Leading a startup is not easy.
Founders must be skilled at coping under pressure and appearing calm, even when facing impossible odds. To help you with that, let’s take a closer look at the five most important leadership qualities startup founders need for success.
Since 2010, entrepreneurs have operated in an unprecedented period of prolonged growth. Until recently, the good times just kept rolling for startup founders.
A combination of seemingly unlimited investor funds ($620 billion in 2021 alone), steady global economic growth, and the Internet empowering startups to win talent and customers worldwide, has made the last decade a golden era for startups.
Global brands like Facebook, Google, and Airbnb emerged from this buoyant ecosystem and, along with countless other startups, they have shaped how we live and work.
None of this happened by accident, of course. It all came down to leadership.
Why is leadership crucial for startup success
As a founder, your leadership sets the direction, creates the culture, and is the driving force behind everything in your business. Your words, actions, and attitude impact your team, customers, and stakeholders.
Take time to reflect on your words and actions. Ask yourself these questions:
- Am I setting the right tone?
- Do I empower my team to succeed?
- Am I a positive agent of change?
If you answered “no” to any of those questions, then let’s identify which qualities might need improvement, and how to implement positive changes to your leadership style.
5 Leadership qualities startup founders need
“Resilience is the capacity to not only endure great challenges but get stronger in the midst of them. This is such an extraordinarily important capability because we live in a world that’s one nonstop crisis—one calamity, one emergency, one unexpected, often difficult surprise—after another, like waves breaking on the shore.”Nancy Koehn
In the wake of a global pandemic, political and economic upheaval, supply chain problems, and the worst inflation the world has seen for decades, founders need to be resilient. Without resilience, your startup vision could fail.
Once a business is generating revenue and has achieved product-market-fit (PMF), startup founders often experience what Ben Horowitz describes as ‘The Struggle.’
Horowitz is one of the world’s most successful entrepreneurs and is a Founding Partner of Andreessen Horowitz (a16z).
There isn’t much he doesn’t know about successfully leading a startup. Horowitz has also written extensively on failure, and how founders can overcome both internal and external challenges.
The Struggle is a combination of these internal and external pressures. It’s often experienced by founders who are navigating early to mid-stage growth — the point when a startup has revenue, traction, and staff, but is battling to reach a secure level of profitable, monthly recurring revenue (MRR).
That’s The Struggle.
In his book, The Hard Thing About Hard Things, Horowitz describes The Struggle as:
“A land of broken promises and crushed dreams. The struggle is a cold sweat. It has no mercy, takes no prisoners, it is a constant battle fought in public and in your own mind all at the same time.”
Resilience is a crucial leadership skill. You need the determination to keep going, especially when circumstances are difficult. Your team looks to you for leadership.
Here are four ways to incorporate resilience into leadership:
- Reflect and assess. Self-reflection and feedback will help you make better decisions, avoid mistakes, and tackle complex challenges more effectively.
- Keep learning and growing. Accept that you can – and will — make mistakes. Don’t let this hold you back. Learn from your errors and push forward.
- Implement a purpose-driven approach to leadership. Show your team the way ahead and explain why you’re taking certain actions. This not only encourages people, but also helps them to share your vision.
- Cultivate strong relationships. Build internal and external relationships that will drive your company forward. A founder with a strong network can make a significant difference in a startup’s success.
Empathy is another positive leadership trait.
Empathy is the capacity to imagine yourself in someone else’s situation — experiencing their emotions, opinions, and ideas.
Employees react positively to leaders who demonstrate genuine empathy and understanding.
Across the tech sector, there’s a global war for talent. Business owners are fighting harder, offering higher salaries, and dangling additional benefits to secure the talent they need.
Startups can’t always compete against those businesses with bigger budgets. But when you focus on creating an inclusive, remote-friendly, and flexible workplace, it gives you an advantage in the talent wars.
Create a company you would want to work in.
According to a Center for Creative Leadership white paper (PDF), “empathy in the workplace is positively related to job performance.”
“Demonstrating empathy in the workplace — a key part of emotional intelligence and leadership effectiveness — also improves human interactions in general and can lead to more effective communication and positive outcomes,” the research found.
Try these four ways to achieve greater empathy and emotional intelligence when interacting with your employees, colleagues, and stakeholders:
- Show a sincere interest in the needs, hopes, fears, and concerns of your whole team.
- Be mindful. Watch out for signs of burnout and overwork in your team, and ensure managers take proactive steps to prevent burnout.
- Demonstrate a willingness to be flexible; allow employees to work from home and assist any team members with their personal problems where necessary.
- Show compassion and provide support when employees say they’re struggling with their mental or physical health or have suffered a personal loss, e.g., a death in the family, health issues or other stressful events.
Decisiveness is a vital quality for business leaders.
Being decisive gives startup founders an edge.
Wavering on a decision (instead of taking action quickly) can cost time and money. Failing to act decisively could result in resources being invested unwisely, causing a company to miss targets and/or head in the wrong direction.
In a perfect world, you would have all the information required before making a decision. Unfortunately, that’s rarely the case.
More often than not, founders take bets – in spite of the missing data. Waiting for perfect clarity at every juncture costs founders time that startups don’t have.
Tips for business leaders to practice decisiveness:
- Do what you say you will and build trust. Be consistent, reasonable, and accountable. Founders that follow up when they say they will are viewed as trustworthy by their team.
- Avoid becoming a bottleneck for decision-making. If you don’t have processes in place that allow you to delegate and manage effectively, then you become a bottleneck within your business. Once you reach a team of 10 or more, you can’t expect to make every decision. Start removing yourself from certain areas of your business, and empower others to facilitate smoother operations throughout your startup.
- Be confident and bold. Even if you have to “fake it before you make it,” your team needs to see you speak and act confidently. Your confidence encourages boldness and decisiveness in your team members. It inspires them to make better decisions, take ownership of problems, and feel safe coming up with creative solutions (even if they sometimes make a mistake).
- Be quick to make decisions and slow to change your mind. Decisiveness isn’t about being stubborn or arrogant. It’s essential to make quick decisions, even when you’re missing pieces of information or waiting on others to make a decision. Trust your instincts. Decide. And only change your mind if there’s enough evidence to demonstrate that a different approach is necessary.
Honesty is an attribute that constantly renews the trust your team places in your leadership.
Naturally, there are times when leaders can’t be completely open. There are some problems only you can solve — or you sit down with your co-founder, mentor, or investor to find solutions.
Aside from those times, embrace openness and honesty as fundamental leadership qualities. Here are three ways to implement this:
- Practice selective honesty. Be honest about your lack of knowledge if you’re not an expert on a topic. Show team members that you aren’t perfect, and that you have the capacity to learn.
- Be open with your team when the company faces challenges. Be vulnerable so that your team empathizes more effectively with you — and you with them.
- Inspire the team to get behind your vision for the future. Encourage a collaborative approach for overcoming difficulties and solving problems so that everyone’s invested in tackling these challenges together.
Humility may seem like an odd quality for a startup founder.
And yet, being humble (accepting you don’t have all the answers and being open to criticism), is a valuable personal attribute.
Feedback and constructive criticism from employees, stakeholders, customers, and investors helps you become a better leader.
Learn from your team. In some cases, employee feedback might encourage a change in direction, a pivot or a re-think of certain operational procedures.
Being humble and open empowers you to continue striving for better ways to achieve your goals.
Summary & key takeaways
Leading a startup is not easy.
A founder’s job is challenging; ask anyone who’s owned and operated a business and they’ll agree. Founders take on large amounts of risk and handle numerous difficult decisions on a daily basis.
There’s no rulebook for founders.
You don’t get a guidebook when you start down this road, and everyone’s experience as an entrepreneur is different.
Leadership is a learning experience, and you will make mistakes. Making a mistake doesn’t mean you’ve failed; it just means you’re discovering new ways to lead and cope with the challenges of leadership.
Practicing — and sometimes learning — resilience, empathy, decisiveness, honesty, and humility will make you a better leader.
Here’s a reminder of the five leadership qualities startup founders should embody:
What qualities have you observed in successful startup founders?
Let us know in the comments.