– Principal Founder May Not Be the CEO

Startup Founder Profile – Most startup founders are persons who possesses entrepreneurial ambitions and has envisioned or developed a product or service that is new and needed in the market place. Most new products or services are created by technical people; therefore the majority of Principal Founders (PF) are technologists.

A Strong Founding Team – Is the most important factor that professional investors consider when making decision to invest in a startup. The preferred “Strong Founding Team” has three team members with these skill sets:

1. CEO with strong management and leadership skills.
2. CTO with proven expertise on company’s core technology
3. VP Sales/Marketing with good knowledge of the market and proven ability to obtain paying customers

CEO/Founder – The CEO/Founder considered having good prospect of success in building a startup should have great leadership skills and strong management experience. Some startups have PF who developed a product or service but does not have significant management experience and often does not have strong leadership skills. Most people think the PF with the vision for the business or the creator of the product should be the Founder/CEO with substantial ownership. A CEO lacking in management experience and strong leadership skill will have difficulty in the following:

1. Assembling a strong team
2. Attracting quality professional investors
3. Manage building and growing a successful business

Innovative Founder Team – A strong Founding Team possessing required strengths could be assembled even though the PF may not have the necessary management experience and leadership skills. The founder team could be structured as follows:

1. PF should be the CTO/Chairman (Majority ownership greater than CEO to be added)
2. CEO (hired by the PF)
3. VP Sales/Marketing (hired by the CEO)

In this scenario the original founder is not the CEO but the CTO and Chairman of the company. The CEO would be someone who has significant management experience and strong leadership skill.

Since the principal founder has majority ownership and is the Chairman of the company, then the Principal Founder will still maintain power over the CEO but the CEO provides the day to day management of the company, its employees and is the spokesperson with investors, business partners and major customers.

This innovative founding team structure is not understood by entrepreneurs and seldom implemented but should be considered and could prove to be very effective.

 

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Thomas Hong, Startup Mentor, Silicon Valley, USA

Founder of Startup-Mentors

Startup-Mentors was founded by Thomas Hong to help startups grow successfully by offering advice and assistance from mentors based in Silicon Valley who are serial entrepreneurs with substantial startup experience; some are active judges at investor pitch events.

 

e-mail: thomas@startup-mentors.com   phone:  (1-408) 455-0170