Leadership in startups: when there’s no one to lead

Jul 07, 2021

6 mins

Leadership in startups: when there’s no one to lead
Ben ProutyLab expert

Serial entrepreneur and startup founder

In this series on leadership in start-ups, Ben Prouty walks us through the different styles of leadership, needs, and pitfalls that entrepreneurs face while taking their start-ups from Day 1 to Series A. Having been a part of four different start-up journeys, Ben has accrued invaluable insight into the ever-evolving nature of leadership in start-ups.

“So I guess we’re a company now,” I say to my friend of 18 years and latest co-founder as we pick up the keys to our tiny new office. It’s the summer of 2016 and we’re excitedly building our first company together, having talked about it for years. Until now, the timing had never been right. Jan had been climbing the ladder in a corporate career while I’d been tied into one life-absorbing start-up after another with little time to think of building anything new with him.

The chance had finally arrived and having armed ourselves with a long list of things to do, we felt we had most of the business building blocks covered between us. There was just one small potential fly in the ointment: we had given little thought to the implications of leadership and in particular how that plays itself out between co-founders, let alone the best of friends. With statistics from 2019 showing that nearly a quarter of start-ups fail due to the initial team falling short, we knew this was something we had to focus on.

Leadership when there’s no team to lead

Why was it so important to figure all of this out so early in the company’s life? We didn’t have a team, so shouldn’t leadership be something to deal with later on? Well, the truth is, you are leading your start-up from the moment you decide to pull the trigger on your idea.

Accountability is key

If you’re a sole founder, you’re leading yourself. With no accountability to a manager or team, you need to build accountability for yourself. This means building timelines and sticking to deadlines; doing what you say you will when you say you will, even in the absence of any obvious implications if you don’t. (The biggest implication is that your business will not succeed.)

Assuring investors

If you are fortunate enough to have investors at this early stage, you’re also the leader of the business in their eyes and you need to act like one. This type of leadership involves being a figurehead for the business. You don’t have any troops to rally at this point, but you are leading the way for the business during this critical phase. You’ll need to adopt a larger-than-life persona that will reassure your investors that you’re able to manage the wide spectrum of tasks and functions required of your day-to-day, and to act as a visionary who will turn their investment into a unicorn!

A team of two

As a co-founder, you’re already running a team, albeit a very small one. As ludicrous as it seemed at the time, my friend and I had to set a hierarchy and build processes for leadership. It seemed like an overkill, but in hindsight, that was critical to the business’s success and likely helped to keep our friendship together. We set times for “team meetings” and designated areas for weekly management meetings. We would literally roll our chairs two meters from our workstations, to our “meeting space” just to create a sense of formality and importance to these sessions. When it came to making decisions, we decided that my role as chief executive meant getting the final vote. If we had given equal weight to our co-founder status, we could have been gridlocked daily. This doesn’t mean steamrolling all decision-making processes, but any time we could not decide together on a way forward, I would take the decision and we’d go ahead.

This kind of clarity meant we were incredibly fast-moving and avoided the kind of resentment that can brew between co-founders who have elected to postpone this difficult conversation and chosen instead to keep everything 50:50. Perhaps this added complexity is why just 13% of workers in the UK say they would choose to start a business with a friend.

Setting the standard of leadership

Decisions such as these have a bearing not only on the here and now of your start-up’s journey, but also have considerable implications for the future of your business. In the case of my friend and I, we knew that this business was going to move quickly, that we’d be taking on additional funding at short intervals and that we’d soon be building a team and outgrowing our office in quick succession. (This ended up being 35 people and three offices in just two years).

The processes we were putting in place were designed to create discipline for ourselves and to ensure that the business was ready to receive employees as soon as we started to take them on. This was a chance for us to start practicing and embedding the style of leadership that we wanted to radiate through the company. In a small, but fast-growing team, culture can be shaped in a number of days and across a handful of events or decisions (good or bad). Determining this before there were real live people in the “system” meant we could shape our leadership styles without the strain or rush of doing so at a later stage.

There were a number of key principles that we stood for as leaders. These were essential for the company to embody:

  • Initiative and accountability
  • Punctuality and respect

We wanted to lead by gaining respect, rather than simply exercising authority. In a report published by McKinsey in 2020, 75% of respondents said that their immediate boss was the most stressful aspect of their job. We wanted to be different. It was important to us that everyone in the company had a voice and that no one was unapproachable. The other side of this coin meant that everyone in the company was responsible for taking initiative and was accountable for their actions. Punctuality may seem like a small thing, but for us, that meant showing respect to your teammates. As founders, we had to set the standard with every interaction.

My biggest lesson from this phase

If I could turn back the clock and do one thing differently in this phase as a leader, it would be to look further to the future more regularly. In this start-up phase, you are very much consumed by the day-to-day and can rarely see beyond your months of runway. As important as it is to focus on the here and now, as a leader, your fellow co-founders and investors also want to believe that you see a life for the business well beyond the current cash position. If you don’t believe in it, then who else should? As tough as it can be to do some days, it’s your job as a leader to regularly communicate the vision for the business and build confidence that such a future exists.

Preparing for the next phase

We now had what we believed to be robust processes and a leadership roadmap in place. The roadmap at this stage focused primarily on the distribution of leadership tasks between us as co-founders. To incoming employees, I was to be the strategic leader of the business and reporting line manager. My co-founder was to be a supportive figurehead that employees could look up to, confide in, and be inspired by, but without the burden of management. That was the plan, but the time was soon to come when it would all be put to the test by way of the first employee. Everything that worked well in theory, was about to be challenged in practice. Fellow co-founders and investors appreciate the challenges of a start-up and tend to forgive mistakes given the chaotic journey that we all signed up for. A salaried employee joins with the expectation of having a structured, fulfilling, and rewarding job with the company––a whole other level of expectation.

Time to start practicing absolute positivity every time you open the office door––no matter what news you’ve just been delivered. This is something you didn’t have to do when it was just you and your co-founder. You will also have to schedule one-to-ones where you’re going to have to start delivering some pretty concise answers on where the company’s going and career progression within your start-up. Research has shown that 80% of employees within tech start-ups have considered leaving their roles due to poor management style or culture. So we knew that building a robust leadership roadmap was important not just for us, but for the whole company.

In the next installment of this series, I’ll take you through the second phase of a start-up’s life: The first hire. I’ll look at why this phase is critical to your start-up’s success and how your leadership (or lack thereof) can either fuel or dampen the odds of success.

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