Let me share my list. It’s more about things I worry about after:
- Founders’ understanding of market doesn’t get deeper. I really worry when 9–12 months later, the founders do not understand their market better.
- Too slow to hire VPs. Hiring is tough, but if 12 months has gone by and you haven’t added 2 strong senior execs to the team, I get worried. I worry if you can even recruit them at all. If you can’t — you will never scale.
- Excuses for misses. This is maybe the biggest flag. You will have rough months and quarters. Probably even a rough year or two. It’s a bummer, but it happens to us all. When the “excuses” come out though … confidence goes out the door.
- Surprises. There’s no need for surprises at the investor / board level in SaaS. Let everyone know ahead of time. In SaaS, the revenue recurs. You’ll know when a big customer is at risk. When the burn rate may grow larger than plan. When the year plan is at risk. When a VP may not be the right one. The best CEOs telegraph these risks, without drama, but plainly and ahead of time.
- Slowdown in transparency, especially during tougher times. This is maybe the second biggest flag. When transparency slows down, especially in tough time, confidence goes out the door. Congrats on the great quarter. But not sending a prompt investor update when the next quarter is soft? That’s confidence wrecking.
- Lack of deep understanding of the competitive landscape. You should get better and better at this. When I hear a CEO say a competitor is “imploding” — usually they aren’t. Sometimes, but usually not. The best CEOs are very respectful of their competitors. The best CEOs update you first on what the competition is doing well, and importantly. where they are adding competitive differentiation.
- Manipulation and sociopathic behavior. Yes, as CEO, you are selling up. That’s part of the job. But venture is a confidence game. Don’t sell a line, or a crock. Don’t spin a story that isn’t real — especially internally. Take the tough criticism, even and especially when you don’t want to hear it. When the going gets tough, the tough get going. The manipulative, by contrast, lash out.
The best founders, simply put, get better every quarter and every year.
It’s just a pleasure and wonder to see it and get to play a small role in the journey.
But the less-than-best, just don’t grow enough.