Well, there is no real logic that can be applied in addressing this question, but a person who understands the dynamics of business better, is good at sales, good at operations management and can be the face of the company to the outside world is a better choice and in the best interest of all, including other co-founders.
Of course, the person who is designated CEO should have what it takes to be a leader, and have the aptitude, the passion and the desire to steer the company in the direction agreed by everyone.
A co-founder who becomes the CEO needs to understand that he/she is NOT the boss who can have special privileges… and that he / she is merely the chief executive who has the responsibility to making critical decisions and making sure that the company is on track to meet/beat targets.
In a startup, a CEO should take up the ADDITIONAL responsibility as a CEO along with an area of the startups business that he/she should take ownership of. E.g. the CEO may take up the responsibility of handling the sales function or operations management or driving the technology piece, etc. But the responsibility of being the CEO is over and above that functional responsibility.
It is also important to designate one person as the CEO from among the founders, as the rest of the team as well as external stake-holders (investors, vendors, partners, etc.) need to know where the buck stops and who would be the decision maker when one needs to be made.
In most cases though, especially when a few friends get together to start a company, who will be the CEO is a tough decision. In such cases, it is best to have a healthy debate within the team and select a CEO. (Some startups, when faced with the task of deciding who the CEO should be have followed the strategy that the founder who will get to be the CEO will give 1% of his/her equity to the other founders i.e. if there are 4 founders, the equity structure will be 22% for the founder who becomes the CEO and 26% each for the other co-founder.)
While it is a difficult question, often leading to stress among the team, it is critical to address that and take a decision. Especially if the startup is going to seek VC funding, there will have to be one CEO who is leading the team.
Darshan Bhambiru
A chief executive officer (CEO) is the highest-ranking corporate officer (executive) or administrator in charge of total management of an organization.
An individual appointed as a CEO of a corporation, company, organization, or agency typically reports to the board of directors. Effectively this would mean if the Organization is a LLC, PVT Ltd, Public Ltd (OPC – One Person Company, not yet available though already sanctioned) etc, any other type of organizations (Proprietor, Partnership) would not be able to use the CEO as a designated POST (apart from satisfying oneself 🙂 )
Typically, the CEO/MD has responsibilities as a director, decision maker, leader, manager and executor. The communicator role can involve the press and the rest of the outside world, as well as the organization’s management and employees; the decision-making role involves high-level decisions about policy and strategy. As a leader of the company, the CEO/MD advises the board of directors, motivates employees, and drives change within the organization. As a manager, the CEO/MD presides over the organization’s day-to-day operations and is also the Speaker on behalf of the Organization too.
As Entrepreneurs we usually have many Roles to play and be a part of our own Concerns at all times even if there is a single post mentioned on the Visiting cards etc 🙂 Cheers!!!
Alok Rodinhood Kejriwal
This is who should become CEO:
– The Guy who CAN BE rude, angry, sweet, cajoling, terroristic and pleasing AT THE FLICK of a switch
– The person who can FIRE the other co-founder. (Read this again and understand what I mean)
– The person who has no ego and places his venture before his family.
Prajakt Raut
(Thums up Alok … don’t know how to get that damn icon into this post)
Karan Pandhi
the second point
when I read it the first time, this is what I learnt
A C.E.O. should make the co-founder lift his spirits up and tell him to work harder.
when I read it the second time, I learnt :
A C.E.O. should kick his co-founder if has no value in the company.
terrific learning Sir.
Amar Pratap Singh
A CEO (Chief Everything Officer – credits :”Asha”), can be the one who gives credits for each of his successes to others but the same time can be blamed for all the failures.
The one who can hire the best people but at the same time can fire his best friend.
The one who can motivate all the stakeholders involved but spend sleepless nights trying motivate himself.
The one who can steer & secure the future of the whole organisation but remain uncertain about his own.
The one who can be unprejudiced and a friend to everybody but himself have none. : P
Regards,
Amar
asha chaudhry
🙂
Rishi
Interesting post Prajakt. Also have to agree with Alok’s comments.
In addition to what you said CEO needs to have a vision AND the ability to drive it. On the “It is also important to designate one person as the CEO from among the founders”, it works great when the startup is still growing, but at some point when the company grows big enough, the team needs to revaluate if they need an external CEO. No shame if that’s required, I believe.
In case of friends (or any team) who are starting together, I think it helps to have this discussion as to who that person is early on rather than waiting.