When Having Two CEOs Is A Good Idea. And When It Isn't.
On Tuesday, Birchbox put an end to a somewhat unconventional management relationship.
Co-founders Katia Beauchamp and Hayley Barna have shared the CEO role for five years, but now Barna is stepping down. She will remain on the board of the beauty commerce upstart, but Beauchamp will take over the day-to-day operations.
It remains unclear exactly why Beauchamp and Barna decided to bring the company under the control of just one founder. In a statement provided to LinkedIn, Birchbox's Chief Communications Officer Claire Paull said "Birchbox would not be the company it is today without her" and Barna will "continue to be actively involved as an advisor and member of the board of directors." Yet as more and more startups decide to split the CEO role into two, it's interesting to consider when it makes sense to make this move.
Niko Bonatsos, a venture partner at General Catalyst Partners, said it is typically difficult to make the arrangement work. His firm has invested in a few companies with two CEOs like Warby Parker and BigCommerce and he added that employees can get easily confused and not know who to come to with certain problems.
"Most often, what ends u p happening a few years later is that one person emerges as the dominant leader and key decision maker within the company," he said. "The right to successfully lead a fast-growing company is after all earned every day."
In the case of Birchbox, it could be that Beauchamp had indeed emerged as that leader. Over the years, Beauchamp became the public facing leader of the company and appeared more frequently than Barna at conferences, in television interviews and written op-eds.
While Bonatsos would not comment specifically on Birchbox, he added that in his experience, the co-CEO arrangement can work in startups when there is a clear division of labor. Just last month, I interviewed Jeff Raider, the co-founder of Warby Parker and the co-CEO of shaving startup Harry's. He shared that dividing the work up with his co-founder Andy Katz-Mayfield not only helped Harry's succeed in the long run, but also helped with his own mental health.
"Being a founder and a CEO is pretty lonely," Raider said. "Having someone you can share thoughts with and speak with about all of the difficult things that are going on in the business on an on-going basis is great...I'm pretty emotional. Andy is very rational and having those two points of view in the company is very helpful."
Katz-Mayfield echoed Raider's praise for the dual CEO role back in April when I interviewed him after a recent funding round. Andy and Jeff have known each other for more than 12 years, so there is an ease to their relationship that is likely uncommon among co-founders.
"Even if we don’t agree on everything, we are like an old married couple," said Katz-Mayfield . "There is a level of communication that is not even verbal because we know each other very well."
Harry's isn't the only company that has had success with co-CEOs: Chipotle, Whole Foods, Oracle and SAP all have two leaders at the helm. Yet while some executives can figure out a way to make the co-CEO role work, it's clear that investors are somewhat skeptical of the arrangement.
When two qualified CEOs exist, Max Motschwiller, a general partner at Meritech Capital Partners, suggests having a CEO paired with a CTO or COO, where both roles may be equally important and in some situations equally compensated. Having roles that are clearly delineated, non-overlapping and complimentary can clear up a lot of confusion.
"The best companies are not a democracy, they must be agile. That is why there is a CEO," said Motschwiller. "For emerging tech companies there are many pivotal and hard decisions, there needs to be someone who has the authority and power to make those hard decisions and make them quickly. With two people, the optimal choice might be too hard to make."
When should a company consider taking on two CEOs? Share your insights in the comments below.
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Senior Business and Technical Manager
7 年So many generalization and conclusions based on one or several examples, while the whole thing is of situational nature. There can be major failures and great success, but it all comes down to the pair and how they fit together. Sadly, most of the comments imply that if I witnesed a divorce or a number of divorces, marriage cannot work in any case and should never ever be practiced. Just poor arguments and no rational consideration. Luckily, we stopped doing science that way and look where it got us. Should be time to apply rational thinking to business too, who knows where that can take us. In the meantime, start thinking outside of your box and approach business in a lean fashion, applying what works best in a particular circumstance and adapt as soon as it stops working.
Chief Marketing Officer @ Richline Group, Inc. | MBA, Marketing
9 年Fiscal responsibility and vision are not the most compatible attributes of top managers.....one of each often makes total sense.
CEO @ CMO Huddles | Podcast host for B2B CMOs | Flocking Awesome CMO Coach + CMO Community Leader | AdAge CMO columnist | author Renegade Marketing | Penguin-in-Chief
9 年Great post Caroline Fairchild Frankly as a long-time CEO I would welcome a co-CEO and it would probably make the company more nimble assuming a clear division of labor, mutual trust and constant communication. That said, I am reminded of when my kids would hope for a more favorable verdict by appealing to the other parent. My wife and I figured out early on to ask the appealer "have you already broached this?" with the other one of us. That prevented a lot of messy "management" crises. If parents can do that, why not co-CEOs?
Sales at eClinicalWorks
9 年Seems to potentially make sense for certain startups but doesn't seem to make sense for the long haul, inevitably a single leader must emerge for ultimate accountability in the lead role.
VP of Luux London
9 年Very interesting...