How to pick the ideal CEO for your business

Photo: Sean Gallup/Getty Images.

The technology industry is seemingly full of legendary founder-CEOs who have been able to grow their companies from a tiny garage to a billion dollar company nested in a beautiful skyscraper. This narrative is certainly a favourite of Hollywood and the media, but in reality, very few entrepreneurs will be the next Mark Zuckerberg, Larry Ellison or Steve Jobs.

That’s because at every stage of growth, the CEO is required to become a chameleon — reinventing themselves rapidly while keeping certainty with staff, investors and customers. Recognising the stage you’re at and what you need in a CEO is critical to help determine who that should be.

Stage 1: The Hustler CEO

Before finding product market fit, most of your time will be spent trying to get your product off the ground. You’ll be focused on recruiting a co-founder, trying to manage your development team (sometimes an agency) and getting your first downloads or sales from your customers.

Enthusiasm should be your middle name due to your hustle and refusal to accept rejection. Everything is on your shoulders, so somebody willing to put in the long hours with great persuasive abilities is needed.

Stage 2: The Manager CEO

Your startup is going well. You’ve probably raised some capital or generated enough sales to justify hiring more people to make things happen.

However, this will require a whole different kind of CEO. You’ll find yourself managing growth and legal matters, while still trying to win customers and partnerships to drive the business forward. However, the toughest challenge will be that you will no longer need to just manage yourself, but your staff!

How do you manage team conflicts? How do you deal with passive aggressive behaviour? How do you handle staff that want your company to fail but appear to be your most loyal lieutenants? Welcome to the art of managing people, the hardest part of any scaling startup! You’ll only be able to get to the next stage if you master handling people. If you managed to get past stage #1, this is a real challenge because the characteristics that made you successful at the beginning often make it difficult to lead in your growing firm.

Stage 3: The True CEO

Once you begin hiring executives such as a VP of Sales or a CTO, the day-to-day chaos of growth can often be handled by competent functional and business leaders.

Suddenly the days of rushing around dealing with every client, bug or problem are somebody else’s responsibility, and you may start to feel that you have nothing to do. That’s because instead of working on day-to-day problems, you’ll be focused on working on the business as a whole.

This is where you’ll need to make sure you have great feedback systems in place for employee and customer feedback because you may not be able to be as close as you used to be.

A good CEO at this stage should be focused on managing the priorities of the startup, constantly understanding the risks and threats, as well as planning the strategic winning moves to take it to the next level.

Types of CEOs

When you’re looking for a CEO, you’ll notice that some people have preference in how they like to work. Often you’ll have people who naturally fit into a few categories.

Insiders vs. Outsiders

Insider CEOs will often come from an operations or finance background. They will prefer to focus most of their time on operational efficiencies, managing staff and accounting. “Get it done” should be their middle name and they often have strong tactical skillsets.

Whilst other CEOs will enjoy external facing activities like marketing, sales, business development and raising capital, day-to-day these lines between internal and external become blurred, but generally people will fall into one or the other.

It is important to understand what your business needs most in its CEO and the predisposition of existing leadership teams. For instance, an external focused CEO should have a strong team of leaders internally to take care of the day-to-day business. This often happens in traditional partnership based businesses such as law firms, where one partner focuses on outside the business whereas the rest focus on making sure the work gets done.

Wartime vs. Peacetime CEOs

Most management books are written by authors and consultants who studied successful businesses and how they succeeded in good times. However, many startups will not be in the same situation as a highly profitable Fortune 500 firm and a focus on becoming a wartime CEO becomes more necessary.

Ben Horowitz has written brilliantly about this concept, and nobody embodies the difference in style between a wartime CEO and peacetime CEO better than Steve Jobs’ return to Apple with just a few weeks of cash left in the bank.

His management style wasn’t exactly conventional, but when a company is trying to survive, it often requires a degree of micromanagement that would be offensive to a peacetime CEO who might focus on consensus building and alignment. But the successful transformation of Apple makes it hard to argue it wasn’t needed.

Choosing a CEO is hard

Whether you’re looking at your co-founders or bringing in some experience to help scale up, choosing a CEO is never an easy call. I hope using one of these frameworks helps make the decision slightly easier!

Mark McDonald is the co-founder and co-CEO of Appster, a leading mobile app and product development company with offices in Melbourne and San Francisco.

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