..or Why I Believe co-CEO’s Are A Bad Idea.
Not so long ago I was invited to take a CEO position at an 18 month old start-up. There was a small team of seven, only three full time. The business guy in the team was one of the part timers and had also invested some money, but chosen to retain his existing position at a large corporate with a full time job and salary.
The two initial meetings, with one of the Founders who was the real day to day engine behind the business, went well. She was eager to bring in a CEO, part time or full time, to help put in a solid strategy – including raising money – and to hire new team members and ensure milestones were being hit, financials kept up to date, people managed etc; all the usual jobs of any CEO.
But when it came to negotiating terms the other part-time co-Founder I mentioned sprung on me a two character prefix to my title which meant I walked away from the deal. He wanted to add “co” to my CEO title. I was pretty surprised as he’d said previously he was happy bringing in an external person to be CEO and run the business.
There are a raft of reasons why I believe having co-CEO’s in your start-up is a thoroughly dreadful idea. Even if you’re both co-Founders of the business. Reason number one is because it doesn’t work.
Quite simply co-CEO arrangements in my experience don’t work, or don’t work as well a different structure. This conclusion is both from being in situations myself where CEO responsibilities were split between two people (even if the actual official title wasn’t) and also from seeing some others trying to run their company’s this way. Having Co-CEO’s creates its own set of problems, outside of the challenges inherent in being a CEO.
Here are some of the problems (and please feel free to add your own in the comments!):
- Someone has to have the final decision, because people do not always agree.
- Legally, someone must be responsible to report to the board of directors
- Someone must “own” the over-arching business strategy and the milestones on it.
- Logistically, if you have co-CEOs, in reality for both people to be equally well informed they must both attend every meeting which might impact any significant business decision a CEO might make OR one co-CEO must relay and discuss all this with the other co-CEO, to convince them it’s a good idea and bring them up to speed
- If you have co-CEOs the team do not know who their boss really is
- If you have co-CEOs there is always the risk of the team or the board or investors playing the CEO’s off against each other
- If you can’t sort out with your team and co-founder who is going to be CEO and what that means, how on earth are you going to sort out other problems
- If one personal isn’t responsible, it’s not really fair to measure them entirely for not performing the role
- There’s a danger you can both re-enforce your own errors of judgement, making those miscalculations or oversights further entrenched
- Measuring performance becomes harder. If CEO responsibilities are split, or the CEO isn’t driving forward the things they should be, someone needs to call it out. Another co-founder, a Board Director, shareholder, the team. That’s harder with co-CEO’s and there is one less person who could be devil’s advocate.
- If makes it harder for both people to perform well. If two people are sharing the co-CEO spot (even as a shadow CEO rather than named title) then it’s all too easy for things to end up dropped on the floor, between the two people – who most like are both very well meaning souls who want success for the company as much as anyone.
- And my personal favourite, if you have co-CEOs it simply looks stupid. Investors and the outside world will probably think “why not just get one competent person to be CEO, rather than two who individually are not?”
Indecision, confusion, mixed messages and an increase in communication workload are the last things you want in a start-up or any business, and I feel co-CEOship encourages just that.
In summary, avoid being a co-CEO or working in a start-up which has them. And don’t take my word for it just look how well it worked for Blackberry.