Are you creating the right VIBE as a startup leader?

How do startups succeed? If you ask around, you may get different answers. Some may say that it’s the idea that matters, others may consider the team critical to success. Derek Lidow, Professor at Princeton University and former Founder/CEO of iSuppli (Sold to IHS for $100M) states in his bestselling book “Startup Leadership” that the founders leadership abilities are the key to success. He highlights a really valid view point: Startup leadership is perhaps one of the most challenging forms of leadership. The founder/s typically start alone and need to build a team that believe in you and your vision. Derek states that less than 10 % startups create significant value and reach a stage where they are self-sustaining and such firms are typically led by “Entrepreneurial Leaders”. Such leaders are rare and account for less than one in fifty. Derek believes that many founders struggle with leadership at some point in their startup career and many even find themselves forced out by investors as they are unable to handle the pressures and challenges of handling organizational dynamics of a startup. In fact, the more successful your startup, the greater the chances that you will be replaced as the leader/CEO.

It’s not the idea that innovates, its the leader that innovates- Derek Lidow

The chasm between the early stage of a startup and the later stage where a startup is able to sustain on its own is fraught with several casualties. Startups that have a great start may eventually falter in this zone where they are attempting to scale from being a founder-led business with a few paying customers to a founder-less self-sustaining organization that is capable of rapid innovation and market share capture. Derek suggests that there is value in distinguishing between an “Entrepreneur” and an “Entrepreneurial Leader”. He describes the entrepreneurial leaders as having specific characteristics, none of which are truly extraordinary meaning they can be acquired through appropriate coaching and training.

The skill sets that are a must have for an entrepreneurial leader include :

Self-awareness: A basic understanding of your motivations, desires and fears. To lead others, you must first lead yourself by developing a deep awareness of your strengths, weaknesses and capabilities. This drives your actions.

Relationship Building: Building strong relationships with others is key and the existence of a “Shared objective” is the foundation of relationships. Three types of relationships must be nurtured in the context of a shared objective: cooperative – you agree on the common objectives , competitive- you may disagree on “how to accomplish” the common objective and “Retreat” you may decide to let the other individual/entity take the lead because you trust their approach/insight better than your own. Leveraging a good mix of these three approaches will help startup founders succeed as an entrepreneurial leader.

Motivation: How do you motivate others to want to help you be successful? As a startup matures, it brings with it multiple challenges. You may need to re-think who you have on your team and let go of those who helped you launch the business. You may have to struggle to make payroll or you may lose customers. During such a challenging growth phase of the business, looking within to realize your intrinsic motivation and understanding that of others in your company will be critical. You cannot win alone, and you cannot win if you and your team are weak enough to throw in the towel at the slightest sign of hardship.

Leading Change: How to make people willingly change what people have been doing successfully. Every startup needs to learn to Pivot. However, “Pivot” needs to be an option not just during the product-market fit stage but all through the life of the startup. Startups themselves can be disrupted if they are not in tune with the market reality. However, change is hard and a founder leader must be effective in aligning the key leaders in the business on the need for change and leverage their understanding of the motivation factors to drive change across the organization.

Enterprise Basics: All entrepreneurs tend to be optimistic fanatics who are in love with their idea. Entrepreneur leaders must have the basics right: understand concepts such as cash flow, customer acquisition costs, employee retention etc. These metrics are critical to transition into a mature business and deliver meaningful growth in business valuation.

I believe that a founder that can create the right VIBE will be successful in transitioning into an entrepreneurial leader. VIBE comprises the following principles:

  • Vision: Crafting a clear and compelling vision and communicating this to everyone. This will be very beneficial in relationship building and establishing shared objectives.
  • Impact: A startup that is making a positive impact in the world will help everyone in your organization develop that “intrinsic” motivation essential to success in the challenging times of startup growth.
  • Bold experiments: When it’s time to “Pivot”, founders should not be afraid of running bold experiments that will help them change course as required.
  • Education: Training yourself last is the worst mistakes founders make. Part of the self-awareness founders must develop is knowing their own weak spots. Ensuring they are constantly learning and improving their own skill-sets especially in the areas of “Enterprise basics” will be beneficial in the long run.

Building a successful startup takes an enormous effort and with the right approach and coaching founders can ensure success. Derek offers a few tools for founders on his website that you may find useful.

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