I met with an angel investor recently who asked me, “what do you want to get out of Sportaneous — do you want to run this company for the next 20 years and be with it forever, sell it as quickly as possible, or something in between?” He went on to explain that the answer to this question is important for investors, for a variety of reasons.
First off, every VC and even most angel investors expect a 5x-10x return on their investment, so they want to be sure that the entrepreneurs they fund are motivated by HUGE (and not just big) opportunities and potential outcomes. In other words, a person who simply wants to create a modestly successful business, which he can sell for a modest profit is not the kind of entrepreneur an angel investor or VC is interested in. They want somebody who is really shooting for the sky and determined to do whatever it takes to get there.
That having been said, the other extreme an entrepreneur who not only wants his business to be HUGE but who also feels that he is the only person who can ever make it that huge – may also be a turn off to an investor, especially if the entrepreneur has never run a big company before.
Many successful business leaders are either well suited to build a startup from scratch, or well suited to run large companies, but few people are equally good at both. This makes sense given that the skill set is quite different…an early stage founder & CEO needs to be:
1. creative enough to come up with the idea;
2. resilient enough to deal with all the hurdles and challenges at an early stage;
3. determined enough to keep going in spite of many early failures;
4. extroverted likeable enough to successfully pitch an idea to investors and walk away with a check;
5. flexible enough to be able to do a wide variety of things (including the non-glamorous ones), since in the early stages of a startup each team member needs to wear ten different hats and effectively become a jack of all trades;
6. inspiring enough and a good enoughleader to motivate a small team to work non-stop and feel good about doing so despite low wages;
It’s not uncommon for early stage CEOs to also be the company’s secretary, treasurer, and possibly even janitor. A typical day for me at Sportaneous often consists of a conference call with an investor or advisor, a few hours of intern-level market research on Excel, a meeting with a potential strategic partner, a roundtable discussion with our CTO and Lead Designer about a feature set we’re building, and a few minutes spent sweeping or mopping the office floors.
The CEO of a large company, though he or she does need to have similar leadership skills as a founding CEO, must also have significant experience in the industry he or she operates in, the ability to lead a large team of workers, often with different divisions, and general business experience running a large organization.
The founding CEO who successfully builds a company from nothing to something is rarely the same person that leads the company from ‘something’ to ‘something huge’; it’s not impossible for this to be the case, but it often takes several key hires in operational roles for a startup to move into big company territory and still compete successfully.
In my own case with Sportaneous, I, like most founding CEOs, am absolutely obsessed with the company, really believe it is the ‘next big thing’ and want to play some kind of a role for the life of the company. That having been said, I recognize my own inexperience and if I’m fortunate enough to build this into a huge company, I would certainly bring somebody on with significant operational experience to come in and help. After all, I’d rather be a smaller part of something huge than a huge part of something small.