This post also appears on Medium.
I often find boards of startups taking — what I consider to be — less-than-perfect approaches to hiring a CEO. The focus is often on “experience in the space” of the startup, irrespective of how qualified an individual is to lead a startup. Below I’ve boiled my approach down to 8 main qualities I look for when conducting CEO searches for portfolio companies in need of a CEO for the next chapter of their journey from startup to enterprise.
But first, if the founder can scale over time it is better to get them help such that they can learn and have enough time to act on those learnings. But if a CEO is necessary, the following approach makes sense:
1. Define the Ideal Candidate Through Real Examples
Instead of writing a spec, which generally looks like god in hard to meet form, start with a dozen top resumes that you can annotate. Highlight positive and negative experiences and characteristics to create a spec based on realistic candidates, and then hand these markups to your recruiter. I find recruiter specs too generic and mostly worthless.
2. Choose the Right Search Firm
Smaller search firms often have a better network and instinct for entrepreneurial candidates than large firms that are used to staffing F500 companies. I have generally found that their instincts for entrepreneurial talent can be off. Smaller firms are more attuned to the needs of startups and growth-stage companies.
The most important way to downselect further is to look at the network they have developed. Ask them who in their network might be a fit. If they cannot immediately fire off some names without further research that fit your needs, they are probably operating in the wrong network. Lastly, ask them for their latest six searches and who the leading and runner-up candidates were. Judge these profiles for what their client in that search was looking for. Are you impressed with their performance? Each company has different drawing power for great candidates. Did they find candidates above or below each company’s punching weight?
3. The Technical Athlete, Not the “Expert”
My bias is to find someone who hasn’t spent too much time in the industry to which the startup belongs (Really! You don’t want too much of the old way of doing things brought to your approach). Some time in the relevant industry is helpful, but too much “veteran experience” leads to sclerosis and the old way of doing things when a startup is trying to innovate and reinvent the business. For example, when hiring for a medical device business, avoid candidates with too much time in medical devices. But the candidate should have experience working in complex engineering outside of medtech. The latter, coupled with deep technical expertise and just a small dose of medtech experience is likely to be more innovative and faster-moving. A traditional retailer hired into a new ecommerce startup with a new strategy for customer acquisition can often be a disaster.
There are very few areas where somebody innovated in an area where they’ve spent their life deeply entrenched. In the 40 years in which I’ve participated in disruptive innovation, I actually can’t think of one example. That’s an unusual kind of statement, and I’ve looked hard. Were space launches disrupted by Airbus, Lockheed and Boeing? No. It was SpaceX and Rocket Lab. All that activity is coming from people who weren’t in the business.
4. The Golden Goose not the Golden Egg
Prioritize finding someone who is the absolute best team builder and a good leader. That will give you the agility to navigate anything from complex engineering problems to an FDA process. A great team builder who can hire the relevant team, who can think and evolve the mission, and who can execute the job is more valuable than someone with narrow expertise who knows how to execute that particular job in a big company where next year's strategy is an incremental change from last year's strategy. The ability to assemble a kick ass team is crucial for startups, and hire above the startups punching weight. And with the frequency of changing plans in a startup, someone who can constantly adapt and build for the next playbook will pay dividends over someone whose “expertise” and “experience” handles the issue at present.
With regard to more technically complex projects, especially one that spans a multitude of different types of engineering, a CEO with a diversity of technical skill is required to make judgment calls, but again, the most valuable skill set will be in building kick ass teams in specialized domains.
5. Growth Velocity Over Experience
When considering a first-time CEO, the most crucial factors for me are their quality of thinking and their ability to grow rapidly. It’s challenging to define this in a job specification, but I prioritize finding someone who can manage change, adapt to new situations, and build a great team over domain expertise. I prefer individuals who can quickly learn and grow, rather than those with extensive CEO experience, especially in new and evolving fields.
For example, while domain expertise is important for getting a device to FDA approval, I might prioritize someone who demonstrates rapid learning and critical thinking and who can hire the domain expert. Experience can mostly be traded off for these qualities. A candidate who is a great thinker, learner, and team builder is ideal from my point of view. Leadership, goal setting, and understanding the technical space are key, as these are harder to learn from scratch.
I am open to giving someone a chance to grow into the role, even if they may not be the definitive long-term CEO. But they’d better be curious, a broad thinker, a first principle thinker, action oriented, a great recruiter and able to lead with vision…
6. Synthesize Diverse Information
The second important aspect is aligning the expectations of all stakeholders involved. The CEO of such a company must integrate feedback and relay it effectively to the relevant team members to both understand each of those stakeholder’s “workflows” and how the tech fits in and solves their problem. They must be a good communicator. A CEO must gain a deep understanding of all involved constituents; integrating and addressing diverse needs is a must. In the early stages, sufficient technical/scientific background is often preferred but not essential to be able to exercise judgment on hard technical/scientific choices.
7. Prioritize Effectively and Make Trade-offs Wisely
Smart individuals can quickly figure out a thorny issue if they can pare it down into its structural components, prioritize, and make decisions effectively based on the identified fulcrums. Thinking clearly and critically is often more important than experience in new technical areas.
8. Raise Funds
Even at the development stage, it’s important to find a candidate who can raise funds effectively. This ability can be crucial for sustaining and growing a company. Selling investors, employees, and partners is also a critical skill. Developing and selling a vision is a critical skill if you are trying to build a big company.