An average of 514,000 startups were launched each month last year. Needless to say, that translates to over 514,000 individuals jumping into the US entrepreneurial waters each month. There is no doubt that these founders clearly have the passion and tenacity to start a company, but the question becomes are they naturally inclined to run a successful business from inception on.
Growth is inevitable in all successful business ventures. With growth comes the need to appropriately scale. While there are founders that have seamlessly transitioned from founder to true CEO, that is not the case for all. According to Ben Horowitz, Co-Founder and Partner of Andreessen Horowitz, the leadership dilemma that plagues many companies can be attributed to three specific situations:
The founder doesn’t really want to be CEO
The board panics
“I don’t want to be CEO”
Just because a founder starts a company does not signify that it is their intention to run the company. Many people enjoy the idea and the follow through of creating something new but at some point, that’s as far as it goes. Knowing this in the onset is critical especially because of the fact that the role of CEO is not only difficult to master but, it’s also not made for everyone. The skill set needed to lead a company takes time and practice to develop and most importantly, the desire to the take the reigns.
“The board makes a decision”
At a certain point, the board of directors will reactively need to make decisions. If a founder/CEO is underperforming or making poor judgements on behalf of the company, as unfortunate as it is, they will be replaced. Premature or not, if you are not getting the job done, they will find someone who can.
Ben Horowitz explains the Product CEO Paradox as “the only thing that will wreck a company faster than the product CEO being highly engaged in the product is the product CEO disengaging from the product.” As one would expect, the initial phase of building a startup is intensive and constant. A founder is involved in almost every aspect of the business making decisions every which way to help bring their idea or product to fruition. After some time and growth, the level of involvement that helped to bring the company to life is no longer required. More resources allow a founder to refocus their efforts but with that comes a certain level of trust and the ability to relinquish some control. While it seems like a simple and straightforward process, it is easier said than done.
While there are things that can be implemented to prevent the paradox, it truly starts and ends with the mindset of the founder. Okay great, so being CEO may or may not be the right path but there is some personal due diligence that can be done to circumvent the leadership dilemma that often plagues so many companies.