurs • CEO of three companies (semiconductor & software) • Worked in engineering, research, marketing & sales • Experience at one large multinational & 6 startups • One IPO (Initial Public Offering) • Wrote six eBooks on entrepreneurship (www.NaeemZafar.com) • Raised over $70M in multiple ways (VC, asset sale, debt, angel) • Traveled to 73 countries, lived in 3 • Brown University ‘81, Univ of Minnesota MSEE • Charter member of TiE Silicon Valley • President of OPEN Silicon Valley • Advised or mentored over1000 entrepreneurs

2 Entrepreneurship All rights reserved © Naeem Zafar

http://www.naeemzafar.com/

Five Stages of a Startup CEO

• Startup CEO

• Fund raiser

• Leader & the crisis manager

• Post-startup CEO

• The transition

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The Startup CEO

• Often an engineer thrust into being a CEO

• Engineers are problem solvers

– High IQ, but low EQ

• Unexpected role & demands


Startup CEO

• Living in the “fog”

• Most of the time on trivial issues

– What is urgent vs. what is important

• Most problems are people problem


Getting Used to New Role

• (almost) no one will tell the truth

• You will never be liked (again)

• You will have to learn to read between the lines

• Whom to consult with


Culture

• Culture is “how things are done when there are no written procedure”

• CEO/founder actions defines the culture

– Collaborative?

– Authoritative?

– Consensus-based?


Fund Raising

• Fund raising is most important job that a founding CEO has

– This cannot be delegated

• It will consume you

• Methodical about not over-shopping the company & researching before you approach investors


O2

Filling the Roles

• CTO: outward facing technical evangelist

• Technical architect vs. professional development manager

• Sales head: look for a gladiator (not a professional sales person)

• What to outsource?


Difference Between Sales Marketing

• Not everyone can make the transition

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Building Sales Organization

• You must be the first sales person yourself

• Do not hire too soon

• Sales people are hardest to hire

– But easiest to fire!


Types of Sales People

1. “Hunters” or “gladiators”

2. Business development experts

3. Account executives (“professional sales” person)


Gladiators

• Solo hunters

• They go away, don’t check-in frequently, bring back customers having sold “the product”

• Make sure that they sell what you make


“the Professional Salesperson”

• Usually trained at a big company

• Require support staff to succeed

• Good at taking orders & building relationships

• expensive


Biz Dev Professional

• Good at making large alliances

• Expensive to maintain

• Usually needed once you have a product


Timing


Bootstrap seed series A series B series C exit

Understand

customer’s unmet

need

Prototype

Product

development

Deployment

Proliferation

Timing

• You will need different people at different stages


Bootstrap seed series A series B series C exit

Founders vs. Employees

• Owner mindset vs. employee mindset

– Employees have entitlement mentality

• First 10 hires will set the tone for the rest of the company’s life


Startup Hiring

• “A” players hire “A” players,

• “B” players hire “C” players

• Are these the very best people in the world that I can get for this job?


Leadership • Leadership is not pleasing everybody

• It is doing the right things, for the right reasons

• Are you willing to be unpopular


Managing the Board

• Trust – build it, earn it

• Communicating bad news

• Communicating good news

• Being prepared

• How often to approach them


Board Communication

• Three buckets

– Things that you are informing the Board

– Things that you want to present to the board and seek their input before YOU will make the decision

– Things that you want to present so that the Board can make a decision


Priorities

• Separate what is important from what is urgent

• Spend at least one day a month of disconnecting & thinking about the big picture

• Create emotional buy-in from people


Email

• Conquering emails

– Open email client only twice a day

• 11 am and 5 pm

• Find blocks of time to do “projects”


Essential Skills

1. Clarity – in your thinking

2. Networking

3. Communications

4. Empathy


Crisis Manager

• Over communication

– Avoids gossip

• Listen, gather information

• Look in control

– Even if you don’t feel like it (and you wont!)

• Explain your actions


The Post-Startup CEO

• Time will come to create processes

• Design efficient processes

• Structure can create efficiency

• Think scalability

• When to be frugal

• Minimize fixed costs so that you can be nimble


Know the Timing

• Who exerts control & power in a company


Startup 1st Product Sales $1-10M Sales to $100M

R&D Sales Marketing Finance

The Transition

• The time will come when you are not the right person for the job

• Deal with this gracefully

• Help plan it

• Seek mentors outside the company


Founder

• This is an honor & obligation

• Wear it well

• It is beyond the title that you may carry


Things Founders Forget

• Control is not same as ownership

• All ideas have to be chiseled away to be refined – encourage debate

• Learn about vesting, protect equity


Don’t Lose Perspective


Summary

• This transition is not easy & there is no school for it

• The most important asset is people – invest in people & reward loyalty

• This company is not the end game!


Mastering transition from founder to ceo

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