Leadership Lessons: Reflections from 2023
2023 was a difficult year for startup CEOs.
The tech funding environment cooled off significantly. Startup valuations came back down to Earth. This made it harder to raise capital, leaving many companies in limbo.
Exit options were few and far between.
The tech IPO window was firmly shut. Strategic buyer multiples were down. They knew they had the leverage. As a result, startups and their investors didn’t want to sell.
Silicon Valley Bank failed. That failure left a big hole in the startup debt market. SVB forced other banks to be more competitive. With SVB gone, debt funding for startups became less available. And it cost more.
Every startup CEO I know went through layoffs and cost-cutting. The companies and teams they had struggled to build got cut back down. They went backward.
Many CEOs questioned why they were pushing so hard, sacrificing health and happiness, only to cut back like this.
Discovering Leadership Wisdom in Times of Change
I firmly believe that everything happens FOR us, not TO us.
2023 was a tough year. But it was a catalyst for leadership lessons, growth, and reflection for startup CEOs.
Leaders faced uncertainty. There is no playbook for how to navigate in uncertain times. You just have to figure it out.
This forces judgment calls. It forces us to listen to our gut.
And listening to our guts creates wisdom. True, certain, first-hand, instinctual knowledge.
This was the gift of 2023. If you got through last year, you learned some important lessons, and you were a better CEO for it.
Key Leadership Principles in a Transforming World
In the absence of proven playbooks, CEOs and other leaders needed to turn to broader principles to help them navigate.
Here are the leadership principles that I saw emerge in 2023:
Nothing is sacred
Every single team member (including the CEO) can be replaced.
Startups were still able to survive, and in some cases thrive, with less headcount and less spend. The spend that we thought was essential turned out not to be. We learned from that and began questioning everything.
CEOs and their leadership teams were forced to question and abandon assumptions.
Nothing was sacred in the quest for cuts and other moves to ensure survival.
Every day matters
If your startup is burning money then your highest bank balance is today.
Speed is vital. You need to make bold and rapid decisions. Even if you end up zig-zagging along the way. Action trumps inaction.
Hope for the best, but plan for the worst
One reason why being a startup CEO is so hard is because you have to be massively optimistic and pessimistic at the same time.
You can’t save your way to greatness. Cuts are fine, but you won’t deliver the outcome your investors (and you) want with cuts alone.
Startup CEOs needed to find creative ways to drive growth while at the same time planning for the worst-case scenario.
CEOs needed to assume no more funding would be available. They needed to find a path to profitability.
Leadership Reflections: Evolving with the Times
Startup CEOs evolved greatly in these challenging times. This is why I said that everything happens FOR us.
I saw startup leaders grow in many ways in 2023. Here are just a few:
Flexibility – Startup leaders had to abandon fixed assumptions. They had to make bold calls with limited, or no, information.
They needed to move quickly. They couldn’t rely on hope.
Resilience – this bred a new level of toughness and ability to handle the highs and lows.
The hardest thing for leaders to do is to terminate staff. But every CEO I know had to do that in 2023.
Getting through that and realizing that the world is still turning breeds resilience.
Authenticity & vulnerability – When you let people go, when you cut spending, you lose trust. Staff face uncertainty. Uncertainty breeds fear.
We fear what we don’t know. This is human nature. And we invent scenarios to fill the gaps. Often those scenarios are worse than the reality.
In the extreme, we run away from fear. Many staff members who survived job cuts began looking for new jobs. At companies that were “safer”.
This forced startup CEOs to be their true authentic selves. It forced them to be vulnerable. To be human.
People are smart. We have finely tuned BS meters. We know when people are not being genuine.
CEOs that were not authentic and vulnerable only fed the fear. They unwittingly encouraged their staff to look for new jobs.
The most successful CEOs realized this. They let their guard down and were more open.
They didn’t share everything. Not every individual team member can handle knowing when the company will run out of cash. But, to the extent possible, those CEOs were authentically open.
Courage – all of this bred courage. What doesn’t kill us, makes us stronger, right?
From layoffs to spending cuts, every decision was tough on some level.
I know CEOs that had to shut down their companies last year. They did everything, but couldn’t make it. That took tremendous courage.
Those CEOs are stronger for going through that experience.
Integrating 2023’s Leadership Lessons Learned
2024 looks a lot like 2023. We still face uncertainty. Interest rates remain high.
I am seeing an increase in companies announcing layoffs. Again.
And suddenly, several founder CEOs are being replaced.
All of this points to continued uncertainty.
The playbook that got CEOs through 2023 is still the one for 2024.
CEOs must continue to watch spending. They must continue to assume that they can’t raise more capital.
They need to pursue optionality. At the same time as they run their business, they need to:
– Find a path to profitability
– Build relationships with potential strategic acquirers
– Build relationships with potential investors
Startup CEOs will have two full-time jobs in 2024: running their company and generating strategic options.
The leadership insights from 2023— of flexibility, resilience, authenticity, vulnerability, and courage– will be vital.
To thrive in this environment, startup CEOs will need to focus on self-care.
This is a marathon, not a sprint.
Markets are cyclical. The IPO market will open again. Venture capital funding will increase. Valuation multiples will rise. Strategic buyers will come knocking at your door.
You need to be ready to pounce when these opportunities show up. This means managing your energy and state of mind personally.
If you care for yourself, you will be in the best position to strike when things turn around.
Happy, healthy humans build bigger, better companies!