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Summary:

I am one of two founders in a startup. Both of us come from a creative background – but even though *we are artists,* we are both firmly grounded in and have a good grasp of technology and business. Still, one of the core qualities of […]

I am one of two founders in a startup. Both of us come from a creative background – but even though *we are artists,* we are both firmly grounded in and have a good grasp of technology and business. Still, one of the core qualities of our lives is a relaxed approach to work – which means that we take the time, to make the time, to get things done right – and *we will not compromise this quality in our lives.*

We believe this is all well and good – but we feel that our business entity requires an additional energy. A driving day-to-day energy that will fuel the infrastructure processes that support business. Out of respect for our personal choices and to our startup *we have decided to seek a third partner – codenamed “The CEO”.* A person who’s motivation and energy are suitable for the day-to-day bustle of running the company.

We have a consultant assisting us with business strategy and fund-raising. He resisted the suggestion of an “outside” CEO. *He thinks that one of the assurances investors look for is that the founders are actively involved* and committed to the company – that they are not merely seeking to make a quick-buck and then leave the company to fend for itself. *Our counter argument was that this 3rd partner demonstrates a clarity and maturity in the founders;* that we realize the critical role of good, professional management and that we are taking measures early in the process to ensure the company infrastructure includes this critical facility.

Though this is an interesting conversation that deserves attention – I would like to point out a more subtle aspect. The subtext of the conversation was that *when it comes to investors – there is talk of appearances -* to make them feel that things are OK.

This carries another, even more subtle, subtext – that *things as they are at our startup now are not OK – that they need to be disguised to appease investors.* This was our wake up call.

We resolved this for now by contining our search for “the CEO” – that third partner that will support our personal needs (e.g.,to nurture our creativity) but also the operational needs of the business. We will give more thought to the form and shape of our partnership going forward, to make sure that it is not just supportive of us, but of the needs of our stakeholders, too. So we have decided to sided with a policy of straightforward truthfulness and honesty at our company.

*THIS BEGS A QUESTION or two:*
*When is it OK for a founder to make strategic or management decisions merely for the sake “keeping up appearances” in order to alleviate potential concerns of other stakeholders — such as investors, customers, or the public?*

*And, what if this requires that a founder minimize his/her own priorities? Are so-called “appearances” ever that important?*

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  1. I am reading the description of your circumstances as being about more than appearances. Your consultant may be correct that his/her task in the scenario may be more difficult to accomplish given a presentation of your startup as you have described it. If you have entered into an agreement with this person to arrange funding for you, then I assume you trust his/her advice on what can and cannot be accomplished.

    If I were investing in a start up, I would naturally be concerned with the question of who will be there 24/7 when a problem arises. This is not to say that anyone has to work 24/7, but the reality is that start ups run into problems, just as all businesses do, only more often. They are naturally more vulnerable and fragile than an established business and require dedicated nurturing. Investors look at your idea and plan, but they are also specifically interested in execution. Therefore their interest in knowing who is in charge and running the show is natural.

    If your yet to be named CEO partner will be more of a marketing and management person, rather than an equal decision maker with you, then your investors will continue to look to you to inspire confidence in leadership and execution. If you have substantial priorities that override the needs of your start up, then this is a true barrier to investment. To put it in a more colloquial manner, the investor naturally wants to know the person(s) who aver(s), “The buck stops here.”, and take a measure of their commitment to success. They typically want to hear and believe that an entrepreneur is determined to do ‘whatever it takes’ to succeed.

    Whether your definition of non-negotiable priorities is something to the effect of, “I won’t eliminate my family life and obligations.”, or more along the lines of only being willing to work a pre-defined maximum number of hours per week, makes a difference in what the issues, as opposed to the optics, are.}

  2. I was having a conversation about this very issue with a mentor (herself a CEO of a fairly big startup) and she felt strongly that investors want to see co-founders with passion, drive, and vision in the drivers seat. That being said, she and I both agreed that bringing in a COO/business manager is a good idea so that my co-founder and I (who are also artists, btw!) can focus on our vision and someone with more business experience can help with the day to day stuff, which it sounds like your issue may be as well. If you’re going after funding, you may want to include briing in an experienced COO as part of your business plan.}

  3. Thank you Amie – that small switch from “E” to “O” really feels like a step in the right direction. I am working on establishing a better definition of the job-requirements then the actual title! I hope that will clear things up for us!}

  4. The only point I’d add here is that it’s always a mistake for founders to view a newly-appointed CEO as a “partner” in a business, even when they, and not the investors, make that appointment. The CEO is there to be held accountable for the direction and performance of the business, and if they are worth their salary then they will indeed take control and lead the company in the direction they believe is right. Seems to me you are not yet ready to accept that state of affairs, so adding a COO at this stage, who will operate under the overall direction of one of the founders, may well be a better option.}

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