CEO: A Lonely Job

[Guillermo Söhnlein]

A while back, one of my mentors drew a mental picture for me as to why most first-time or prospective entrepreneurs want to be CEOs and yet *most* serial entrepreneurs who have been startup CEOs do NOT want the job again. I have since taken that mental picture, sketched it out, and used it in various talks. Never mind the spartan drawings (I never claimed to be artistic!), but I would welcome feedback/comments on the general principles.

First, we start with how most people view the role of the CEO. Generally, CEOs are perceived to be the senior decision-makers in an organization. They usually sit at the very top of most org charts, with everyone else (senior managers and staff) reporting up to him:

However, as most folks know, the CEO also reports UP to a Board of Directors, who in turn has a fiduciary duty to the company's shareholders and investors. Any entrepreneur who has raised money for a startup venture knows all too well that the burden imposed by serving outside shareholders and dealing with Board oversight can be quite imposing. The CEO splits most of his time between managing the company and pleasing his Board and investors.

Of course, that is not the only burden on the CEO. After all, a for profit business must acquire and service paying customers, which usually requires a new venture to create relationships with various partners. Again, in an early stage business, the CEO usually spearheads these efforts and regardless must ultimately be accountable to his customers and partners. At this point, you can probably see where this is all leading, as the burden on the CEO becomes greater and greater.

Finally, the CEO must deal with two other groups: his advisors (both professional advisors and more informal Advisory Board); and the general public. On the latter, the CEO is almost always--but especially in a startup--the public face of the company. As such, he must be vigilant to promote the venture during good times and to protect it during bad.

What does all of this add up to? Well, once a new CEO gets past the initial perception of power, fame, and glamor that seems to come with the official-sounding title, "Chief Executive Officer," he begins to feel a bit like he's caught in the cross-hairs of a sniper's rifle.

I realize that being CEO isn't ALL bad. However, it certainly is not for everyone, and it is not, as they say, all it's cracked up to be. I'll end this with one of my favorite stories that illustrates my point:

I have a good friend who is a very successful serial entrepreneur. A few years ago, he joined up with four friends--who were also very successful serial entrepreneurs--for the purpose of starting a new venture. They had all raised money from investors and returned handsomely on their investments. They had all been CEOs, but had each taken a different career path to get there (my friend had a background in finance, and the others each had experience in sales, operations, marketing, and technology, respectively). They figured that together they had to be the absolute best startup management team a VC had ever laid eyes on. While I certainly agreed with that assessment, I had to ask the obvious question, "With so many seasoned startup CEOs on your team, how did you decide who would get to be CEO of your new venture?" He laughed and said that none of them wanted the job, so they had to draw straws. The loser became CEO.

And on that note ... I'd welcome any thoughts, comments, feedback, or--even better--personal war stories!

[Brendan Philip, Esq.]

Guillermo, as a young attorney working in private firm, I am slowly becoming familiar with the business structure of the firm while trying to focus on my primary objective; learning how to practise law.

While I don't have a question or comment specifically related to the desirability of being a CEO, I do appreciate your taking the time to illutrate a basic view of a corporate entity.

Brendan

[D Alan Eastwood]

As a three-time entrepreneur, and having held several intraprenuerial positions over many years in a rapidly growing bank, I invented every position I ever held and moved into each one very intentionally. As a result, I loved the leadership roles I chose for myself, and I exceeded the goals for each mission for that reason (and also, of course, because of my supportive "sponsors"--those who hired me, backed me, and allowed me to follow my drummer). I enjoy working to achieve a vision, which means serving all constituencies with enthusiasm and respect. One must love what one is doing. I would not want to work for or invest in a company headed by a CEO selected by drawing straws! In my experience, the CEO role requires a unique personality: part "maven," part "relator," and part "evangelist." With a competent CEO, everyone wins. With an incompetent CEO, everyone loses.

[Guillermo Söhnlein]

Alan,

To your point, there is a postscript I should add to my friend's story: their startup never even got started. There were a variety of reasons for it, but I'm guessing that the primary one was that the CEO who was reluctantly thrust into the job by drawing the short straw wasn't really motivated to lead effectively. ;-)

Guillermo

[D Alan Eastwood]

Guillermo,

With respect (pun intended) to your friends, any one of them might have been an excellent CEO at a stage beyond start-up. The one-for-all-seasons CEO is rare, as you know.

Leonardo da Vinci was renowned for his ability to take a spark of inspiration and carry it all the way to full implementation, with the backing of patrons and the help of assistants. Yet, some of his grandest plans crashed on the launch-pad and even more went unfinished.

I saw a good definition of the entrepreneurial personality just recently: a person who can jump off a cliff into a lake through fog without doubting the success of the dive and with no need for applause.

Alan

[Minky Kernacs]

I agree that everyone dreams of being the one in charge, the top guy, etc… not knowing the mental stress the position entails. The only thing employees see is the CEO seemingly have a great time in a beautiful big office.

Having started my own startup a few months ago, of course, I was the CEO :) since I am the brains behind it. How could I let someone else run my baby that I put so much work, sacrifice, and effort in to? Well, I’ve found that not only does a CEO need smarts, they also need extraordinary people skills and a magnetic personality. They don't need to know the details of the code or the part numbers, they know the business and industry in depth and have a killer exec team to keep them informed. They know how to effortlessly interact with and win-over investors, press, and customers along with motivating the employees on a regular basis. There’s a great deal of personal introspection and realization one needs to do in order to decide whether to let go and allow the company to succeed, even if you’re not the face of it or simply go for it. It all depends on what you want and where in the organization you fit.


At the end of the day for me, I could have been the CEO of a faltering start-up or part of the executive team in a fast moving, successful venture… I have happily demoted myself to President / CTO & SVP of Coffee.

[Diane Kulisek]

I have started a half dozen ventures over my career and only one had investors. I can tell you that it was a very intimidating burden to bear accountability for OPM. What has always driven me to initiate businesses has been my creativity and the sense of freedom to be creative. I find this gets quickly stifled, though, as the pressures you have so succinctly represented emergy and intensify. There are two others that might add a third dimension to your diagram, though, making it more of an implosion than a target. These are the pressures of 1.) building and maintaining effective relationships with one's personal friends and family, while sustaining a quality of life to which they (and you) have become accustomed and 2.) realizing the full extent of the regulatory and/or legal requirements with which a new venture must comply and mobilizing the resources and efforts required to achieve that compliance. Item 2. is especially true for medical, pharmaceutical, nutraceutical and biological innovations, or combinations thereof. Aerospace has always been subject to government regulation, often military oversight, and the innovations pertaining to space exploration are no exception. It's just that regulations in aerospace tend not to get too heavy-handed until you want to get something literally "off the ground".

[Thomas Meylan, PhD]

When I got to the crosshairs I just cracked up. CEO life isn't merely lonely, it's downright dangerous.

This treatment of yours inspired me to do some thinking. I've posted the resulting MP3 programs (3-4 minutes long) at the following locations:

Team Building for CEOs

Turning Stakeholders into Collaborators

Trust Building for CEOs

Vision Building for CEOs

Thanks for the inspiration Mr. G.

[Alexis Wilke]

Hi Guillermo,

This translate pretty well to politics too. Anyone here who would want to be president of the US?

I think, however, that outside of the power that you definitively get, there are good reasons to get the position. As Minky noted, if it is your own creation, of course you want to be in control, whatever it takes.

Now, if you have been able to get the VCs to invest in you, it seems to me that you are in control of the VCs. Now it is true that at times the board and the VCs do not work together sufficiently creating a lot more pressure. Plus, at times, the CEO attempts to please the VCs falsely. Thus, later, when you need the 3rd round of money... it's much harder to come by.

I think that the CEOs who succeed best are those who are more open and more aware of the downside of not being 100% truthful. Can the president of a country follow that scheme?

Alexis

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