By Melinda Thomas, EIR.
You’ve got this great scientific technology. You’ve been working on it for years. No one knows it better than you or has more passion for it. You want to start a company. The question is, should you be the CEO?
There are two main things to consider when making this decision:
- What does the company need in a CEO?
- Do you have those skills?
I was asked to speak on this topic at a recent Idea to IPO class session at the New York Academy of Sciences. I did an exercise of asking the class full of scientists to tell me what they thought a CEO’s job was. As they shouted out ideas, I wrote them on the whiteboard. I then asked the scientists to tell me what skills were necessary to fulfill each of those responsibilities (e.g., fund raising, strategic thinking). I wrote these on the whiteboard as well. Lastly, I asked what skills were typical of a scientist. Wherever there was an overlap with the skills needed to be CEO I circled it. In the end, about half the skills were circled, suggesting that scientists in general may not have everything needed to be a CEO. If you’re thinking about this for yourself, try the exercise and see what results you get.
This is not a static question. There are phases to a company. What it needs in one phase may be very different than another. For example, in the beginning, if the major challenge is that most of the company resources will be focused on further developing the technology, then perhaps a scientist who has led major research efforts can lead this team as well. But if the major challenge is finding customers for your technology and developing commercial contracts, then perhaps not. Steve Hochman of Ascent Biomedical Ventures, a local VC firm, said recently at a NYC Health Business Leaders event that “Marketing a scientist right out of academia as the CEO is a big mistake.” If you’re going to do it, you need to demonstrate that you have credible entrepreneurial expertise and a strong business advisory board.
You may say that you’re a really smart and driven person so you can develop the skills needed. Plus you would be saving the company money. That may be true, but do your investors want you to learn on their dime especially if you will transition out of the role in the future? And do the mistakes you will make and your lack of efficiency early on at those new skills, really save the company money? The best use of you as a resource to the company may be in moving the science forward more quickly toward the eventual product, and not being distracted by the other things that a CEO does.
Let’s say that you think you’re the right person to be the CEO for at least the first 12-18 months of the company’s life, what do you do when it’s time to transition? There are several options: 1) You can become the Chief Scientific Officer (CSO). This is the most common transition; 2) You can leave the company. This is the second most common transition; 3) You could leave the company but stay on the Scientific Advisory Board (SAB). The CSO or SAB roles are also ones you could take on at the beginning instead of being the CEO.
If you do take on the roll of CEO, some common mistakes to avoid are: 1) Being so enamored of the technology that you fail to focus on the market (i.e., it’s so cool everyone will want it); 2) Coming up with new and different applications for the technology every month. This is a corollary to #1 in that you can’t focus on the market if you keep changing who you think your target market is; and 3) Failing to deal with the people issues efficiently and effectively. In an academic lab, there’s often no rigor around holding people accountable for their work, getting rid of non-performers, or dealing with tensions within the team. Most people are usually working in parallel on their own research and transition out of the lab with regularity so dealing with these types of issues has less importance. In a start-up culture, in particular, these are the most important problems to deal with (see last week’s post on founder’s dilemma).