Founder and CEO: two distinct roles in a startup
By Early Metrics Team - 31 March 2021
The life of a business goes through different phases, which do not all require the same management skills. A startup is often the result of a vision, an idea or a desire to do better than what exists. This initial vision is carried by one or more founders, who will surround themselves with skilled supporters from their professional and personal spheres. The types of people brought on board can change as the project expands, to fill in skill gaps within the team.
These skills can of course concern operational aspects: tech, product development, sales, marketing… But they can also touch the very heart of the startup when it comes to challenging the general management strategy.
You often have the creator-visionary who gives birth to the idea and generates the initial momentum for the project; and on the other hand, the operational manager who enables the project to develop and scale sustainably. These two roles require different sets of competencies, so they don’t necessarily have to be filled by the same person.
Who is the founder?
A startup founder is a person who, one day, said to themselves that their idea had to become a business. Their belief and drive must be such that they are ready to fully commit to their idea and make significant sacrifices to see it become a reality.
Founding a business requires a certain amount of courage and ambition. It also entails a medium-term vision that allows you to imagine your own future and that of your family and/or close collaborators.
Not everyone is able to found a business. Regardless of their skills, the founder is above all a passionate person, with low risk aversion and high adaptability. Their thirst for freedom must be such that it leads them to write their story their way, based on a clear vision and idea.
Who is the CEO?
The CEO is the person in charge of the day-to-day management of the company in the broadest sense. This orchestra conductor must be able to recruit, sell, buy, monitor performance, negotiate with funders…
Their management skills are essential in order to guarantee financial stability. They must also be able to define and apply company-wide strategies. Finally, the CEO is expected to have the managerial skills to get the best out of their employees by encouraging them to surpass their own skills and lead them to excellence.
This position, therefore, requires leadership and strategic skills, as well as a certain charisma to unite teams over long-term missions.
From founder to CEO: a natural transition?
The terms ‘founder’ and ‘CEO’ are often used interchangeably to refer to the person running a startup. In reality though they are two distinct roles that don’t necessarily require the same profile.
Sometimes the transition from founder to CEO can happen naturally. As the team is confronted with management issues, a profile with more managerial skills can emerge internally. Jeff Bezos is a good example of this. At Amazon, he played the roles of visionary founder and CEO for 26 years, before stepping down in February 2021. No one can deny he was successful in both, leading Amazon to become one of the largest global tech companies.
However, some startup founders don’t have the management and leadership skills to become CEO. We could argue that was the case with WeWork as its founder Adam Neumann showed he lacked some of the necessary skills to take his company to the next level when he attempted to list it publicly. As the company came under increased scrutiny, he was then pressured into giving up his position as CEO.
How to find the right CEO for the future of your startup
Some founders could benefit from bringing in an external profile as CEO, even at a late stage in the project. Finding the right CEO at the right time is a delicate operation that touches the very heart of the startup. On top of the required skills, the aspiring CEO must be compatible with the founding team and their ethos.
This search can feel like looking for a needle in a haystack. It can be done through venture capital or CVC funds. Indeed, aside from their financial support, they can advise on how to make the management strategy evolve. But what if the startup has not built relationships with investors? The founders can seek help from companies specialising in the recruitment of executive profiles, particularly at top management level.
Patrick Mataix, founder of Vistaprint and then founder of CEO Worldwide, has turned this difficult endeavour into his profession. “I created CEO Worldwide in 2001, after experiencing the frustration of the gap between the services offered by headhunters and consultants, and the urgent international problems I had to face, requiring reactivity and flexibility. To date, our international team has completed more than a thousand high-level executive search assignments for all types of companies and sectors in over 70 countries.”
The benefits of introspection
As Tomasz Tunguz, Venture Capitalist at Redpoint, points out, the trend is currently for startup founders to remain as CEOs for longer. Nevertheless, we believe it’s beneficial for entrepreneurs, founders and CEOs to take time to reflect. And for the sake of their company, they shouldn’t shy away from this tough but key question:
Who will be the best-suited person to lead my company tomorrow?