The Founder/CEO of a tech startup I’ve been following for a while caught me off guard the other day. This is not a company in which I’ve invested, mainly because its activity falls outside our fund’s investment sweet spot. Yet it’s a compelling venture for VC backing given its robust and defensible technology that offers a myriad of lucrative applications. I am being deliberately vague here to maintain anonymity and will not name the company nor its Founder/CEO (whom I’ll simply refer to as “Mr. E”).
Anyway, despite being out of scope, I liked dreaming about the potential applications of its technology, plus there was something about this company’s highly technical founder that I found endearing, so I occasionally kept in touch with him.
During one of our recent catch-up sessions, the conversation took an unexpected turn when Mr. E said (paraphrasing here), “Mark, I want your advice here. I am convinced that we’re sitting on a ground-breaking technology. However, I am not sure whether I’m the best person to lead this company into the next stage of growth. What is your opinion, and furthermore, how would you advise I recruit a proper CEO?”
I was dumbfounded. Here was an individual who was a major shareholder in his company — one with proven product-market fit, some revenues, several employees looking up to him — rising up out of the weeds to look around and recognizing that his company might be better served having somebody else as its leader.
Mr. E was essentially accountable to nobody, yet now he was asking for a boss. My respect for him grew immensely.
Every rapidly growing company faces the question of leadership on a recurring basis. Deciding when to reinforce the team — especially with individuals deemed smarter, more experienced, or better suited to scale the company — can be a daunting prospect for a founder.
Thinking back to my life as an entrepreneur, I can relate. We think we can do everything. We have all the answers. We’re ambitious. We like the prestige of being the top dog. I certainly had thought that I had all the answers back in the day.
These traits stem from classic requirements for entrepreneurs: be obsessed over solving a market problem, have a product vision, pitch the company with confidence, inspire people to join in the adventure, believe despite the naysayers, etc.
However, the priorities required in scaling a company differ from those required in starting a company.
Even for founders that possess wide-ranging talents (and many good founders do), it’s unusual for someone to alter their personal interests and passions. Human nature is such that if you’re more passionate about creating a product than say, overseeing personnel recruiting and training, chances are that you’ll spend more time on the former, even if the company’s success requires mostly the latter at a given point in time.
It’s a delicate balance that entrepreneurs must walk: without undermining their entrepreneurial drive, find the perspective when needed to make a candid judgment on the management needs of their company.
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