Don't Run Out of Money

I know you read the subject line already but I’ll say it again:

Don’t run out of money.

As a founder, and more specifically as a CEO, your number one job is to keep the company going. Literally everything else is secondary.

This is why the OpenAI saga finally ended when board member Helen Toner was quoted in The New York Times saying that “if the company was destroyed, she said, that could be consistent with its mission.”

No matter what you think about their issues with governance, that mindset isn’t compatible with leading a company and especially not a startup.

But it isn’t just about money, there are also other jobs that a founder/CEO uniquely has.

We came up with five and co-wrote this week’s piece about them:

The 5 Jobs of a Startup CEO

Set Your Startup’s Hierarchy of Needs

You’re the foundation of your startup, but startups have a hierarchy of needs just like people do.

It’s not enough to just determine which problem you want to solve and the end state you want to reach. You’re responsible for the mission, vision, strategy, goals, and roadmap, and yes, those are all different things.

Lenny Rachitsky helped visualize the difference:

As your startup and team grow you may eventually have less to actually do around these:

• Your goals and roadmap are in the hands of your team (though, as Brian Chesky says, you shouldn’t shy away from the details)

• The mission and vision rarely need to change drastically

But setting up the foundational structures are explicitly your job, and in the early days you’ll be doing it all.

You will fail at this sometimes. You may even need to tweak the foundational layers of the pyramid. That’s ok. To minimize the number and impact of your misses, engage mentors and read more than you think you have time for. In particular, investor letters have helped me hone my mindset.

Don’t Run Out of Money

This one is more complicated than you may think at first.

It’s more than a math equation, correctly allocating extremely limited capital while achieving rapid growth requires you to have spent hours after hours training yourself to have the correct assumptions about the market you’re operating in.

To make the right bets that let you grow fast enough and not kill the company you need to understand where the opportunities in the market are and the true scale of them better than others going after the very same market. Additionally, you need to have sufficient built-in protections against macro factors that are outside of your control.

Right now we’re seeing startup deaths go up because founders didn’t sufficiently protect their startups against those macro factors:

This was something we got wrong at my last startup as well. We ended up in a scenario where, if things went right we would capture a lot of value but if things went wrong we’d have to navigate a challenging capital situation.

Thankfully we were able to work through that with the help of our investors at a16z and Flybridge, but not every startup has partners that will back them during the tough times too.

The important thing to remember: this is your job. It’s arguably the only job that really, truly matters. If the company does not have money it will die. If you fail at this job, doing well at your other jobs no longer matters.

I really like this free tool from Trevor Blackwell, co-founder of Y Combinator, that shows when you'll reach profitability and how much capital you'll burn through before then, along with what happens after. Seeing it in black and white can help you stay focused on this job.

Build the Team

Now that we know the company will be alive, because we will make sure it always has money, the next step is executing on the goals and roadmap from the hierarchy of needs.

The way to do that is through hiring quality operators.

Matt Mochary, CEO coach to the founders of Coinbase, shared his full curriculum for free and in his writeup on the role of a CEO he frames this as hiring the executive team.

That’s true for later stage companies, but for startups you should be making every hiring decision yourself (or with your co-founders). At Stripe, the Collison brothers were famously devoted to this, being part of the interview process even when the company reached hundreds of employees.

I’ll talk more about this in a future issue of the newsletter, but the way to get the best operators backing you isn’t to endlessly chase them down and try to sell them on it. Instead build a place (either through brand, culture, an ambitious mission, or ideally a combination of all three) that they want to be part of.

It’s how we were able to attract high performers from places like Stanford, Uber, and Y Combinator at my last startup.

Drill It Into Their Heads (and everyone else’s too)

You’ve got a killer team now. Great! Your work here is done, right? They’ll just start doing the right things and remembering the hierarchy of needs?

Founders know it’s not that simple.

You need to become the Chief Communication Officer and Chief Storyteller all in one. It’s uniquely your job to over-communicate the mission, vision, values, and everything else over and over and over and over.

Founders often underindex on how often they need to do this. They either mistakenly think the team doesn’t need to hear it, or fear that saying the same thing over and over will cheapen it in some way.

This couldn’t be further from the truth. They should do the opposite.

Why? Well, here’s the result. Watch the first 26 seconds of this video and tell me you’re not curious about and inspired by the team’s mindset:

Your mission is something that no one else in the world cares about like you and your team do. No one else in their lives cares about it. You’re the only person and place they are going to hear about it and get excited. And seeing you devoted to it will inspire them further.

But it’s not just an internal job, it extends outside the company to investors, customers, social media, and everywhere else. Increase your luck surface area by letting the world know what you’re up to.

Thankfully that’s easier than ever today. With limited knowledge of copywriting and the right platform you can build a following (or a cult) on social media.

Hold People Accountable

Sometimes you’ve gotta be the boss. After all your startup is not a family, it’s a sports team:

It’s uniquely your job to set, communicate, and enforce performance standards across the team.

If those standards aren’t being met you need to take action. Whether it’s an isolated incident or a pattern that demands termination, knowing when to fire someone and when not to is hard.

No matter your approach, you need to be consistent across your team. You don’t want team members believing you favor others and that your startup is not a meritocracy.