Insights for First-Time CEOs: An Interview with Davidson Oturu
As part of my ongoing series on startup leadership, I recently had the pleasure of interviewing Davidson Oturu, an experienced lawyer and venture capitalist who has worked extensively with startups and their CEOs. Davidson, Nubia Capital Managing Partner, shared valuable insights on common mistakes made by first-time CEOs, the importance of team composition, and advice for new leaders stepping into existing companies.
Daria Rudnik: Thanks for joining me, Davidson. Can you tell us a bit about your background and how you work with startups and CEOs?
Davidson Oturu: My background is in law and venture capital. I started out in legal practice, heading my firm's technology, venture capital, and emerging companies division. In this role, I worked with businesses, CEOs, and founders who were starting out, helping them build their companies, protect their intellectual property, and navigate funding rounds. We provided advice on various aspects of building a business, from setting up board structures to obtaining necessary licenses.
Later, I transitioned to venture capital, where we invest in tech startups in Africa. Now, I'm doing something similar but from an investor's perspective, helping companies survive and thrive in this challenging environment.
Daria: What do you see as the most common mistake first-time CEOs make?
Davidson: One of the most common mistakes is assuming that because they came up with a brilliant idea, they're automatically the best person to execute it. For example, a CEO might come up with a great AI concept and decide they can run the entire business based on that idea alone. They might start hiring people, bringing on co-founders, and raising funds from excited investors. However, if they've never run a company before, they often lack crucial skills in people management, financial planning, and strategy development.
These CEOs might do well for the first couple of years on sheer adrenaline and excitement, but when real operational and financial challenges hit, the business often struggles to survive. It's a fundamental lack of preparedness for what it actually takes to run a business.
I always advise first-time CEOs to focus on a few key areas:
Develop a clear vision and strategy for execution. Think long-term.
Build the right team structure. Don't just hire friends or classmates – look for complementary skills and relevant experience.
Establish a strong company culture from the outset. As the saying goes, "culture eats strategy for breakfast."
Daria: You mentioned teams, and many VCs say they invest in teams above all else. How do you identify a good team as an investor?
Davidson: There's no magic formula, but it's about complementary skills and the right mix of diversity and experience. For example, if you're looking at a health tech startup where the CEO is a medical doctor, that makes sense. But if all the co-founders are also doctors, it raises concerns about who will handle crucial business functions like financial management, operations, customer acquisition, and product development.
A strong team should demonstrate a deliberate mix of technical, academic, and operational experience that aligns with the company's needs. This doesn't mean every executive needs to be an expert in everything, but they should have enough understanding to effectively oversee their respective areas.
Daria: What would you recommend as the first steps for someone joining an existing company as CEO?
Davidson: The first thing is to understand the company's vision. If you don't know where the company was intended to go, how can you determine if your direction aligns? It's also important to assess whether the existing vision is still relevant or needs updating.
Next, understand the company's business model, its relationships with stakeholders, and the existing company culture. Evaluate the current leadership team and determine if any changes are needed.
Finally, map out your own strategy for transforming or improving the company based on its current state.
Daria: How should a new CEO build a relationship with the board?
Davidson: Building a relationship with the board is crucial. There needs to be alignment between the board's thinking and the CEO's direction. This doesn't mean everyone will always agree, but the majority should be on the same page regarding the company's future.
Consistent, transparent communication is key. Keep the board updated on your strategies and progress. Effective communication helps ensure the board understands where you want to take the company and how you're working to achieve those goals.
Daria: You've mentioned vision several times. Who do you think is responsible for the company's vision – the CEO, founder, board, or executive team?
Davidson: The responsibility for the vision can shift as the company evolves. Initially, it's usually the founder's vision that drives the company. However, as the company grows and potentially brings in a new CEO, that responsibility may shift.
A new CEO, especially one with more business experience than the founder, might refine or even completely reshape the vision based on their expertise and market understanding. In more mature companies, the board might also play a significant role in shaping the long-term vision.
It's important to remember that visions can and should evolve. What works in the early stages of a company might not be suitable as it grows and faces new challenges.
Daria: Is there any final advice you'd like to share with first-time CEOs?
Davidson: One crucial point I'd like to emphasize is the importance of continuous learning and growth. The number of years you've been running a business doesn't necessarily equate to acquired skill sets. A CEO who's been leading a company for 20 years but hasn't actively sought to improve their skills might be outperformed by someone who's only been a CEO for two years but has intensively worked on developing their leadership abilities.
Leadership is always a learning process. You never reach a point of perfection. Each new situation, each new company, presents unique challenges and opportunities for growth. I highly recommend the book "The 5 Levels of Leadership" by John Maxwell, which breaks down how the leadership journey continually evolves.
Remember, what worked in one company or situation might not work in another. Stay adaptable, keep learning, and always be open to expanding your skills and knowledge.
Daria: Thank you so much, Davidson. This has been incredibly insightful and helpful for new CEOs.