
You are Not the CEO - jacquesm
http://jacquesmattheij.com/You+are+NOT+the+CEO
======
staunch
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.

~~~
jacquesm
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.

~~~
drusenko
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.

~~~
jacquesm
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.

~~~
drusenko
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.

------
grellas
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.

------
bonsaitree
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.

~~~
jacquesm
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.

~~~
mathewgj
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...](http://www.thocp.net/companies/microsoft/microsoft_company.htm)

~~~
nostrademons
Maybe this is why Paul got screwed. ;-)

~~~
staunch
Net worth ▲US$13.5 billion (2010)[1]

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

~~~
nostrademons
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.

------
apsec112
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.

~~~
wheels
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.

~~~
staunch
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.

~~~
wheels
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.

~~~
staunch
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

~~~
wheels
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.

~~~
staunch
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?

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

------
JacobAldridge
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.

~~~
jacquesm
That makes good sense.

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

~~~
JacobAldridge
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).

------
Murkin
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.

~~~
arethuza
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".

~~~
jacquesm
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.

------
braindead_in
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.

~~~
jacquesm
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.

~~~
braindead_in
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.

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

~~~
braindead_in
There you go!

------
bkrausz
> 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.

~~~
loewenskind
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.

------
snprbob86
For a 2 man company, "co-founder" is perfectly appropriate for email
signatures to _most_ recipients.

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

~~~
jacquesm
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.

~~~
sunny_s
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?

~~~
rdl
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.

------
cesart
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.

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

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

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

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

~~~
david927
I once wanted a business card that read:

<my name>

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.

------
dannywoodz
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.

------
adamilardi
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!!

------
rbanffy
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.

------
DanielBMarkham
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.

