You are Not the CEO | Hacker News Reader

You are Not the CEO

jacquesmattheij.com

93 pointsjacquesm54 comments

Investors want a CEO. You can't tell them "we're co-CEOs" or anything other than "X is the CEO" or they'll think you have a problem. They'll fear a power struggle could cause instability. It's a red flag.

Larry/Sergey were co-leaders (co-presidents or co-CEOs or something). I think it's actually the ideal case where two people are equally capable/willing to be the public face and big-decision maker. Tell that to investors though.

On a personal basis there are real benefits to having the title CEO. If you were CEO of a successful company you have real credibility with press and investors. If you were CTO or COO you're going to be seen as 5% as important. When it comes time to raise money for a new venture or to talk to the press they're much more interested hearing from The Head Guy.

It all depends on the stage you're in. When you are just out of the gate, building a product and getting your first customers having titles is silly.

At a later stage it makes good sense. Whether or not 'investors want a CEO' depends on a lot of factors, the most important one being what stage the company is in, as soon as you incorporate you'll need a 'signing officer' (or two, or three, depending on the law), and maybe one of the people in the company is preferred for that role and so a natural transition from co-founder status to a CEO role is established. Don't be surprised if the guy that ends up in that chair is not the guy you originally envisioned.

There are lots of situations in which investors don't want a CEO. Two co-founders looking for seed capital are going to have a problem getting themselves taken serious if one of them labels himself CEO and one of them labels himself CTO. Too many chiefs, no Indians.

Agreed that having 'two captains' is not ideal, but should there be so much conflict that this is a problem the titles don't matter much. When your 'other half' walks out you have a problem regardless, and a title used to force an issue is not going to help in this respect.

Finally, the title of CEO of a successful company is useful when starting a new company, it becomes part of your track record, and a successful company will have a CEO, but you first have to get to that stage. And a good CTO is just as valuable as a good CEO, to weigh the role of CEO as fully 20 times as important as that of the other co-founders is not at all in line with my experience.

I disagree with you. It seems there are two simultaneous things happening, and you are unfairly dismissing both.

The attitude you're calling out is, as you rightly mention, harmful to a startup. Anybody who refers to themselves as the "CEO" in internal discussions early on has a problem. You're right -- everybody in a startup does as much of everything as they can.

However, as the commenter above pointed out, there is another important function being played while handing out titles early -- establishing a basic leadership structure -- and this is vital.

Being on top of the leadership structure doesn't mean you sit around and order people all day, or refuse to do work; both of those would be the hallmark of a horrible leader. The leader is someone who takes ultimate responsibility and who has the final call in all decisions (should it be necessary).

Early on, that might not really show up much. A good "leader" would be the person who makes sure the little things get done and on time, like prioritization meetings, or helping to hold people accountable if/when they are underperforming (both of which can be unpleasant). Early on, a good leader would recognize that it would be horrible to exercise any kind of overriding call as consensus is better in a very small group.

Over time, however, having a clearly defined leader from the beginning helps in the outwards presentation of the company (to investors or prospective employees) and, most importantly, prevents the company from failing to due a power struggle or a misunderstanding of the leadership chain when it comes time to formalize it. I've seen it happen to several companies -- it isn't pretty, and is entirely avoidable.

You need a leader for one thing only at this stage, which is to break deadlocks, but it usually better in such situations to find outside counsel. I usually have someone on board specifically as a tie-breaker in the case of deadlock. In one of the companies I'm involved in the shares situation is exactly balanced so when we're deadlocked we ask the bookkeeper. Everybody gets to state their case, he casts his vote, we move on.

Having a 'clearly defined leader' is as good as having a single founder and a bunch of employees, you will never get the kind of teamwork and commitment from your co-founders if one of you starts to behave like 'the boss' until it is absolutely necessary.

The places where you see power struggles are those places where decisions are not made on their merits. Attempts to force such decisions usually backfired, and as you say, it isn't pretty.

Once you start taking on employees, or investors that ask for a clear corporate structure, you're probably at the right time to start to solidify those roles, so we agree there.

But that initial phase can last for a long time, and naming your 'CEO' too early can cause real problems.

I suppose we can agree to disagree then. Naming a "leader" early on does not mean that leader has to exert any kind of authority early on -- as I think we both agree, decisions should be made by consensus early and often.

To say that establishing a basic understanding on who will be taking the leadership roles early is somehow detrimental to the startup? I couldn't disagree more. Most companies I've seen out here (and I've seen quite a few as part of YC) have clearly defined who the "CEO" will be later, and it hasn't hurt them one bit, as long as that person is actual worthy of the position (and doesn't act like an idiot early on).

Your example that "Having a 'clearly defined leader' is as good as having a single founder and a bunch of employees" almost proves my point. If your team's motivation relies on them all imagining that they are the "CEO", you're going to have problems down the road. A good founding team should all understand their eventual positions from the get-go, and have no problem with that.

I think you're confusing someone being named "CEO" and someone behaving like "the boss". They may sometimes happen together, but I would not say they are correlated.

Founders should not get worked up about titles, though they often do need them as a matter of formality (e.g., the corporate law requires it) or as a matter of public positioning (e.g., third parties want a contract signed by the CEO) or as a matter of necessity (someone has to be the point person to sign contracts, government forms, etc.).

The unhealthy variation is where founders let titles get to their heads and screw up their perspective on who they are and what they are doing (the point of this article).

While the bad cases do happen, I would not eschew titles altogether, as they do play a helpful and utilitarian role in the early-stage companies and can even reflect the reality that some founders truly do have stand-out leadership and strategic-thinking qualities so as to merit the title CEO.

So, use the titles if you have to; just don't over-emphasize them at the start, or lose sight of what they mean, as this can and does lead to problems.

FWIW, certain legal documentation mandates the role of an "executive officer" or "president", but clearly those are mere formalities in companies of this size.

I've always preferred to keep titles quite "loose" (e.g. "Member of Technical Staff","Sales","Support", etc.) outside of "Executive Staff" and "Founder" since nomenclature eventually reflects expectations as the enterprise scales.

There are many good reasons for incorporating as late as you can get away with and for some situations, for instance, YC actively discourages people from incorporating before applying.

This also helps in a different way, it is much easier to reshuffle after the 'shake-out' period if you have not incorporated yet.

Interesting - any place I could read about the reasons? Thanks!

http://ycombinator.com/faq.html

Other reasons:

A founder may not work out, once he's got stock that's a lot harder to resolve (if you didn't include a vesting cliff, for which, again, there are reasons for and against).

Founders may find that they can't work together after all (personal differences).

There are a lot of things that need to 'find their place' when you start a company, and in my experience you only really know your relative positions after a couple of months of collective hard work.

Setting things in stone early can be problematic, costly or fatal.

I learned from this (surprisingly interesting MSFT history) that Bill & Paul didn't formalize even a simple partnership between the two of them, let alone incorporate for about the first 2 years, during which time MSFT was operating and bringing in revenue.

http://www.thocp.net/companies/microsoft/microsoft_company.h...

Maybe this is why Paul got screwed. ;-)

Net worth ▲US$13.5 billion (2010)[1]

http://en.wikipedia.org/wiki/Paul_Allen

So it'd be more like $20B if Microsoft had split the equity 50/50 instead of of 66/33. Ironically, Bill Gates's reasoning for the split was the Paul had taken a part-time job at MITS to pay the bills, but then Bill went and took a part-time job at MITS too after they formed the agreement.

Do you think its better to "find" a co-founder or hire somebody as first employee?

PG states that the idea number is 2 co-founders, but I'm still looking for a co-founder.

In the UK the paperwork of a LTD is the responsibility of a 'director' which is quite a handy nondescript indicator of general responsibility.

These are not mere formalities. Accidentally fail to comply with some bureaucratic governmental regulation? Run up a fine your company can't pay? It's the officers of the company who're going to be found personally liable.

At my startup, we give ourselves fancy titles, but we still wake up every morning and do the grunt work (who else is going to?). In fact, we rarely even notice that we have fancy titles.

So the titles are merely for outward appearances? I wonder if it wouldn't be seen as presumptious for a two person company to have a CEO. I'm employee #1, so I don't have this problem, but my employers certainly don't call themselves the CEO and the CTO.

There's a practical reason not to do this as well: it puts off investors. Investors think when you've styled yourself as CEO, "Shit, if we need to bring in a external CEO at some point this guy's going to cause problems."

Co-founder seems universally safer.

I don't think that's true of modern/good investors. I think most of them desperately hope they don't have to find an outside CEO. They want someone strong in the position, and ideally it's one of the co-founders.

I've heard it from multiple investors, good and bad. I think good investors naturally hope that one of the founders will pan out as a long term CEO, but they also don't want to be up shit creek if it doesn't happen.

Calling yourself CEO in a 2 person company is a common enough faux pax that I've seen it mentioned in several investors' blogs and it's one of the things they sit around and make jokes about when the startup's back is turned.

I'm genuinely curious who you're referring to. Making fun a haughty 22 year old CEO makes sense, expecting that one of the founders will likely not be the CEO doesn't.

"If you don't have anyone on your founding team who is capable of being CEO, then sell your company -- now." -- Marc Andreessen

I know Art of the Start from Guy Kawasaki mentions it -- I thought it was in his blog too, but I can't find it at the moment. Here are a couple more:

http://venturehacks.com/articles/top-heavy

http://www.beyondvc.com/2006/06/topheavy_teams.html

I've also heard this in private conversation (specifically, the first time we met with a VC before promptly ditching the titles) and a couple of the speakers at YC in our batch mentioned it.

That Venture Hacks article says "One of the founders should be the CEO so you can make decisions quickly."

Anyway, I'm sure it varies. I really am curious what top investors think though. Does Ron Conway think less of you for telling him "I'll be the CEO and he'll be the CTO" assuming you're not arrogant/lame about it?

He certainly didn't when we were pitching him...

I encourage my clients (mostly small businesses) to embrace the CEO tag, but to view it as a function or role, not a title.

In other words, you might be CEO 20% of your time / one day a week. Another 20% of your time might be Sales Manager or Code Monkey. All are necessary roles, none is more essential than the rest.

FWIW, we then define the CEO role as having three tasks: Managing the company's vision, Managing the company's energy, and Coaching the team to up their capability. This encourages small business owners to think and act strategically, even if only with part of their time.

That makes good sense.

Do you view the role of CEO as tied to a specific individual?

Yes, but largely because the responsibilities are few. Many common CEO responsibilities (particularly reviewing financials and signing off strategy) may be done by other directors / partners etc.

Where relevant, we also encourage clients to consider rotating CEOs. It's something we've done in our coaching company (which is large enough to have a full time CEO), and it means the role of CEO isn't the pinnacle, subject to office politics and power trips, and that post-CEO our coaches find other ways to contribute within the company (including going back to business coaching operationally).

A painful lesson we learned (2 men startup) is that you can't be co-managers.

While I coded, my co-founder was out making deals. I would sometimes help and after two occasions where I agreed on something (rather small) but that collided with something he agreed, we had to stop.

Now, all major decisions are made by both of us with lengthy discussion.

All small decisions (technical for me and biz for him) are done by one side. We can't afford to go go into a 2 hour discussion and can't afford conflicting decisions.

Call me CTO/VP-RND/Programmer, call him CEO/Presiden/VP-Dev/Sales-Guy. But the roles are clear when it comes to making decisions.

And yes, the CTO does wash the floor and the CEO buys the coffee filters and toilet paper.

I remember we had a slightly painful meeting when there was 4 of us and it was clear who the best candidate for CEO was - and it wasn't one of the founders. I even said the "you aren't going to be CEO he is" to my co-founder, which I don't think he ever forgave me for (although we went on for another 6 years after that).

That was probably the single best decision I made at that company. Once we got that out of the way we kind of all knew what our areas of responsibility were, before that it was "everyone does everything".

That happens far more frequently than you may think. Kudos to you and your team for recognizing this (ok, reluctantly in one case) and acting on it.

Counterpoint. As long as you don't let these titles get to your head, its fine to have these titles. There are upsides to it.

First, you start behaving like a real company. A real company has CEO, CTO's etc. The sooner you start behaving like a serious company, the better it is for you.

Second, your customers know who is who. It gives them a clear idea of whom to go to, to ask for. If he asks for a sales guy, then its CEO, Tech support, CTO and so on.

There are downsides to it too. But as long as people realize that they have to handle everything in a 2 person startup no matter their title, its fine.

I don't think there are any upsides at all, you are basically as realistic here as kids playing house, if we call the couch the living room, we have a house. But it's still play-acting, and the couch is still a couch. CEO is what you may want to be, but before you can do that you first need to become a company large enough to warrant one.

Just like the cargo cult people try to build planes by laying out trash in the shape of one you can try to build a company by 'imitating' the structure of one but that isn't going to work, you have to imitate the core activities of a company to become one.

Behaving like a real company means making sales, getting satisfied customers, building a product, dealing with challenges and making money.

It's not going to happen by having a perspex thingy on your desk that says 'John Doe, CEO'. It also implies that you and your buddies are not 'self-starters' and that one of you is calling the shots, when in practice co-founders in most successful startups (not all of them, so this is not a hard rule) achieve stuff by working together, not by ordering each other around.

If the 'sales guy' is out of the office who is going to take the sales call ? The CEO ? Surely not, it's no longer his job.

Having people realize that they have to handle everything in a two person startup is exactly what this is all about, the effect of a title is more than just decorative, it changes the position the person with the title finds themselves in, it reduces their mental flexibility to the point where they no longer realize they have to handle everything together.

See the article here that I linked for a fantastic example of that.

Completely agree. You're not worth the prespex if you allow the title to reduce your mental flexibility. However if you let the prespex sink in and take responsibility of the company, of doing what it takes to make sales, getting satisfied customers, building a product, dealing with challenges and making money, you've got that 90% inspiration thing going. Now you need that 1% perspiration.

The quote is 1% inspiration, 90% perspiration. (or 99%?).

There you go!

> Titles are for insecure people that need to have their egos re-inforced...

Can't agree more...I'm glad I got over the need for titles with my first (and maybe second) girlfriend(s).

I can't think of a time when my cofounder and I will prefer our actual (read: legal) titles as opposed to "co-founder". I suspect it would come when some external pressure starts demanding it, a la board meetings and VCs.

Well, titles can be pretty important if your startup doesn't work out and you end up needing to go join the work force again. Being the CEO of a company of 5 people isn't a big thing, but it's better than being "Junior developer" at one.

For a 2 man company, "co-founder" is perfectly appropriate for email signatures to most recipients.

We put "Founder" on it. Does this make a difference compared to Co-Founder (I'm not a native english speaker)?

Founder is fine, co-founder is too. Co-founder automatically conveys that you are not a single founder, with just 'founder' someone might infer that you were either first or the only founder. It doesn't matter much in practice, either is fine. It distinguishes you from a regular hire and it is clear that you can be addressed with any issues.

I am about to start a "Sole Proprietorship" to do some VoIP consulting and system integration. I have had 2 clients before this, but I was just getting my foot in, so I didn't have a "Company Name". I am glad this came up on HN. Would 'Founder' be the most appropriate title on my biz card?

For a one-man shop, I'd just skip the title entirely. The only downside is potentially someone seeing just the card wouldn't know if you have the authority to do deals, but I really doubt that would be an issue with a consulting shop.

In the company I co-founded, for the longest time the business cards of me and my three co-founders said just that: "Co-founder." Once we were to a good place and were profitable (and the REAL work started), action items began to fall by the wayside, despite the proficiencies we all knew we had (you've heard the phrase "if everyone is responsible, then no one is responsible").

Internally—not to anyone else—we designated CEO, CTO, CMO and COO designations. It wasn't about titles, it was about a mindset; that's when things started getting done again. It wasn't about ego at all. It wasn't about getting off from having a title on my business card (in fact, we didn't re-print new cards because we didn't want to spend money on new cards, hah!).

Our decision was about highlighting our proficiencies and giving each other the power to take ownership of different aspects of the business we owned together. We could give a shit if people were impressed with a title on a piece of paper.

That sounds about ideal, a gradual and natural transition to formal roles after building up a track record.

For the startup I founded, I prefer Tech Support Lead. It's more reflective of the day-to day. :)

Hehe, that's really a neat way of putting it.

Personally I like 'janitor', it has many subtle implications.

I once wanted a business card that read:

CEO, Janitor, Marketing Director, Coffee Maker, Architect, Tech Support, HR, Snack Purchasing Agent

But to your point: If a company is a corporation, than someone is CEO; it doesn't matter if the corporation is 1 person or 100. But I agree -- the main thing is that titles don't get in the way of the work to be done.

Awesome. Except it'll mean you'll have to lie on your cv when the startup tanks and you need a job to pay off your credit cards...

Titles can be important for dealing with clients. Many organisations won't even give you time on the phone unless they see that you're a 'Managing Director' or 'VP of Sales'. If you impress your client with your product, you'll inevitably get a chance to present to their superiors, and it helps a bit if your contact doesn't have to introduce you as 'the guy that does this stuff'.

Of course, as has already been said, it's important to remember that these are just titles: they don't change your work or what you're trying to do.

When you go on an interview and say you were CEO of acme co 4 employees or VP of product at Microsoft they will know the difference. I've always thought your a "CIO" but my project manager has a bigger budget and more responsibility. People know this. No harm in giving yourself a flashy title. Good on you CEO's of 2 man companies!!

If you really need a title, make it "Quality Inquisitor", "Grand Vizier of Partnerships", "Priest of the Council" or "Czar of All Servers".

That will, at least, make it clear how seriously you take the titles.

If it's a two-man company, one can be the CEO and the other the Chairman of the Board.

Great post, Jacques.

I prefer "Lord Master of all I Survey" It leaves the immediate impression that if you're looking for titles, we can give you one. I understand that this gives the impression that I don't take the duties of the job seriously, but in fact what it's saying is that I don't take the competence of the questioner seriously.

Yes, investors want a CEO. We can't just have chaos, barbarians at the gate, or nobody to put in a suit. But to your point, if there are 2-4 of you in a team trying to find a market, you shouldn't be spending a millisecond worrying about who has which title. This is the organizational equivalent of premature optimization.

Or look at it this way -- before profit, before sales, before working product, how do any of you have any idea who might be better at doing what?

You don't know. Just be honest about it.

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