How to Be a Tech CEO – The 5 Stages Every CEO Goes Through

For a few days, I was on top of the world. Everything went well, and life was beautiful. Then the shitstorm kicked in and suddenly I felt everything collapse. All the things I’d built fell apart. This is the frightening roller-coaster ride of being a tech CEO. Only we know what it feels like when ups and downs are coming with high intensity, sometimes even multiple times a week.

Most of my entrepreneur friends said there is a two-to-five-year time frame at the beginning which requires extraordinary work. After that, you reach a point where the pieces come together and you can have a normal 9-to-5 job in your own company (although most of us never switch back to normal).

If I look back over my last four years, I see I was the most successful and that my company grew better when I had a very clear picture of what my role is.

It’s easy to get confused as a CEO. You get too much information, you have too many tasks. Everybody wants something from you, everyone knows better what you should do.

Having a clear sense of what your job is as a tech CEO will help you to focus on the most important things. So I collected the five stages every tech CEO goes through, with descriptions of your role at each stage.

Stage #1: Work on the product or service

product development

The first step is to always find a product or service people really want. This is the time when you are alone with a small team of co-founders or the first employees.

Your job is to work on the product or service. You actually do it yourself. Instead of delegating, you take care of every little day-to-day detail. And you learn a lot about the market, the customers, and your own product. You do things that don’t scale.

The best thing to do is to follow your instinct and to experiment. Do the thing people like, the thing many of them ask for. Do they lift their heads up when you talk about your service at an event? Do you see the twinkle in their eyes?

In this phase, it is too early to work on marketing, HR, growth or anything else. Just the core product or service. And you find it by doing it and selling it yourself.

You are ready when you have found something in high demand. You will know that you are there when your customers are referring you to new customers, and you have more customers than you can serve.

In the second when you first reach the state where you have more incoming requests than you can serve, you can step forward to the next stage. Sometime it takes just a few months, sometimes it takes years.

Stage #2: Work on the core team

When you can’t serve the initial demand any more, your next step is to build up the core team of your company. The next level to your company is to have a small team that can provide a professional, high-quality service to your customers on a permanent basis.

Your job is to hire the first team members and then train them. You will teach them everything you learned during the first stage. You will show them how to do things. After they start working, you will see where the weak points are, you will define your processes together with them, and refine it in a few iterations.

You work on hiring, training and defining the main processes. Depending on the labor market, your product and your people skills, it can take from six months to a year. Check out my other post about dealing with humans.

You are ready when you do not have to work on the core product or service any more, it’s entirely done by your core team. If you can survive a month without talking to existing customers because instead of you, your team is serving them, that’s a good sign. (New sales doesn’t count, of course).

Stage #3: Work on the company

Now that you have a company with a high-demand service and a core team who can deliver it, it is time to work on the company itself. This is the switch that 75% of the people can’t make, because they get stuck in doing the work themselves.

In this stage you are responsible for everything besides the core service. Usually it means you spend most of your time with sales and HR. As they say, the CEO has to be the best salesman and the best at HR.

Your goal is to grow your core team as the demand grows, but also to build up the basic functions of your company. It is the time when you hire your first salesman, you start to think about marketing (and hire the first marketer). I started this phase with hiring a financial assistant who took care of all the administrative work instead of me. Focus on the core functions every company needs: marketing, sales, finances, HR and culture. You will have to figure out how these fields work, and you will have to define your processes for these areas.

For me, it took a year and a half. Finding good salespeople was very slow, but I also had to wait for the growth of our core business, so we would have enough cash-flow to hire all these people.

You are ready when every function of the company can work without you. You know that you are there when you can go for a month-long vacation with a maximum of 30 minutes of Skype a week, and your company survives.

It’s not a joke, I spent that month in Thailand, and I recommend you do the same. It will help your team to become independent and solve problems on their own.

The end of stage #3 is also the end of the entrepreneur’s struggle. Now you have a self-sustaining business, it doesn’t need you day to day. You can switch to a more comfortable everyday life. You get what you have always worked for, and you feel a bit of emptiness because your big goal is accomplished. So it’s time to look at stage #4.

Stage #4: Work on growth

Okay, now you have a company that can survive without you; every function is covered, and you feel the relief. The next step is to build a company that can also grow without you.

In this stage, your daily job is to set the high-level goals and make sure everyone understands them, build the culture, manage change and decide about resources. Your goal is, on the other hand, to find out how can your team do these things without you. You can use retreats, workshops and experiment with systems like OKR.

The tricky part is you can do high-level, strategic goal setting just a few times a year, so it takes more time until you get the necessary practice. That’s why it can take even a few years to get good at this, and to teach others.

You are ready when your team is able to set their own goals for the next three to six months, and there is a tradition of how the team redefines itself from time to time. Then they can change the way they work, adapt to the environment and improve things on their own.

Stage #5: Work on reproduction

Now you have a mature company that can grow and change without you. You have a bigger team, your early employees are respected senior professionals now, and your name is well known in the industry.

A weird question will arise in your thoughts: what if the whole industry declines? I have a huge team here built upon this business. It would be better to diversify the company and look for more income sources.

The goal of this stage is to start over. Go back to the beginning and start building new business inside your company. But be honest with yourself. You are not that youngster any more. Do you really have the fire to do all this again? It might be better to leave space for young prodigies.

Your role now is to start building a new business and oversee multiple teams working on different products or services. Make sure you collect enough ideas, validate them, experiment and bet on something that has a future. Although you don’t do the work, you know all the traps and you know how to do it. Your job is to oversee your teams and make sure they do what they have to, depending on where they are in their life cycle. You are the one who knows everyone, has the wisdom, gives advice, and mentors other leaders.

You know that you arrived to this stage when the first new product or service that was built independently from you becomes a success.

There’s no shortcut, take it step-by-step

So these are the five stages. Most of the entrepreneurs I know would grow much faster if they were aware of these stages and their position. One common mistake I see all the time is rushing forward. These stages are built upon each other. If you are not ready with a certain stage, you should not move forward, because everything will collapse on the weak foundation. Believe me, there is no shortcut, you can climb step-by-step. In exchange, each step is very exciting, with many challenges and many interesting new things to learn. You won’t be bored, I promise.

So, what stage are you at? Would you be so kind to share it with me in a comment below? I can’t wait to read your stories.

In need of advice running your product team? Could do with some guidance on how to move forward with your product? We now offer various UX consulting services!

Dávid Pásztor

Founder and CEO of UX studio. Author of the book Product Design, TEDx speaker, one of Forbes 30 under 30. Enthusiastic about self-managing teams, new technologies and human-centered design.

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