As a business grows from idea to an organization of impact (changing the world) - there are 3 leadership roles that shape the organization: Founder, CEO and Board Chair. In some rare instances, the founder becomes the CEO and Board Chair. It's not necessarily a "badge of courage" or "exceptional leadership" to do so. All 3 jobs are quite different. Knowing yourself - your skills, your passions, your values - provides deep insight regarding whether you're well suited for more than one of these roles. Below is a summary of all 3 roles:
The Founder. Being a founder is about being driven to put something new in the world. It’s an act of creation, of irreverence, of defiance and of hope. Being a founder is both one of the greatest jobs and the most difficult jobs of all time. Here's the great part: you get to create something that matters to you, and to attract great people to join you in making that creation mean something. If it works, you make money for yourself, your team, and your investors: the people who back you and believe in you. If it really works, you change the world. The difficult part: you're creating something from nothing. Sharing your vision, finding the first customer, and validating your business model are challenging enough. Attracting great people when you have only a vision to offer is nearly impossible. A founder, especially in the early days, is the soul of the company. The founder is the initial spirit and visionary who sees an opportunity in the market that few people around them can see. And even though your card says CEO, the organization really needs your founder magic to get off the ground. Of everything you do as founder, there are a few areas that are the most important.
- Evangelizing - The job that never stops, you have to constantly convince everyone to be a part of your vision. You use energy, charm, will, tenacity and anything you have to convince people that what you are building is special. Most tiring of all, you are the emotional leader for the entire team.
- Driving to Product Market Fit - Getting to product fit is all that matters and your job is to do anything it takes to get there. Changing the team, the product, direction, to the point that people think you’re crazy just may be part of the game. The product is all that you have, which means it takes a significant majority of your magic, until it clicks.
- Hiring Carefully - Until you reach product market fit, focus on hiring roles that actually make your product better. Hire carefully, piece by piece.
- Finding Capital - This role never goes away, even when you are a CEO. Spending before you have the money is a path to bankruptcy or investor terms that no longer make it your company.
The CEO. Should your venture take off, you become something else that crowds out the founder role with its demands on your time: CEO. Soon the creativity that got you into this gives way to something more structured. The CEO job is a lot different than founder. It’s about focus, scale, and execution. It’s mostly about not doing new things, and picking the few new things to do which are really going to matter. It takes judgment. It’s about hard decisions, sometimes lonely ones. It takes courage. You need to become a leader to people who are your peers or your elders. It takes self-awareness, humility, empathy, and intellectual honesty. As you attract more employees, more shareholders, more customers, and more capital, you have to decide where to go with it all. It takes endurance, perseverance, and a profound sense of duty. What works as a founder (to lead by example), has the opposite effect when you are the CEO. An effective CEO leads not by doing, but by inspiring, enabling, and holding people accountable. Everyone has a slightly different definition, but I have found the following to be key areas of focus:
- Leading - Doing the work yourself is easy. Enabling your team to do better work than you is painstakingly hard. Giving direct, consistent feedback is important to getting the most out of your team. No longer a hub and spoke model, the best CEOs are objective, critical, and people focused.
- Thinking - Different from being a founder, thinking is valued over doing. No longer in the weeds, you should be designating significant time to understanding and thinking about the businesses. CEOs work "on the business" not "in the business."
- Evangelizing - Still important, this role shifts from one-on-one belief building to evangelizing at scale. While your personal touch still matters, the quality of your time with individuals over the quantity of the time you spend is the biggest change you have to make.
- Prioritizing Relationships - The people you spend time with are completely different. Being a real CEO means your leadership team and your board members take the majority of your time.
- Capitalizing - A never-ending proposition, ensuring the business has enough capital is one of your sole jobs. Spending time with investors and potential acquirers, lays the ground work for future transactions.
Board Chair. As the company scales, the board becomes more important. Board meetings that were an afterthought in the early days, become more significant moments of actual governance: real board meetings. The board expands and the amount of capital invested increases. Stewardship of the company, matters of strategy, whether to sell or go public, whether to raise more capital or not, whether to buy a company or not, how to align incentives, and how to take a group of disparate people who put in money and make them into a team in their own right: these becomes your new challenges. You become the leader of the shareholders, or more precisely, the leader of the people who report to the shareholders. They call this role chair of the board. You are the architect of the company balance sheet, a keeper of the company vision, and an ambassador for the company to the investors and the wider world.
It's a very hard the transition to move from Founder to a CEO. Being a CEO is a completely different role from getting a company off the ground. The journey of becoming a CEO is even lonelier than being the CEO. Few people know how to teach it and even less think about developing you. Quite often, the people that saw you as a founder aren’t always ready to see you as a CEO. It's an even more difficult transition to Board Chair.
As the Founder, every hire and every decision that the company makes is under your direction. If someone is promoted for all the wrong reasons, it's your fault. If you miss the quarterly earnings target, it's your fault. If a great engineer quits, it's your fault. If the product has too many bugs, it's your fault. If you manage a team of 10 people, it’s quite possible to do so with very few mistakes or bad behaviors. If you manage an organization of 1,000 people it is quite impossible. At a certain size, your company will do things that are so bad that you never imagined you’d be associated with that kind of incompetence. Seeing people fritter away money, waste each other’s time, and do sloppy work can make you feel bad. And to rub salt into the wound and make matters worse, it’s your fault. Then - of course - a "professional" CEO is hired that comes in and blames all of the problems on the prior regime, you're reminded it was your fault.
If you choose to make the transition from Founder to CEO, just remember that things will go wrong. Things go wrong, because building a human organization to compete and win in a dynamic, highly competitive market turns out to be really hard. Nobody sets out to be a bad CEO, run a dysfunctional organization, or create a massive bureaucracy that grinds their company to a screeching halt. Yet no CEO ever has a smooth path to a great company. Also remember that focus, execution and communication are your most important tools. Focus on what matters to the overall business; make the hard decisions and execute; and communicate clearly - over and over and over. Finally, remember that you live in a glass house - at a time when every gesture and utterance can quickly be shared through social media, small gaffes can cause major harm to your organization. You may have opinions (on the state of the world, politics, etc) - but most of the time, you keep them to yourself and focus on the business.
Becoming a CEO is the greatest leap that an executive can make in his or her career. What makes it such an extraordinary transition, of course, is the complexity of the role and the skill that is required to manage that complexity successfully. Over the years, I have found that mediocre CEOs point to their brilliant strategic moves or their intuitive business sense or a variety of other self-congratulatory explanations. The great CEOs tend to be remarkably consistent in their answers. They all say: “I didn’t quit.”
At some point, you may wish to become the Board Chair. In this role, always remember you are both the leader of the shareholders and the leader of the people who report to the shareholders. You are the architect of the company balance sheet and an ambassador for the company to the wider world. Your work largely involves the communication between these groups and ensuring you are a good steward of these resources. A very important job - but almost the antithesis of the Founder. You're preserving, not disrupting. You're a keep of the vision, not the creator of the vision.