Do I Hire a First Time CEO or a Proven One?

Do I hire a First Time CEO or a Seasoned Professional CEO?

I am often asked this by Boards of Directors, and my answer is always: it depends. This decision depends on the business hurdles you want to conquer and what stage your company is at. Are you on a public exchange? Are you turning around an organization? Are you a start-up? Backed by Private Equity or a Hedge Fund? What are the circumstances of the business? Is it well run and now needs to grow? How involved is the board?

I recently had the opportunity to interview several Venture Capitalists and asked them what was currently working for them. It was interesting to hear that their more successful portfolio companies have first-time CEOs. I then asked them what that could be attributed to. They told me they felt that first-time CEOs came with an open mind, collaborated with the board, and worked harder to prove themselves. In small, upstart companies, these CEOs also courageously roll up their sleeves and participate in whatever project needs to get done ( even if it is brewing a pot of coffee to keep the team going). These CEO’s came to work with what is called “a beginner’s mind”. It is also interesting to note that 80% of the Venture people I interviewed also did not have products that had any sales yet.

I might interview a few more Board Members to learn more. That included publicly traded companies with significant revenue (over 100M) and products on the market. Interestingly, these people feel differently. They want a proven executive. They believe that they de-risk the hiring decision by hiring someone who has handled a similar situation in a similar market with similar or the same customers. They want someone familiar with speaking with the public markets and fostering relationships with the board of directors and leading management teams.

Private equity investors, hedge fund boards, and people on the boards of turnaround organizations also share this sentiment. They are looking for someone who can successfully manage a similar challenge. This is critically important, as this board of directors seeks to quickly maximize the company’s value. There is no room for failure. It is also important that the CEO has experience in this specific market.

We work with companies to identify their business needs before looking for the best CEOs and their teams. We specialize in placing CEOs and Vice Presidents who perform to or beyond the expectations of the board that hires them, and we guarantee it. You can call for a free consultation regarding the hire of your next executive.