I was having a conversation with a friend of mine who has a really hot startup. As we were wrapping up the call, he tells me that he has one last thing that he wants me feedback on.
“I think I should bring in an outside CEO.”
Now, one would expect that the normal reaction would be “Screw that! Its your company, you should run it!”
But, here is the truth. Not all founders–perhaps many founders–are CEOs.
Before we dive into this, lets define the “CXOs” of an organization. Understand that not all these functions are individual people early (in fact, most investors would freak out if you had a large senior team early on. Try and keep the leadership to a Hacker and Hustler for as long as possible.)
Each member of your senior team, including the CEO, should have a clear and defined function.
CEO (Chief Executive Officer) has three key functions (as told to Fred Wilson):
A CEO does only three things. Sets the overall vision and strategy of the company and communicates it to all stakeholders. Recruits, hires, and retains the very best talent for the company. Makes sure there is always enough cash in the bank.
COO (Chief Operations Officer) primary function is to run the business of the business. This might include things like HR and finances, but it also is managing the sales process, project management, and often, the board meetings. Everything that is essential to the company developing a cadence and running smoothly.
CRO (Chief Revenue Officer) cares only about driving revenue. And not just at the expense of everything else, but revenue that is long-term and sustainable. Often marketing, sales and business development report into the CRO.
CPO (Chief Product Officer) cares only about the product and its development. They own UI, UX and design. And often have a large say in product marketing (which is different from Marketing Communications, PR, etc.)
CTO (Chief Technology Officer) manages architecture and future scale. They may or may not code or make coding decisions, usually thats left up to a VP of Engineering who leads the engineering team.
CMO (Chief Marketing Officer) manages the external view of the company. PR, marketing, etc usually fall under this role.
There are other positions that often take senior roles, such as Presidents and CFOs for example, and a few others that are kinda made up, like a Chief Strategy Officer, which tend to be where a founder goes when s/he doesnt fit any of the other roles.
The question is, as a founder, should I bring in an outside CEO?
As a company grows, it becomes more and more important that the specific functions outlined above are covered. And the answer to the question gets easy.
What do you do well? If you arent the best at focusing on the product, creating a product roadmap, and developing all the wireframes, etc to effectively build a product, dont focus on product. If you just love building the architecture and understanding things like scaling and other technical things that I have no idea about, maybe being the CTO is the right move.
Just because you are the founder, doesnt mean you are the defacto CEO. The most important skill of a founder is to know what you DONT know, and then hiring for that.
Case in point. I suck at the business of the business. I try. I work hard at it, but I miss stuff. Documents dont get signed, bill dont get paid on time. For me, having someone manage that side of the business is very important, and an important hire. So important, that we have gone through two different cats in that role and now understand what it is that we need.
I know that I dont know how to manage product lifecycles or technical architecture so we hired for that.
Here are a couple of reasons to not hire an external CEO:
1) your investors told you to. Given that the CEO is really the conduit to the board, if your board is suggesting you hire an external CEO, there is a much bigger issue going on (lack or loss of trust) that should be dealt with straight on.
2) Because they have a bigger public profile than you.
3) They worked at some big company.
At the end of the day, as you build your company, its important to outline the important functions that are requirements to your success, and ensure that each role is properly filled. And, if in that process, you realize that you serve the company best by not being the CEO, then you have an answer to your question.
- What If Some CEOs Are Idiots? (247wallst.com)
- Distilling the Wisdom of C.E.O.’s (nytimes.com)
- Kenneth Cole slumps after CEO departure, loss (marketwatch.com)
- The Risks Of CEO Succession (blogs.forbes.com)
- Things You Must Do Every Week As Startup CEO (betashop.com)
- A Startup CEO’s Job Description (bjconquest.com)