It is probably not shocking to those in the field that numerous startups fail due to founder conflicts. I have seen this happen to many founder friends. In fact, Harvard professor Noam Wasserman claims that 65% of startups break down due to this reason.
One of the reasons involves disagreement in the roles and responsibilities. To determine who should do what, a newly-formed founding team should go through a 2-step process.
- Have alignment on the responsibilities of each role, the more specific the better.
- Have alignment on a framework to determine the assignment of individuals to the roles.
It is possible that the responsibilities in step 1 evolves over time (e.g. when the company direction changes, or as the company scales). However, at any static point in time, founding teams should have clarity on which responsibilities fall under which role. In step 2, founding teams should collectively design a framework that is not driven by emotions, aspirations or pride. It should be a framework that gives the startup the greatest chance of survival and success, and frankly, should not be convoluted.
At the startup I founded, the framework we used for step 2 involves 3 simple guiding principles.
- If person A is substantially better than person B in function X for this business, person A should be in charge of function X.
- If person A is marginally better than person B in function X for this business, person A should ideally be responsible for function X but not necessarily so based on the synergistic nature of some functions (e.g. product and tech should ideally be bundled together).
- Founders, just like everyone else, have aspirations to level-up. Founders can set up a plan to be better at something they are not very good at and want to be better at, but the first 2 points still take precedence. This is especially true when outside capital is involved, because founders have a responsibility to try to generate returns for investors.
Based on the framework we used, arguments such as “I came up with the idea and therefore I should be CEO”, or “I can grow into the CEO role even though someone else on the founding team may be the better CEO” have no merit. Certainly, founders can and should design their own frameworks (i.e. there is no assertion that the framework we used is the best), but everyone should agree at the framework level, before assigning the roles and responsibilities.
The CEO position
Since the CEO position is perceived to be the most highly coveted role, I will take the luxury to expand a little bit more. The CEO is analogous to a conductor of an orchestra. His/her role is to bring in the best possible musicians so that the orchestra as a team can present the music in the best possible way to the public. There are a few important points that are worth highlighting.
- The conductor is often not the best musician (violinist, percussionist, etc). In startup terms, the CEO may not be the best executor, and overtime as the company scales, the CEO will not know each individual domain as much as other specialist leaders such as CTO, CRO, CMO.
- The conductor’s role is to bring out the best of everyone in the orchestra, especially the leads (e.g. first violinist). In startup terms, the CEO’s responsibility is to make sure the core management team can shine. To a large extent, the CEO should try to make others more successful than himself/herself and should always optimize as a team.
- Even though the conductor may not be an expert in any single instrument, his/her role is to set the musical direction. In startup terms, the CEO’s responsibility is to set the vision correctly and in this regard, the CEO should be the final decision maker. This tends to be underestimated, but defining the company direction is an extremely challenging task and can make/break a startup.
The CTO position
In a technology startup, the CTO is often viewed as an equal. Seasoned technology investors are cognizant of this, because they know that what generates outsized returns for them in many of these businesses is the “technology leverage”.
Starting and building a technology startup is a difficult journey. In determining the roles and responsibilities, it is important to remember that you are optimizing as a team, not as an individual. It is also important to remember that we are all human beings, and therefore, we need to convince not just intellectually but also emotionally.