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OKRs: A Startup CEO’s Sanity Tool

By August 13, 2025No Comments

Recently for Valor portfolio founders, serial successful startup entrepreneur Cliff Baker presented a masterclass on OKRs for founding CEOs. He showcased a pragmatic framework for using Objectives and Key Results (OKRs) not just as a reporting mechanism, but as a core leadership tool to drive focus, align your team, and manage your board. The central message is that a disciplined, programmatic approach to OKRs brings sanity to the chaos of running a startup. When implemented correctly, your board reporting becomes a simple byproduct of the same metrics you use to run the company day-to-day, eliminating last-minute fire drills and ensuring everyone is pulling in the same direction.

Why OKRs Are Crucial for a Founder

As a CEO, you’re under constant pressure: Are we focused on the right things? Should we pivot or do we just need more time? Do I have the right team? Cliff shared from his own experience building and exiting companies that OKRs provide a stable foundation to answer these questions objectively.

  • Brings Discipline and Focus: In a world where everything feels like a priority, a clear OKR framework helps you and your team stay the course. It gives you a defensible reason to say “no” to distractions—even when they come from investors.
  • Improves Communication: OKRs create a common language. They help you have structured, data-driven conversations with investors about progress, shifting the focus from subjective feelings to objective results.
  • Manages Team Performance: They make conversations about performance, compensation, and even exits much clearer. When expectations are quantified, it’s obvious to both you and the employee when things aren’t working out, making difficult conversations less personal and more productive.

Communicating with Your Board & Investors

Your investor and board metrics should be a direct reflection of your operational priorities. Cliff stresses that if you’re scrambling to pull together metrics for a board meeting, your system is broken.

  • Metrics Evolve with Your Stage: The “right” metrics change as you grow.
    • Pre-Seed/Seed: The focus is on product-market fit and growth. Can you build something people want? Can you acquire customers? Key metrics include revenue growth, new logos, and early customer acquisition cost (CAC).
    • Growth Stage: The focus shifts to efficiency and unit economics. How efficiently can you grow? What are your margins? Key metrics include gross margin, burn rate, cash runway, and sales efficiency.
    • PE/Exit Stage: The focus is on scalability. Can a buyer take your model and multiply it?
  • Focus is Everything: Don’t report on every metric under the sun. Pick 3-5 critical metrics that define success for the current stage of your company. It’s your job as CEO to tell the board what matters most right now. You can provide other data in an appendix, but the core of the meeting should be about the priorities.
  • Keep Board Decks Simple: A powerful board update can be as short as half a dozen slides. The goal isn’t to overwhelm with data, but to provide clarity so the board can help you. The key components of a high-level summary slide are:
    • Objective: The high-level goal (e.g., “Prove product-market fit”).
    • Priority: Which objective is the most important right now?
    • Status: Are you on track, ahead, or behind?
    • Trend: Is the metric improving over time? (e.g., quarter-over-quarter growth).
    • Risk: What is the key obstacle that could prevent you from hitting the objective?
    • Explanation: A brief, direct narrative of what’s happening.

Building Your OKR Framework

Cliff made a clear distinction between OKRs and Key Performance Indicators (KPIs), using a simple analogy.

  • Objectives (O): The destination. This is what you want to achieve. It should be ambitious and qualitative.
    • Example: “Become the market leader in our niche.”
  • Key Results (KR): The roadmap. This is how you’ll measure your progress toward the objective. KRs must be specific, measurable, and time-bound.
    • Example: “Achieve $2M in Annual Recurring Revenue (ARR) by Q4.”
  • Key Performance Indicators (KPIs): The car’s dashboard. These are the day-to-day operational health metrics that tell you if you’re on the right path to hitting your KRs.
    • Example: “Maintain a demo-to-contract conversion rate of 25%.”

OKRs tell you where you’re going; KPIs tell you if you’re driving well enough to get there.

From Boardroom to Operations: Making it Stick 

The magic happens when your top-level board objectives cascade down to your team’s daily activities–and in the live session, Valor CTOs and CEOs really leaned in on this one. 

The framework connects a Level 1 board objective all the way down to a Level 3 team-level KPI. Here’s an example.

  1. Level 1: Board Objective: Prove product-market fit and build a strong revenue base.
    • Key Result: Achieve 10% quarter-over-quarter ARR growth.
  2. Level 2: Functional Team OKR (e.g., Sales): The sales team’s objective is to support the board-level goal.
    • Objective: Show we have product-market fit by accelerating new customer acquisition.
    • Key Results: Grow new business pipeline by 20%; Achieve a 25% demo-to-close conversion rate.
  3. Level 3: Operational KPI (Sales Team Member): This is where execution is measured. The conversation shifts from “Why did we miss the number?” to “Why did you feel confident we would hit a number that we missed?” This holds leaders accountable for understanding their operations.
    • KPI: Pipeline accuracy. (e.g., “Of the deals you personally forecasted to close this quarter, what percentage of your deals actually closed?”). This KPI directly measures the sales person’s ability to execute and forecast reliably.

The core principle: Metrics must drive action. If you see a number but don’t know what decision or action to take based on it, it’s not a useful metric to prioritize.

Key Takeaways & Discussion Highlights 

  • Start Simple: You don’t need fancy software. An organized spreadsheet is a perfect place to start. Don’t over-engineer it.
  • Prioritize Ruthlessly: Get alignment with your board on the 3-5 most critical metrics for this quarter. Use this focus to protect your team from distractions.
  • Track Trends, Not Blips: Don’t panic over a single data point. Investors and effective CEOs look at trends over time (e.g., quarter-over-quarter, trailing twelve months).
  • Cascade Down: Ensure your board-level KRs are directly supported by departmental OKRs and individual KPIs. This creates alignment. 
  • Make it a Conversation Tool: Use the data to ask better questions and drive accountability. The goal of an OKR review isn’t to judge the past, but to make smarter decisions for the future.

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