[Guest post by Sanjay Anandaram, entrepreneur-turned-investor]
Over the weekend I was a panel member at a mentorship event. One of the presenters was the founder of a company whose business card simply read “Chief Architect”. On being asked who the CEO of this company was, he surprised all by saying, “I’m looking out for a CEO. I realize that I don’t have the ability to be the CEO and that I’m the bottleneck in the company.” Needless to say, this remarkable self-realization and public articulation astounded all the panel members.
It is a tired cliche that the most important thing in a startup is the team. But, it has yet to be internalized by many founding teams (and in several cases by VCs!). So, what is the problem? Is it that the people don’t “get it” or is it that they believe that they are indeed the best team? The team lives in a self-delusionary world, in a state of denial. This is very dangerous.
There’s also a third angle to this. Many times the founding team realizes that the existing team has gaping holes and there’s a crying need to bring quality external talent on board. But this realization does not lead to action. There’s a intention-implementation gap, or a knowing-doing gap.
While the abstract description and jargonization of the situation helps in putting a framework for analysis, the bitter truth is that in a startup, there is no time for such analysis. Where the CEO and the senior management fail to deliver the goals for the business, they need to step back and ask the reasons for their failure.
They need to ask:”Am I good enough?” “Does the business need additional, different skills?”
Clearly, it is very hard for the founding team to accept and acknowledge that they are “just not good enough”. In fact, it would be hard for any of us to do so. But to be confronted with a situation where the founding team’s competence is questioned can be quite a draining experience; especially given there’s so much emotion and passion involved.
It is this emotion and passion that sometimes acts to the detriment of the company. The emotion and passion creates a kind of security blanket that masks the competence of the team members. Hard work, loyalty, and excitement start becoming substitutes for competence, analytical insights, and action.
So what does one do in a situation where one of the founders isn’t performing and has to be let go?
It was a matter of friendship, of common aspirations at least once upon a time. The true test of the CEO and the leader is the ability to differentiate between self and company. And the CEO/leader has to ask: Is what I’m doing good for me or for the company? Will my company be better served by other more talented people? So, the ability to make that clear distinction between self and company is a critical first step.
After all, if the startup is the founding team’s baby, the “parents” have to do what is good for the baby not what is good for the “parent”. The baby has to be trained by qualified teachers in various disciplines, be punished and rewarded by the teachers.
The parent feels proud when the baby grows up to be a high achiever and a top performer. The parent has a role to play not all the roles. There are other people who have significant influence and impact on the baby as well – teachers for example.
There are situations where the CEO is totally insecure and insists on hiring people who are of lesser mettle. The CEO is concerned that he/she will lose the position of authority. This kind of CEO soon becomes the bottleneck in the company and very quickly drives the startup to the ground; or ensures its survival only as a corner-grocery-store equivalent. The VC has no business funding such a CEO. This kind of a CEO cannot attract talent; will be obstinate; will insist on things being done his way. In short, this kind of a CEO is better off by himself. This kind of a CEO is not a team player. And that can mean death in the business!
You may be a superstar but only if the team supports you. You cannot shoot goals or score runs if the team does not support you. You have to play in the larger interests of the team. Think football, cricket, hockey, basketball. On the other hand, if you believe that its better to be an individual star, then don’t play team sports – golf, tennis, chess are games for you.
Unfortunately startups are like team sports. So, what kind of player are you?
What do you think?
[The article first appeared in FE. Republished with author's permission.]
Cannot agree more with your thoughts, Sanjay. Sometimes business compulsions tend to force a start-up to make a stop gap arrangement for example your customers/investors may want to be absolutely sure where the buck stops and hence one of the founders may have to take up the role as CEO.
Having said that it needs to be absolutely clear in the minds of founders whether they do or do not have the skills needed to be a good CEO of a company and the demands of the role change as the company grows.
excellent stuff Sanjay, i just wish startups would read PLUS emulate this in their structure.
An important distinction is the stage at which the startup is at.
In the early stages there is a lot of uncertainty & doubt. A founder-CEO brings traits like passion, hard-work, single-minded focus etc.
At later stages, traits like organizational skills, networking, people-management, forging alliances etc. come into play. Depending on the circumstances (funding, investors etc.) either the founder-CEO adapts or steps aside in favor of external talent.
You make a good point about the good of the Company vs the Individual.
I wonder how history will judge Mark Zuckerberg in this regard.
I agree with Lalit and Srinagesh. I believe that founders are mother of their startup. They play all the roles starting from peon, to support guy, till CEO or sometimes even more than that. And as Sanjay said that like any good CEO, they put their venture much before them. Because most of the times they are putting much more on the stake then just their time.
So while taking the startup from Garage to Growth stage, they play all CXOs role. But once the startup grows bigger, it requires some defined skills along with the passion and dedication. At that time the places have to be filled with the right persons or I must say the best ones.
I agree that CEO can actually build or destroy any company. But as most of the startups face a challenge of getting good CEO, the idea is to wear the shoes yourself and go on till the time you don’t find the right candidate.
Cheers,
Sumit
It is a classic case of how soon or how late can the baton be passed. As God said once upon a time –
Moses, you are the right person to take my people from Bondage and Egypt, BUT you are not the right person to take them to the Promised Land – Joshua is…..