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11 Factors to Consider When Hiring a Startup CEO

Posted by Early Growth

June 6, 2013    |     6-minute read (1070 words)

Should startup founders ever hire CEOs to lead their companies? And if yes, what should they look for?

Opinions differ. And Reid Hoffman’s recent entry on the topic sparked a lot of debate in the tech community. But if you’re thinking about bringing a CEO on board, needless to say, it’s not a hiring decision to take lightly.

We asked 11 founders who are members of the Young Entrepreneur Council to share their advice on recruiting a CEO. Here’s what they had to say:

11 Factors to Consider When Hiring a Startup CEO

1. Go With Referrals

While you can spend six figures conducting an executive search, a lot of CEO hires are made through referrals — typically via your board of directors, your advisory board or your investors.

That being said, definitely consider promoting from within if possible candidates exist. The ramp-up period will be much quicker, you won’t have to worry about any cultural fit issues and the process will be infinitely faster.

- Matt Mickiewicz, Flippa and 99designs

2. Create a Formal Process

I know the popular advice will be to utilize your network. While I agree, I think there is also tremendous value in posting on LinkedIn or Monster in order to get a mix of talent you would have never come across on your own. Score the candidates based on how well their resumes align with the company’s brand. The big question to ask them is whether they’re willing to take a salary below the industry standard, with a huge upside for performance. If the answer is no, this may be a reason to question this person’s motivation and his ability to commit to the vision.

- Raoul Davis, Ascendant Group

3. Find an Experienced Leader and Manager

Many founders are not good CEOs of established businesses. The job of a startup founder is to make the business model work and form a solid team. Hire a CEO who has experience managing larger teams and can grow your already-established business. Make sure this person has the same passion you had, and incentivize her to grow your business.

- Matt Wilson, Under30Media

4. Ensure Vision Alignment

There are some companies that are dedicated to this process that you may want to work with. Whether you outsource or not, before hiring a CEO, you need to be assured that the person you’re hiring shares your vision and that you are in sync in terms of what you hope to achieve for your company. To determine alignment, you should ask about the potential CEO’s goals and vision for the company, his priorities, how he measures success, how company decisions will be made, division of labor and equity and ownership interest.

- David Ehrenberg, Early Growth Financial Services

5. Don’t—Hire a VP Instead

Rather than bringing on a CEO, hire a VP-level employee who complements your skills, filling the gaps. If he performs at a high level, you can then promote him to CEO. This helps lessen the risk and lets you stay in control of your business until you’re sure you’ve found the right person to take over.

- Bhavin Parikh, Magoosh Test Prep

6. Hire a Complementary Leader

I would first look at yourself and identify your own weaknesses and strengths. Once that’s done, you can form questions to identify a CEO who complements you. For instance, I’m not the best at driving accountability or metrics, but our CEO is awesome at that and has really helped me grow Molding Box.

- Jordan Guernsey, Molding Box

7. Find Someone Smarter Than You

When hiring a CEO, your goal should be to bring in someone who will put your company in the best position to succeed. Make sure to check your ego at the door, and seek out people who are more accomplished and smarter than you. If you feel like you are the smartest person in the room, it’s time to bring new people in the room.

- Adam Stillman, Ditto Holdings

8. Get an Advisory Board

If you want a CEO, get a board. Each board member should have a different core talent. For example, one should know software, while the other knows hardware. One should know finance, while another knows engineering. Bring the board together, and interview the CEO candidate as a group. It’s amazing how some people are swept off their feet, while others aren’t.

- Ziver Birg, ZIVELO

9. Do an Informal Background Check

  The actual interview with a new CEO can be deceiving, and the wrong guy can pass the test. You need to actually look into his or her history: Was he respected? Could she lead a group? Did he try to be a solo star? Finding out these answers from previous employers and employees is the only way to determine whether the person’s a good candidate.

- Joe Martin, Merchandize Liquidators

10. Seek Thought Leaders

  Consider whether he or she is capable of being a thought leader in the industry you’re in. One of the best ways to differentiate your company is to have a CEO who’s leading the way in the industry. Ask questions that test candidates’ knowledge of your field—if you learn something, that’s a good sign.

- John Hall, Digital Talent Agents

11. Hire a Stage-Appropriate Candidate

The most important thing that a founder can do is validate that an incoming CEO shares the company values and is stage-appropriate. I have worked with some very talented folks who were successful, but they didn’t have the mentality for our stage. An overly intellectual, contemplative style is death in a startup, just as a turn-on-a-dime, freewheeling style can create chaos in even a $50-million business.

- Zach Clayton, Three Ships Media

The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the world’s most promising young entrepreneurs. In partnership with Citi, the YEC recently launched #StartupLab, a free virtual mentorship program that helps entrepreneurs start and grow businesses via live video chats, an expert content library and email lessons.

Are you looking to hire a CEO for your startup? Tell us about your search in comments below.

Originally published in GeekWire.

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