Should Founders be CEOs?

That is an excellent article, which raises some great issues, as do all the comments. I think whether or not a founder makes a good CEO has everything to do with how s/he is wired. I would like to add this perspective:

- New research on entrepreneurs has shown that there are 16 different "types" of behaviors/tendencies - what founder of BOSI Institute, Joe Abraham, calls "entrepreneurial DNA."

- Founders may have a high B (builder) or a high I (innovator) - think of Wozniak and Jobs, as a great example. That was a classic B and I combo that allowed one to focus on the technology and the other to focus on sales, marketing and building the business.

- However, if there is just one founder who is a strong innovator, for example, their preference is going to be to focus on the technology and not building the business systems that may be needed to grow and scale. S/he will be passionate about their product and will be able to pitch it to hire talent, obtain funding or sell to prospects - which can take them a long way. But at some point, when growth is at the stage where it's important that systems and controls are in place, and they have to step away from the technology to focus on that, problems can occur.

Understanding what type of entrepreneur you are (at any given time) and how that impacts the people around you, what you choose to focus on and how you build your business is half the battle.

Although I respect Andreesen Horowitz, their decision to keep founders as CEOs is based on their own successes, not any rigorous studies of success in these circumstances. And it encourages founders to take their money if they want to remain CEO.

Horowitz has great insights into the types of CEOs: http://bhorowitz.com/2011/04/15/peacetime-ceowartime-ceo/

Who dictated that the Founder is always the person with the Vision? I will argue that to the end. Sometimes it is true, and sometimes not. This is a question that must be answered case by case.

Let's say I have a vision. Do I have the skill set to bring that vision to fruition? Maybe not, and if not, it becomes my responsibility to find someone who can.

Let's say I have a bitchin' product, but I have no vision at all how to make the world know it's bitchin' too? Will I be the most effective person to run my company?

If I have the product, the vision and the skill set, then I am truly blessed. But there is a reason that lists beginning with Steve Jobs and Bill Gates are short lists. Few folks have all three.

Where the VC group mentioned in the question is concerned, I will bet my right arm they do not invest in Founder/CEOs in a vacuum. They are vetting for individuals with the capacity to excell in multiple roles. They are looking for the next Steve Jobs. I promise you they are rejecting far more Founder/CEOs than they are accepting.

Together, let's put the fun back into work!
Belldon Colme
belldon@belldoncolme.org

Absolutely, but with a short list. We work only with technology startups, and the question is whether the founder--who generally is highly technical in nature and vision--can adapt that vision to the demands and intricacies of the market. That can be determined pretty early in the game--and if the answer is no, either he (and it's always a he) or the VCs should make the hard decision before the company loses touch with the market.

I'm with Robert Foraker -- it's not about the mechanics of who is best suited for what as matter of functionality. Trying to get the best talent into the best postions ignores several human factors, something the L.A. Lakers had learned a while ago when they had all the best players in the league for each positon. What happened? They had one of the their worst seasons! Why? Everyone was a leader -- and no one was following... There are human factors that many of the educated love to ignore,,, Example: a consultant I know was giving a conference to a group of senior management leaders in a very large company. They had no clue how the new system them were getting was supposed to work - in spite of materials and classes having already been shared and attended. Every person there had a masters degree or more (some had several degrees). The consultant had dropped out of college to start his own business -- explaining systems to those that could not comprehend.

It's about the gifts we have on top of the skills -- not just the skills. Being a visionary is a gift -- but it also requires skills to bring those dreams to fruition...

I see no reason why not. The founder is the person with the vision, the passion,
the aspiration, the one who will give his life for what he believes in. He/she is the
one that burns the midnight oil, the one that goes without food and other necessities
for extended periods of time just to accomplish his/her dream. Who else can fill that role?

As the saying goes, "Nothing the die for, nothing to live for."

Passion is what makes people do things. Others can be followers, but the one with the passion is the one who will see it thru to fruition. Nothing beats a burning desire, so Founder and CEO goes hand in hand. To separate them is disaster.

"Founding" is more of organizing...
while being CEO is about leading;
yet you can't "organize" if you don't
even have a drop of leadership ability,
hence, why not if you have great ability.

To lead is much more than having that vision
and experience but possessing a good brain along with
that character strength to paddle through inclement weather
and take the boat to its destination in time.

This is @TheGreatLight.

I agree with Robert Foraker and wanted to balance out the comments of others who say that some people can't be CEO because they are not the best to run the business. The better scenario is to have the CEO be coupled with a strong COO who can run the business; then you get both vision AND operations. Think Steve Jobs + Tim Cook, think Mark Zuckerberg + Sheryl Sandberg.

There's really no one answer, because no two businesses are the same. The real key is whether the founder is suited to lead the venture through the life cycle stages of the business where the skill sets and demands of the CEO change. Those that evolve will manage, and those that don't need the foresight and confidence to set egos aside and seek out qualified talent to fill the gaps.

Not neccesarily.
Having started the organisation doesn't mean that he/she must be well in it but he/she got to go out there and fish for more expertise in that relevant field, Otherwise he/she could be a consultant and an adviser to the firm.

I wonder if the 2nd part of this question revolves around more of what control the CEO keeps once a decision is made to remain CEO.

One of the best resources I have read that lends light on this question is “Growing Pains” by Flamholtz and Randle. They affirm the greatest challenge for entrepreneurs once they have successfully launched their business is to transform their business from the spontaneous, ad hoc, free-spirited enterprise to a more formally planned, organized and disciplines entity. At the point of significant growth, the personality traits of the founder will be key to determining their ongoing role as many entrepreneurs often lack the experience and ability to lead their own organization through the necessary stages of transformation. Some CEOs make the mistake of not increasing the company’s capabilities beyond his or her own personal skills.

Flamholtz and Randle write there are 4 choices for the CEO when faced with growth: 1) Do nothing; 2) sell the business and start over; 3) move up to Chairperson and bring in a professional manager; or 4) make a systematic effort to change personal behavior to fit the needs of the company at its new stage of development.

I find more often than not the founder should vacate to a skilled CEO at a certain point in the evolution. It seems it is easier for a visionary founder to drive when they are chauffeur driven to THEIR destination of choice

The question of whether or not to retain the founder as CEO depends fundamentally upon what the business is trying to accomplish, which of course continuously changes throughout the lifecycle of the business (i.e inception, growth, maturity, etc.). Generally, retaining the CEO during the inception stage serves as an effective strategy, because it provides an opportunity for the company to build internal processes, policies, practices, and systems based upon the core values and beliefs that the company was originally founded upon. Typically, these core values and beliefs originate with the founder. By deeply rooting and weaving these core values and beliefs into the organization's operating and cultural fabric, the vision that was used to form the company in the beginning can continue to live and grow. It's not uncommon for the founder to transition out of the organization after the beginning stages.

Can a startup afford both a founder and a CEO or COO - lots of extra six figures there

Some should some should not about like the rest of the world.

It is my opinion that ...

Some business founders make great CEO's, however more often than not a business founder is not the best person to sit in the CEO chair. Running a business can be miles apart from founding one. A CEO wears many hats from a macro stantpoint.

I favor an expert in running a busness (CEO) coupled with and expert in the business venture (Founder).

It depends on the Founder. Some, like Steve Jobs, Bill Gates, Ken Olsen, Hewlett and Packard, have the ability to lead as well espouse and execute a vision for the long term. However, most Founders are challenged by the requirements of both management and leadership. The best scenario is an experienced CEO tightly coupled to the Founder as Chief Visionary and Chief Evangelist. While most VCs may prefer to invest in founder-led companies, most also realize there will come a time when a new role needs to be developed for the founder as a seasoned CEO takes the lead. IMHO based on real experience.

I think I understand why a VC organization would believe a founder of a company is generally the one to make the best CEO. Many of the reasons are related to the PERSONAL investment and commitment that a founder has to their creation.

They may not fit the role well at all times but, over and above any of the generic leadership qualities often mentioned they generally have the following attributes:

1. They understand the mechanics of their success better than anyone.
2. They know their customer base better than anyone.
3. They tend to have a personal / emotional connection to what they founded.
4. They understand the trials of their particular market, and their market strategy better than most, if not anyone else.
5. They believe in their company and its products / services more than nearly anyone else.

Then there are all of the other things many have mentioned. Inspiration, motivation, vision, etc. The more "generic" leadership qualities...

I'm not sure I'm in agreement with those who suggest getting another CEO. The reason is that too many of today's CEOs are NOT the visionary leaders that truly build companies. Many of today's CEOs without the personal connection to the organization's founding are more administrators and expensive stewards of what someone else has built.

===============

And the number one reason of all? Experienced VC investors seek to minimize their investment risk and try to maximize their reward. They have learned from the capital risk experience that founders are by far the most committed to the success of the enterprise.

Venture Capitalists WANT passionate entrepreneurs with a personal connection...

How do I know? I am a founder of my own company and in my efforts to expand at times I am baffled by how many leaders have little idea on producing real success. Second, I've been pretty successful and periodically entertain VC type investments... You just do NOT get much of the really serious level of commitment and passion from the non-founding leadership.

===============