Who Should be the CEO?

Hey y’all — how should you pick who should be the CEO?

When I was doing research for this issue I noticed that the most common advice is that it’ll either be easy because only one person will want it, or obvious based on the backgrounds and skillsets on the founding team.

…but what if it isn’t?

I had two cofounders at Launch House:

• One had previously co-founded a different startup but not as CEO

• The other was a strategy / ideas guy who spoke investor language well

• And then I had started the company and had previously been CEO of an agency

After 18 months we all had been the CEO at one point.

The first takeaway there is that we weren’t well suited as co-founders — our skillsets and interests overlapped too much — but that’s a different discussion.

I’m not going to talk much about who should have been the CEO in our case out of respect to them, but there’s surprisingly little actionable advice written about this topic, so I’ve created a new framework I call the LEAD Framework to help make this decision:

On the Pod: Adam Alpert

Adam has an incredibly resilient story.

When his classmates graduated and left Brown, he stuck around trying to get his startup off the ground on campus.

He was rejected from big accelerators, including YC, multiple times before getting in and went through multiple pivots.

Then everything changed, and his startup, Pangea, started adding 1,000 signups per day.

He shared the story of how he persevered, including his reliance on stoic philosophy, along with some hot takes on why most founders build MVPs the wrong way and more.

Check it out below on YouTube, Spotify, or Apple Podcasts.

Who Should be the CEO?

Should You Want to be CEO?

There are two types of founders:

• Those who think CEO is a glamorous job

• Those who understand the job

Sure, someone can play the part of a glamorous CEO or even lean into it and shirk their responsibilities, but they won’t be CEO for long.

Brian Chesky worked 80-100 hours weeks for years, and 99%+ of that was spent on things that no one saw other than his team. He was deep in the details on decisions, not jet setting around the world on Airbnb’s dime.

The reason isn’t because he’s a certain type of CEO, it’s because he deeply understands what the CEO role is actually about.

That’s what Founder Mode was really about — what the job of a CEO is.

I wrote about the 5 functional jobs of a CEO last year, but also consider this when deciding if you should want the job or not:

• You need to prioritize the business above the other parts of life

• You must be able to keep an even keel when the world’s falling apart

• As the company grows you need to be hyper aware of as much as possible (ideally everything)

There are no examples of meaningfully successful startups where someone else worked harder or was more in the details than the CEO.

You’re the beating heart. You have no choice but to keep beating.

So it’s a valid question to ask yourself — do you want to sign up for that for years? Can you handle it?

You Have to Choose

If you’re going to build a startup with someone you need to leave your ego at the door.

There’s a psychological principle called The Lake Wobegon Effect that states it’s a natural human tendency to overestimate your own achievements and capabilities in relation to others.

Nowhere is that on display more than times when people have something within their reach that they actively desire.

So if multiple people actually do want to be CEO, the answer is not “let’s just be co-CEOs.”

You might try to convince yourself you’re Larry and Sergey but they’re the exception, not the rule.

Even Garry Tan, now CEO of Y Combinator, ran into this.

When his first startup was pitching Ben Horowitz and Marc Andreessen for its Series A, Ben asked Garry and his co-founder who the CEO was and they said “both of us.”

As Garry said himself, the meeting was basically over from that point.

The unfortunate truth is that, even if you split up areas of ownership, decisions will take longer if it’s unclear who the dictator is. Even if you agree 99% of the time, the 1% you disagree will cause untenable blockages.

Matt Mochary, renowned CEO coach for Brian Armstrong and many others, even advocates against a 50/50 equity split for this reason. Here’s Matt’s full curriculum for CEOs, by the way including how he defines the CEO role.

Equity splits are a separate conversion, though the CEO should never be the person taking less equity if you go that route. A scenario like that would mute their decision making power.

Here’s what Ben Horowitz has to say from a piece he wrote on sharing command:

A company with co-CEOs is also a bearish signal externally, because it indicates the founders weren’t willing or able to have the hard conversation needed to choose someone, as Pilot CEO Waseem Daher says.

The bottom line is that choosing, especially if it’s hard, provides clarity for yourself, your co-founder(s), team, and external parties.

How to Choose the CEO: The LEAD Framework

Ok, so how do you choose?

Here’s my framework, called the LEAD framework:

First — Logical Fit

If it is obvious just have it be that person. For example, maybe one of you has dramatically more fundraising experience, or a highly relevant network for partnerships in the industry you’re building in. Just keep it simple in this case and have that person be CEO.

Second — Enthusiasm

If only one person wants to be CEO then then they probably should be, unless there’s some disqualifying factor (i.e. they freeze up in high-pressure situations like investor calls).

This might sound overly simplistic, but being CEO is so demanding that you really need to want to do it in order to do it well. If multiple or none of you want it then continue on…

Third — Authority

Consider how the co-founding team feels about each other.

If there’s one member who is the clear leader, with the deference of the others, they should be the CEO.

The CEO will make unpopular decisions. It’s important that they have the respect of their peers in those moments.

Nothing’s worse than a co-founding team that appears divided during tough times.

Lastly — Demand Alignment

Lastly, look at how people’s skillsets match up to the demands of this specific startup.

Most startups need a lot of the same things:

• A cult leader who can convince others to join, invest, and believe in them

• A visionary who deeply understands trends, the market, and where it’s headed

• An operator who can make tradeoff decisions and set an aggressive pace

• A manager who can get the best performance out of their team

But there are also things that differ between startups.

For example, a sales-driven company where sales drives the product roadmap needs a sales-driven CEO, whereas a product-driven company needs a CEO who can orient the company around a vision for the product.

Those needs will be unique to your market and your product. Choose the person who matches up with them the best.

Check In Annually

Changing CEOs isn’t inherently a sign that a company is in bad shape.

You probably know that Uber’s board ousted Travis Kalanick when the company was going through a tough time, but Uber actually changed CEOs twice — the first time because things were going so well.

I recommend checking in at least annually, and ad hoc if needed, to ensure the configuration of the founding team is the optimal one for the company to succeed.

Chances are that as time goes on that each founder will get deeper into their role, making switches less likely, but if the 0 to 1 CEO isn’t equipped to manage a large organization, they may not be the best CEO for the growth stage and/or beyond.

But, whatever you do, don’t hire an outsider as CEO. That’s just not the way transformative companies tend to be built.

How We Can Help

Advertise in my newsletter to get in front of 70,000+ founders.