The 3 Roles of a CEO
Money, people and company’s vision
When I founded Cupcake Entertainment in 2012, the startup world started becoming popular in Brazil (I’m from there). I began to notice a lot of people building startups and calling themselves CEO. I was one of those people.
I decided that I would be the CEO of my company, but I didn’t know exactly what that meant. As I was the one who had the idea for the business and brought together the people to work on it, I assumed I should have this role. It was what I was seeing other companies doing.
CEO is the acronym for chief executive officer. Unfortunately, the word executive doesn’t bring much meaning. You can think of the CEO as the chief of all executives. But it is much more than that.
About ten years back, business owners in Brazil didn’t call themselves CEOs. They usually call themselves owner or director. As the startup world, especially from Silicon Valley, started to become more popular here, we adopted many names like CEO, COO, CMO, CTO, etc.
I’m not against using these names inside a company. I believe those names help to give a direction in the roles of everyone inside a company. Especially the founders. The main problem that I see is that we often use those names without knowing what they really mean. It was just at the beginning of 2015, 3 years after I founded my company, that I learned about the three roles of a CEO.
#1 The CEO needs to ensure that the company has money
“Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent. When bills come due, only cash is legal tender. Don’t leave home without it.” — Warren Buffet
Some entrepreneurs think that the accountant or the CFO should worry about the money. But it is the CEO that should take care of that, especially in the beginning. The CFO helps the company have its financial side working correctly, but he is not responsible for bringing money to the company. The CEO is the person responsible for making the company survive, and the only way for that to happen is with cash.
The CEO has to build a strategy for the company to make money. What is the product or service? How will you make money with it? Some companies, like Facebook, don’t think about money at the beginning; they think about growing the number of users. If that’s the case, the CEO should build a strategy for that and raise money to keep the company alive.
As the CEO of my company, I always was the one who talked to investors. I practice a lot how to make an impressive pitch, and after five years leading my startup, I raised US$1 million. I’m not saying that I did it all by myself. Most of the pitch is to show your company’s performance and show how the investment can help the company grow even more and faster. For all of this, I had my team helping me. As CEO, I was responsible for sharing our growth with investors.
#2 The CEO is responsible for hiring and guiding key people
“You don’t build a business. You build people, and people build the business.” — Zig Ziglar
Some entrepreneurs think that when they need to hire more people, they can delegate that to HR. People are the most important thing in an organization. HR alone can’t hire the best people for the company. It is very dangerous to have the wrong people working in your company. The CEO should build a model of what is necessary for someone to join his company. How is the organization’s culture? What are the company’s values?
As CEO, you should hire A players. If you hire people like this, they will also hire A players. Now, if you hire B players, those B players will hire C players, and the professional level of your company will decrease drastically.
Besides that, you should guide your people to become better professionals. You do that by giving feedback and mentoring them. At my first company, I had a formal monthly feedback talk with everyone from my team.
#3 The CEO is the protector and communicator of the company’s vision
“People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully.” — Steve Jobs
The CEO is the person responsible for setting the way that the company should go. He also needs to guarantee that everybody inside the company walks together to that destination. Everybody inside the company should understand the vision of the company and work for that. For me, this is the most important role of a CEO.
Simon Sinek, author of Start with Why, and more recently The Infinite Game, defends the use of the acronym CVO (chief vision officer). He talks about the fact that the word “executive” is vague, and, actually, the most important job of the CEO is to be the holder, communicator, and protector of the company’s vision.
The company’s vision isn’t something you write once and forget. You got to keep reminding the team about it. You got to use it in every possible speech you give. It’s when you start to feel tired of repeating it that people will start to understand it.
In short, the 3 roles of a CEO are:
- ensure that the company has money
- hire and guide key people
- be the protector and communicator of the company’s vision
I remember watching a talk from Elon Musk, where he said that the CEO should always be working where the company most needs him. That meant solving the most challenging problems of the company. Even with a larger company, the CEO will have some involvement. However, when you are starting a company, you don’t always have someone to delegate tasks.
Being a CEO is not easy. As the CEO of my company, I did what was necessary to make it grow. I worked anywhere that was necessary.
Learning about the three roles of the CEO helped me build a better startup. Money, people, and vision are the root of a company. Understand what you should be doing and work to make that happen. Don’t be a CEO just for the fact of being a CEO.
