Nearly every entrepreneur I have worked with is highly and irrationally concerned about losing control of their company if they bring in investors. They have heard horror rumors about entrepreneurs being left out in the cold by greedy VCs. I used the term "horror rumors" instead of "horror stories" because the latter term would imply that there is even a wisp of truth behind them, which there is not.
You heard that right: There is absolutely no truth to the rumor that effective entrepreneurs get pushed out by investors.
To prove this point, here is a challenge I throw down to all readers of my blog:
Name one instance of a tech company that reached national prominence through VC investment and in which the original entrepreneur was pushed out by the time the company "hit the big time."
To help you out, I will list a few of the cases in which the original entrepreneur(s) did remain at the helm (CEO, President, Chairman, etc.) as the company grew monstrous, went public, etc. These are the biggest names in entrepreneurial business success, some of them going back 50 years. VCs were involved in most, but not all of those listed below, although massive outside investment was involved. I have included a range of types of companies for your reading pleasure.
Microsoft (Bill Gates), Oracle (Larry Ellison), Google (Sergey Brin), Twitter (Jack Dorsey), Wal-Mart (Sam Walton), Facebook (Mark Zuckerberg), Dell (Michael Dell), YouTube (Chad Hurley), MySpace (Tom Anderson), Starbucks (Howard Schultz), Nike (Philip Knight), Digital Equipment Corporation (Ken Olsen), Best Buy (Howard Schulze), Apple (Steve Jobs), Amazon.com (Jeff Bezos), McDonalds (Ray Kroc), Cisco Systems (Len Bosack), Intel (Andy Groves), Research in Motion [Blackberry] (Mike Lazaridis), Wikipedia (Jerry Wales), Outback Steakhouse (Chris Sullivan), Turner Broadcasting System (Ted Turner), Sun Microsystems (Scott McNealy), Netscape (Marc Andreessen), Silicon Graphics (Jim Clark), FedEx (Fred Smith)Yahoo (Jerry Yang).
Note that in the last case Jerry Yang was forced out more than a decade after the company hit the big time, but the CEO position is never a lifetime guarantee at any major company.
So what are you afraid of? Go out and get the money!
Wednesday, January 13, 2010
Hiring a CEO Part 2: Who to Look For?
I have consistently seen that an absolute requirement for a startup CEO to be effective is to posess and deploy high-level sales skills. If the original entrepreneur is the CEO and does not have effective sales skills, then he or she must at a minimum perform the sales function of recruiting someone who does have these skills. Usually the entrepreneur will need to convince that person to come aboard for little or no salary.
Sales skills are required long before an entrepreneur is ready to sell his or her product. Primarily, I am referring to the application of those skills in the task of raising capital. Make no mistake about it: Raising capital is a sales function. And a highly complex one at that.
The personality traits required as the bedrock for effective sales skills are:
1) self-confidence
2) an outgoing personality
3) an energetic drive to accomplish goals
In seminars I have often told groups of aspiring entrepreneurs about the above requirements. Then I tell them this: "If you do not posess this personality then go out and get it." I mean this literally. Either change your personality or hire someone with this personality. Either option is feasible with enough willpower.
There are numerous books and courses on the topic of self-confidence, people skills, etc. and they really do work of one really wants them to. One well-known example is the Dale Carnegie books and courses. If necessary, this would be time and money well-spent. The answer to the question asked in the title of this post: "Hiring a CEO, Who to Look For?" may be YOU.
Sales skills are required long before an entrepreneur is ready to sell his or her product. Primarily, I am referring to the application of those skills in the task of raising capital. Make no mistake about it: Raising capital is a sales function. And a highly complex one at that.
The personality traits required as the bedrock for effective sales skills are:
1) self-confidence
2) an outgoing personality
3) an energetic drive to accomplish goals
In seminars I have often told groups of aspiring entrepreneurs about the above requirements. Then I tell them this: "If you do not posess this personality then go out and get it." I mean this literally. Either change your personality or hire someone with this personality. Either option is feasible with enough willpower.
There are numerous books and courses on the topic of self-confidence, people skills, etc. and they really do work of one really wants them to. One well-known example is the Dale Carnegie books and courses. If necessary, this would be time and money well-spent. The answer to the question asked in the title of this post: "Hiring a CEO, Who to Look For?" may be YOU.
Wednesday, October 07, 2009
Hiring a CEO, Part 1: What to Look For
Some entrepreneurs, investors, or board members may think that it is necessary, in the earlier stages of a company, to hire a person with a "marquee resume" to handle the CEO duties for the company.
As an entrepreneur, you need to be sure that you, your investors and your board are fully informed of what to look for when hiring a CEO for a startup. Very often I have found that there is little understanding of this. This is evidenced by the fact that many times young companies are willing to make such a hiring decision based mostly, when it comes right down to it, on a resume.
It is important to realize that previous success as a member of a large organization does not indicate future success as the CEO of a startup. A startup CEO must be high-functioning in a wide variety of business disciplines, especially in implementing effective sales processes. (more on this last point later) Large organizations hire for specialized skills and tend to cultivate those skills. It is very rare to find someone from a large organization with deep experience in finance, sales, marketing, engineering, manufacturing, human resources, and especially in raising investment capital as a startup.
All of these functions are extrememly critical for a startup CEO, as is the ability to multitask, be highly observant, be able to make accurate predictions based on trends and instincts, be highly driven to success, and to be goal oriented. A startup CEO must be willing to handle intense situations and stress, take risks, work for years at reduced salary, jump on a plane across the country at a moment's notice, and spend long stretches on the road with little sleep. He or she must be a consumate networker, motivator, and "people person." On top of all of this is honesty, integrity, rational decision-making (as opposed to emotional), and lack of hubris.
When your young company interviews for a CEO, ensure that you ask the candidate what qualities are necessary for the position. If the candidate does not respond with the above, or something very similar, it is probably best to let that candidate learn on someone else's dime.
As an entrepreneur, you need to be sure that you, your investors and your board are fully informed of what to look for when hiring a CEO for a startup. Very often I have found that there is little understanding of this. This is evidenced by the fact that many times young companies are willing to make such a hiring decision based mostly, when it comes right down to it, on a resume.
It is important to realize that previous success as a member of a large organization does not indicate future success as the CEO of a startup. A startup CEO must be high-functioning in a wide variety of business disciplines, especially in implementing effective sales processes. (more on this last point later) Large organizations hire for specialized skills and tend to cultivate those skills. It is very rare to find someone from a large organization with deep experience in finance, sales, marketing, engineering, manufacturing, human resources, and especially in raising investment capital as a startup.
All of these functions are extrememly critical for a startup CEO, as is the ability to multitask, be highly observant, be able to make accurate predictions based on trends and instincts, be highly driven to success, and to be goal oriented. A startup CEO must be willing to handle intense situations and stress, take risks, work for years at reduced salary, jump on a plane across the country at a moment's notice, and spend long stretches on the road with little sleep. He or she must be a consumate networker, motivator, and "people person." On top of all of this is honesty, integrity, rational decision-making (as opposed to emotional), and lack of hubris.
When your young company interviews for a CEO, ensure that you ask the candidate what qualities are necessary for the position. If the candidate does not respond with the above, or something very similar, it is probably best to let that candidate learn on someone else's dime.
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