5 Challenges New Startup CEOs Need To Tackle Head-On

One or two startups in a generation have magic. They are virtually guaranteed success.

If you have a car that runs on water or a wind-proof umbrella, you’re going to be successful. It’s just a matter of time.

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But that type of sure-fire situation is incredibly rare. Most startups begin with a vague idea and plenty of risk and uncertainty. As a leader, you’re making a bet that you and your team can take that uncertainty and forge it into something that works.

A successful startup requires a combination of organizational work, momentum, and technology—coupled with the right people and the right habits. All of it has to come together in an individual manner to create a great company.

Of course, that’s easier said than done. You’ll have to face down difficulties related to every aspect of your startup’s growth and culture along the way.

5 challenges new startup CEOs need to tackle

As the CEO of Morphic Therapeutic, a biotech startup that’s raised more than $200 million in funding over three years, here are six of the most common challenges I’ve found teams have to confront on the road to success:

1. You need to create and sustain early momentum for your company.

The biggest mistake CEOs make is waiting to work on the organization of a company until they know whether the technology or science is working.

It’s tempting to think that way, I know. You’re wondering why you should put the effort into building an organization if you’re unsure that the underlying basis for its existence is even there. But when you discover it is there, you’re going to want an organization in place to capitalize on the opportunity.

I’m not the only one who thinks this way. About 15 years ago, a venture capitalist told me the best companies are the ones where you’re just trying to get out of its way. They run like a storming train autonomous machine that’s been turned on. And the only way you can operate like that is by putting in the work to create an organization that can build and sustain momentum quickly—at the flip of a switch.

2. You have a very short runway to prove the company’s worth.

One fundamental difference between a startup and a large, established company is how they’re funded.

Typically, in a large pharmaceutical company, teams have a semi-constant funding source. Year after year, the money is there to continue supporting the science and discovery. There are merely tweaks to the annual budget year to year. But it doesn’t work that way at a startup. You have to earn your way to your next funding route.

It’s just a fact of life that you have a finite amount of resources—and thus a finite amount of time to prove yourself to investors—as a startup. When I interview candidates for our team, one of the first things I tell them is: make sure you realize that you are earning each next round of financing.  

That ticking clock mentality benefits you as a CEO, but it also generates momentum when it filters down through the entire organization.

3. You must attract top talent, potentially with a little-to-no track record.

Roughly 99% of startups are leaps of faith.

Your job is to convince talented people to take that leap with you because you generally aren’t going to have an idea so great that just anyone can execute on it. That’s what you want at the end. You won’t have that at the beginning. Rather, you have to attract talented individuals who can see the opportunities inherent in your idea and are willing to solve tough problems.

Remember, you’ll be evaluated on the people you bring in. Good people attract good people, and the opposite is true, as well. Investors may not be able to evaluate your idea very well, but they will be able to assess the team you hire.

4. You want to make a good first impression because it will last for years to come.

First impressions affect people in ways that are difficult to quantify—and they tend to last much longer than you’d guess.

For instance, the CEO at my previous company would always tell people to give projects to me because “This guy never sleeps.”

I had to tell him, “I get plenty of sleep, and I have two kids. When I first started here and you met me 10 years ago, I would work like that.” But his impression of me was formed when I walked in the door a decade earlier.

The truth is, you’re constantly making impressions, whether you like it or not. That’s especially true when it comes to investors. Each round of funding means new investors (and a different class of investors) that you’ll make some sort of impression on.

Your first impressions can either help you or hurt you. In the first board meeting after each financing, I tell my folks to put more than usual effort into the meeting and package. I know that this meeting will set the impression for years to come.

It’s up to you to consciously decide what kind of impression you want to make.

5. You have to break old habits and establish sustainable ones.

Once something becomes a habit, it’s incredibly hard to change it.

So, it’s essential for you as a CEO to take advantage of the blank slate you’ve been handed with a new company. Take time to reflect on how you want the organization to operate, and then work to instill those habits while the company is still young.

Bad habits lead to mistakes, and mistakes are hard to fix. They take up exceptional amounts of energy and time that you don’t have in a startup. They drain you and fatigue your team when you can least afford it.

You will make a few missteps along the way, but if you can avoid the big ones that often lead to terrible habits, then you’ll have a much better chance of survival.

Praveen Tipirneni is the President and CEO of Morphic Therapeutic Inc, a biotech company leading the development of a new generation of oral integrin drugs. Previously, he served as the Senior Vice President of Corporate Development and Global Strategy at Cubist Pharmaceuticals, until the company’s acquisition by Merck in 2015. Praveen has also served time as a 1st Lieutenant in the U.S. Army.

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  • Originally published January 22, 2019, updated April 26, 2023