Because in the beginning you’re not going to have HR to help you find and hire a world-class team. You won’t even have a recruiter. For the first twenty-five or so employees it’ll all come down to you and your cofounder—your vision, your network, your ability to convince people that you know what you’re doing. You can lean on your mentors and board (and hopefully early investors), you can put them to work to prop up your reputation, but ultimately you’re selling yourself and your vision for success.

You need a story people can get behind. [See also: Chapter 3.2: Why Storytelling.] People you respect. People who will help you create something great. Your team is your company. And your first hires are crucial—they’ll help you architect what your business and culture will become.

It’s an issue I see at a lot of startups and project teams at larger companies—the founder or team lead often plays the role of the product manager in the beginning. They define the vision and work with all parts of the business to make it a reality. The trouble comes when the team grows—to 40, 50, 100 people. [See also: Chapter 5.2: Breakpoints.] That’s when the leader has to step away from the day-to-day business of building the product and hand over the reins to someone else.

But they can’t imagine handing over their baby. How could anyone understand it or love it or help it grow as well as they could? And how would that function even work? Where would it live? How could the founder retain influence over the product if they’re no longer the manager of that product? And then what would the founder’s job even be? [See also: Chapter 6.1: Becoming CEO.]

In this job, respect is always more important than being liked.

You can’t please everyone. Trying can be ruinous.

CEOs have to make incredibly unpopular decisions—lay people off, kill projects, rearrange teams. Often you’ll have to take decisive action, hurt people to save the company, to cut out a cancer. You can’t skip surgery because you don’t want to upset Team Tumor.

Delaying hard decisions, hoping problems will resolve themselves, or keeping pleasant but incompetent people on the team might make you feel better. It may give you the illusion of niceness. But it chips away at the company, bit by bit, and erodes the team’s respect for you.

In summary, growing a business is a dynamic process as the leadership team navigates the evolutions and revolutions of growth. And like the growth stages of a child, they are predictable and unavoidable. To deal with these challenges, the company must grow the capabilities of the leadership team throughout the organization; install scalable infrastructure to manage the increasing complexities that come with growth; and stay on top of the

market dynamics that affect the business.

To do this, there are 4 Decisions that leaders must address: People, Strategy,

Execution, and Cash.

And while some of the specific do’s and don'ts for CEOs are unique to their role, most essential things like setting expectations, developing a vision, establishing a management process, creating priorities, building your management team, and doing an exceptional job on your earliest projects apply equally to anyone in a new leadership role.

When Ron Daniel was the managing partner of McKinsey & Company from 1976 to 1988, he sent a memo to new recruits when they started, entitled, “On Becoming an Associate.” His advice is still memorable all these years later: “Recognize the necessity of getting off to a good start in the firm. Your first few engagements are critical. During these studies, you can establish an internal clientele for yourself - that is, by performing in an outstanding way, your reputation will be quickly established in your office and even the firm.” (We’ve incorporated Ron’s memo in the Appendix of the book.)

This is especially important because whenever you assume a new role, you’re in what Max DePree, former CEO of furniture company Herman Miller and author of Leadership Is an Art, calls “a temporary state of incompetence.” Even if you think you know a company - or a department or a division - before you take over its leadership, think again. As GE’s Immelt reminisces, “I worked for this place for twenty-one years before I got the CEO job and there were still things that shocked me when I took over.”

The knowledge gap is even wider for outsiders. “Anyone coming into a new situation is faced with the fact that they often have to do the most at a point they know the least. You may have previous experience and you may be smart and have insight into how things work, but you know the least about the actual company you’re engaged in at the same time you have to set things in motion,” says AOL chairman and CEO Jonathan F. Miller, himself recruited into the company from the outside.