In one of the most honest resignation letters in the history of CEO resignation letters, last week Andrew Mason signed off after four tumultuous years as the CEO of Groupon, the daily deals company that he founded. Andrew handled a difficult situation well, admitting to serious errors in running the business and hoping that his departure would pave the way to the company’s turnaround.
Others have not handled the pressure of a failing startup nearly as well. Sadly, there have been recent and very tragic examples where founders were so depressed from their struggles that they took their own lives.
The pressure on startups and their CEOs is significant. Today, startups are expected to have a product and happy customers right out of the gate. This leads to flatter and less hierarchical organizations, where everyone is racing to meet ambitious product milestones. These flat organizations put even more pressure on the CEO because he usually has more direct reports and a broader range of decision-making. Today’s CEO might be intimately involved in the product development, sales strategy, marketing plans, hiring decisions, fundraising, customer management but also minor things like securing office space and booking their own travel.
Putting so much responsibility in the hands of a single person means that today’s startup CEOs will likely make more imperfect decisions than perfect ones. Despite this, if you ask almost any CEO how he is doing he will always say “Great!” or “We’re crushing it!” How can this be when 90% of startups are in the process of failing?
The answer, of course, is that CEOs need to remain positive to give their company the best chance at survival. People want to work with and invest in winners so founders must project an aura of optimism at all times.
Maintaining constant positivity can have its drawbacks, though. A startup is a roller coaster with many highs and lows. The CEO job can be lonely so a strong support system is essential. Fellow CEOs who have “been there” can be great sounding boards for when things don’t go so well.
Constant positivity can also make it hard for employees to relate to the CEO. A founder who is always right is either a narcissist or a liar. So an occasional acknowledgement that things didn’t go as planned can make a CEO seem more human. In turn, employees can focus on what needs to get done instead of holding themselves to a level of perfection that is counter productive.
Admitting fallibility as a CEO is also important because it allows everyone to acknowledge a problem and then get to work fixing it. Most successful startups need to make dozens of major and minor adjustments along the way before they hit on a successful strategy. Even then, the process of trial and error must continue if the company is going to stay on top.
Remaining optimistic while acknowledging fallibility is essential to today’s CEOs.
This column was written by Matt Straz, publisher of The Makegood, and CEO and founder of Namely, the people management platform.