The most successful start up company management teams contain a workable mix of entrepreneurial vision and seasoned, successful management experience.
It’s rare that one individual combines both the entrepreneurial vision and the necessary management success. Sometimes the ideal combination is the vision of a founder and the previous success of an experienced CEO.
Build your additional management team around the tasks required to start your company. Often these are technical tasks like product development proof-of-concept or product testing. If you think you can get some early sales of your product or service you might want to recruit an experienced sales person. You can probably save a Chief Financial Officer or VP of Manufacturing for later. These are usually area where a startup need only a modest amount of help.
The excitement of a start up company and the opportunity to create wealth through stock options are often all you need to compensate your initial team. Startup companies often operate for a year or two with a management team whose only compensation is equity. Obviously, your team members expect to receive a salary sometime in the future, but that might not happen until the company is able to raise equity capital.
If you expect to raise capital from venture capitalists or angel investors you will want to build your team with people who have documented success with closely related products or services.
The most important member of your management team will be the CEO. Investors will look to the CEO as the focal point for all activities. They will expect the CEO to manage the company — to provide leadership, develop an effective plan, recruit the necessary team and manage the company’s finances.
Investors prefer to invest in CEOs who have successfully managed companies with related products or services.
We all know the stories about wildly successful entrepreneur/founders who create massive wealth. Steve Jobs. David Packer. Bill Hewlett. Gordon Moore. These are rare exceptions. Most successful startup companies are managed by CEOs with previous experience and success. Sometimes venture capitalists bring CEOs into companies. Some venture capitalist even have “executives in residence” on their staff.
Only rarely do venture capitalists invest in companies whose founder is also the CEO. Successful CEOs are usually the product of 10-20 years of management experience. Venture capitalists generally do not want their funds to be used for on-the-job CEO training
Getting the right CEO for your company is a tricky “chicken and egg” problem. It’s hard to attract a top-quality CEO if you don’t have funds, but it’s even harder to get funding without a top-quality CEO. Sometimes it takes a lot of creativity to entice a top-quality CEO who will work (temporarily) for no salary and who will be able to attract equity capital.