You Are Only A First Time CEO Once

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You Are Only A First Time CEO Once

I heard myself say this yesterday at a Board meeting. It sounded kind of silly coming out of my mouth, but after thinking about it, I thought I'd expand a bit on it.

The hardest job in management is the "first time CEO". I have absolutely no data on this, but I suspect that at least 75% of first time CEO's fail at some level. Many get fired. Many go down with the ship when it sinks. Some quit. Many sell their businesses before they've realized their full potential because they just can't figure out how to do the job right.

But in venture capitalism, among the most pure forms of capitalism there is, failure isn't all bad. Because, as i said yesterday, "you are only a first time CEO once". Most talented business people come up the learning curve quickly. And the next time, they don't make the same mistakes. They move faster. They listen better. They spend less. They hire better. The list goes on and on.

So, what does this mean for VCs? It means back serial entrpreneurs who have done it before. But if you can't do that, and are backing a first time CEO, recognize the risks of that. Mentor, coach, and pay a lot more attention.

What does this mean for entrepreneurs and managers? It means that the first time you run a business, you should admit what you are up against. Don't let ego get in the way. Ask for help from your board and get coaching and mentoring. And recognize that you may fail at some level. And don't let the fear of failure get in the way. Because failure isn't fatal. It may well be a required rite of passage.

Comments (16) | Posted January 14, 2004 in Venture Capital and Technology

Comments

As a first time CEO, I couldn't agree more. Knowing what you don't know, as my father and mentor often says to me, is the most important part of not just surviving, but growing your company and yourself professionally.

Posted by: Matt Blumberg | Jan 15, 2004 12:05:43 AM

What an encouraging and true post! I have a so-so tenure as first-time CEO behind me and am now in my second business, and know exactly what you describe. I still make many errors, but I routinely avoid so many as well.

It's as it is described in The University of Hard Knocks: When you have a glass jar of many white beans and some walnuts, and you shake it, the walnuts will rise to the top. But you gotta shake it, man!

Posted by: Anonymous Second-Time-CEO | Jan 15, 2004 1:41:56 PM

Right you are. Here are a few published quotes that underscore what you've, so aptly, stated:

"Experience is a good school, but the fees are high."
-- Heinrich Heine

"If we could sell our experience for what they cost us, we'd all be millionaires."
-- Abigail Van Buren

"Experience is the worst teacher; it gives the test before presenting the lesson."
-- Vernon S. Law

Posted by: Bill G - 3 time CEO and still learning how to get it right..... | Jan 16, 2004 5:40:58 PM

In Japanease business society, onece a CEO failed you never come back.Only winner can survive so many good managers do not have courage to try to become a CEO.

Posted by: Harry Miyamachi | Jan 19, 2004 11:20:12 PM

I read this post twice.

First: as is; regarding CEOs.

Second: regarding Presidents...

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Posted by: directx | Sep 29, 2005 10:31:03 AM

When I made the decision to join my first start-up as CEO (that was 3 companies ago now!), I was scared to death. I wanted the job, but I was afraid that I didn't have the skills or experience to be successful. But I correctly figured that if I failed I would be a "failed CEO" -- a big step up from "Successful Product Manager". After growing that 2-man company to $25m in sales then watching it evaporate in the post-bubble-911 world, that reasoning turned out to be right. I got another shot and used all the lessons I had learned to succeed the next time. The lessons were easily learned because because I had wonderful teachers (investors, outside directors, and other CEOs) and because I was completely open to their suggestions. I was sure that I didn't know what I was doing, and I chose openness rather than defensiveness. If you're a first time CEO, do the same!

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Posted by: ì´í | Oct 12, 2005 2:41:53 AM

Lots of good comments to the post.

For entrepreneurs: Along with being smart enough to know what you don't know and learning from your prior experienes, building the appropriate team is key. It takes all kinds to get it done. Diverse people yield diverse perspectives, which in turn can yield a better outcome. Think about that Chicago Bulls team that had Dennis Rodman and Michael Jordan in the starting line up. Rodman may have been a pain in the ass but they got it done.

For VCs: first time CEOs that may have less experience, also have less baggage. A fresh perspective and a little naivity, which a first time CEO has can be invaluable. And with the right support the board, a young CEO can go far.

For both: the other thing to keep in mind is having the right CEO at the right time. The CEO of a known brand company that is publicly traded isn't necessarily the right CEO for a startup building something in the brave new world category. He also isn't likely the right guy for a series B stage.

Posted by: Michael Cerda | Oct 13, 2005 5:34:25 PM

You are so damned right. I am still in the saddle as a first time CEO, mainly because our company istn VC founded i think...;-) So the only one I can blame is ME and if I was ME (oh god) i would have fired myself a year or so ago. But I think i am getting it increasingly better from month to month now. Its my 7th year but i think since 9 months or so i for myself feel a certain difference.

Posted by: Michael | Oct 16, 2005 3:17:23 PM

Great post. My run as a first time CEO was maybe the most difficult thing I've ever done. I now mentor several first time CEO's and watch them making many of the same mistakes I did. I often wish I could hit rewind and have a do-over knowing what I have now learned.

I've often thought that my greatest steps forward as a CEO and leader in the entrepreneurial community came as I've made mistakes that I was initially defensive of....not the successes that came. The mistakes were difficult to come to grips with, but now have become a significant part of my approach to leadership.

It is refreshing to see a VC's perspective on this issue. Nice post.

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Posted by: astuce | Nov 28, 2005 7:32:46 AM

I am becoming a "first timer" CEO for a not-for-profit organization. Is there any immediate pitfalls I should be avoiding? And, what do you think is key critical planning for the first 12 months?

Posted by: Sharon | Jul 19, 2007 2:23:41 PM

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