Start-up to scale-up: How a CEO’s role changes

Mike Reid

Mike Reid
Senior Partner

Leading a business from the start-up phase right through the scale-up phase is one of the most exhilarating and challenging journeys in the business world. Successful navigation relies on significant mindset shifts on a range of different levels. Running a 50 – 200 person team in a fast growing company is radically different to running a 5 – 20 person start-up.  It isn’t necessarily tougher, but it requires different skills. When done well, stressors become manageable challenges and the journey feels far more enjoyable.

As a later stage VC focussing on scale-up software companies, we at Frog have a simple but effective framework to help CEOs stay ahead of the game. Our methodology distils down to three key areas: short term execution, mid term planning and longer term resilience.  I’ll be exploring each of these in blogs to run over the next few months.

Before getting into the specifics, it is interesting to first note that CEOs who have successfully made the transition display a range common traits.

Scale-up CEOs are true delegators

To succeed in the start-up phase, a leader needs to be excellent at getting a very broad range of things done, a lot of time by themselves. They have probably been the best sales person, the best product lead and the best customer complaints handler etc.

Success in the scale-up phase is all about putting your ego back in its box and attracting in (and most importantly integrating and motivating) experienced specialists who can increase your competitive advantage. Recruiting in the right people, whilst retaining or saying goodbye to members of your original team is a huge challenge.

If the new managers are good enough, they will want to run their teams their way. Successful scale-up CEOs guide, inspire and measure, without meddling and interfering. Typical mistakes include hiring more of the same or hiring big, then firing because the fit isn’t right. Justifications usually include lack of impact, lack of real engagement and ‘not getting our pace and culture’, all of which should have been planned for during the recruitment and on-boarding process.

Scale-up CEOs are self-aware

Effective scale-up CEOs continually review AND improve on their own thinking and behaviour and that of their senior team. They review their team’s strengths and weaknesses on a frequent basis to identify where development, role change and new hires are required. They proactively countenance the views of advisers and investors. They know when they are micromanaging and stop to ask themselves why. Then they take proactive action.

Scale-up CEOs plan their recruitment at least a year ahead 

It can take up to a year to scope, search for and then integrate a new senior team lead. Time flies in scale-up world. Successful scale-up CEOs plan ahead with ambition, focusing equal attention on getting the best candidates and getting them to work well together.

Scale-up CEOs openly work on their company’s values, culture and behaviours

Start-up culture is cult-like. And for good reason. It’s a tough and unpredictable phase requiring irrationally strong bonds. Successful scale-up CEOs can leverage of the best of these values and the behaviours they display. But, equally, they are specific and firm about the values and behaviours that must be left behind, even if it means some of those, brilliant in the early days, can’t make the transition.

Bringing in a new senior player changes the culture of a small business in a major way. High performance scale-up CEOs are open with the broader team about this impact, helping them understand that this is a deliberate process change that requires the whole team’s buy-in.

Scale-up CEOs fuel a culture where constructive challenge is vital 

Bigger teams and more hierarchy can stifle the atmosphere of challenge start-ups thrive upon. However, strong scale-up CEOs can deliver organisational clarity whilst retaining a culture where challenging the status quo is welcomed. Within reason, strong contention and alternative views are signs of a healthy, creative and confident team, mature in their ability to discuss, agree and move on.

Robust scale-up CEOs use culture together with clear, regular objectives to allow them to step back and proactively manage any areas of conflict.

Scale-up CEOs have a coaches, advisors, mentors

In scale-up, you need every unfair advantage you can get. Learning from other people’s mistakes and tapping into their wisdom makes sense . It’s good having supporters. But the best CEOs also have tough collaborators who test and mould their thinking in a constructive way.

Transitioning from founder to fully fledged scale-up CEO is an exciting, thrilling journey. But there is no need to learn everything on the job. Be open, seek advice. Frog’s scale-up methodology offers a framework that has been proven to deliver in a range of businesses. We’d be happy to discuss it more detail with you.

About the author

Mike Reid

Mike Reid
Senior Partner

Mike launched Frog in 2009, after seven years in industry and 12 years at 3i. He represents Frog on the boards of Clue, Evotix and Modulr.

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