VentureNiche

Summary: What makes a great CEO? While I can’t answer that question, I can say what we look for in a CEO for a brand new entrepreneurial startup.

Every time we start a new company, a lot of things have to come together. We spend a lot of wringing our hands about strategy, the market, and finance. Even though these are important (some would say critical) initial decisions, often these decisions can be modified or refined as the company matures. Plans are, after all, made to be changed and it is the nimble company that can adapt and survive in a competitive changing market. However, there is one decision that, once made, can’t be easily tweaked or modified. Sometimes it is the number one cause of a company’s success or failure. This decision is who is going to lead the organization.

This person is going to have a major influence on the company’s value structure. The entire organization looks to this person and they tend to emulate his or her behavior. We have found the strongest CEOs to possess these characteristics at the core of their being.

Approachable. If employees in a company don’t feel that they can be heard, they will be nothing more than automatons – executing on the leader’s vision. While this might work for a while, many brains always overcome one brain. Weakness in this area can be overcome by a super self confident staff – people who aren’t bold, want their opinions heard and don’t care about politics. While I have seen this work it does create an argumentative (some would even say hostile) environment.
Interdependent. A realization that s/he can’t do it himself. CEOs with a heightened level of interdependence desire, even crave, other people so they can be even stronger and more effective. This is a corollary to the approachable characteristic. It is also beautifully described by Steven Covey in his 7 Habits of Highly Effective People.
Driven. This person needs to have a fire in their belly. Like the other characteristics, the entire company will look to leadership on this. If the CEO displays a very relaxed nature, the company will be sleepy. If the CEO is restless, the company will be awake.
A decider. A startup company can’t afford to be frozen in place. Unfortunately, lack of data is par for the course. A strong CEO, like the president of the country, needs to be the decider. They need to be able to make decisions and wholeheartedly act upon them in the absence of a complete picture. Don’t mistake being the decider for being pig-headed. Because of lack of information, many of the decisions will be wrong so it is important for that person to “own” the decision and, at the same time, be willing to walk away from it when new information presents itself.
An explorer. The strong CEO needs to be in the mode of exploration and learning. Often we are sending a company off into uncharted territory. We’ve all met people who seem to have all the answers. Often times it is comforting to have them around. If they are take-charge kind of people, it is easy to abdicate responsibility based on their wealth of experience. I like to call them the professorial CEOs. However, we are often sending companies off into uncharted territory. It is inevitable that the CEO will come across something that doesn’t match anything else in their mental map. Their past experiences won’t have prepared them for everything. If that person is not in the mode of learning, they will be the proverbial hammer seeing everything as a nail. The explorer CEO realizes that s/he doesn’t know everything. They seek to truly understand the situation and then act strongly.

A start-up CEO doesn’t have to have all of these characteristics in order to be successful. That person can be stronger at some and weaker at others. What is more important than the exact make up is their self-realization where they are weak.

There is one more thing that we look for in a CEO for a brand new venture. And it is really only because of our needs. It is not like the others above - a characteristic that is part of their being. It is more situational and pragmatic in nature. We look for someone who has to have a paycheck.

In need of a safety net. If a CEO embodies all the characteristics above, has a high level of risk tolerance, and has adequate finances to execute on their vision, they don’t need us. They will go and be an owner operator of their own entrepreneurial start up. We need the perfect CEO who also can’t afford to risk it all. This person needs a salary in their current situation. Perhaps it is less than they could command on the open market. In that case, we augment it with equity.