How do you decide who becomes the CEO from among the founders?
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 (or presenting and communicating the story), 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 the 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 for 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.
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.
To download a free PDF of my book on Starting Up and Fundraising, click here.
By Prajakt Raut — Managing Partner Supply Chain Labs — A sector-agnostic fellowship fund investing in startups disrupting supply chain, and Founder applyifi.