I think you are absolutely correct.
I am the MD (CEO elsewhere) of an IT consultancy that is 18 years old. We have around 20 staff and t/o ~£1.5M. I like to sleep at night, I do have ambitions but they'll never be cool. Our business model will never set the world on light but we are one of many companies that you will never hear of that keeps the world turning. We are the boring lot that worry about backups and security. We host some customer systems at our place and run a near comprehensive monitoring system that generally warns us pre failure. We also have a few other skills around the place.
There are other reasons why startups don't go big and that is by design. I do not want my firm to go big. If we hit around 50 staff then I will break it up into bits (budding).
Did I mention that we are boring? I like boring.
I was (1997-2000) a contractor in the IS department for the really large aerospace company in Yeovil, Somerset, UK (it's changed hands a few times). I eventually got to the team doing server management, app delivery etc ie third line. IS was due to be "facilities managed" and two of my colleagues approached me to be the MD of this thing they'd cooked up. The idea was we would go external and resell ourselves as a unit back through the on site supplier of IT/IS services. The supplier chosen by said aerospace company used to have a short name that matched the name of a famous sauce from these shores - it's brown (the sauce) and starts with H.
We rented a small unit down the road (proper rural around here) and had an old PC that ran Win 98 as a file server etc etc. We put in a ISDN BRI link (2x 64Kbs-1) for internets. We had one customer.
We moved on gradually and learned. Our first employee stayed for around eight years and then moved on - still in touch. Employees 2 and 3 (poached off a local travel agency - terrible pay there but we could better the pay despite being a little setup: E2 stayed for 10 years and moved on and sadly played silly buggers with customers - nothing too detrimental but still a bad taste left behind. E3 still with us, complications recently but all good now.
By 2013ish we now have around 15 odd employees. We have moved to a bigger pair of units in the same area that we started from. We now have modern systems involving (small) racks, virtualisation etc.
The norm for most companies is to rent but I wanted to own my premises. My thinking was that we could do more stuff. We looked for a while and ended up buying (story short!) an NHS clinic in Yeovil which is the largest town in the area.
We now have five internet connections - a leased line (100M) and four FTTC (ADSL 80/20) and a pair of pfSense HA routers running on Dell R310s (to be ditched soon - they can't do AES-NI) with a lot of IPSEC VPNs and OpenVPNs and 10ish internal VLANS. We have a proper computer room with proper gear. We also have a lot more customers these days. We are now ISO 9001 and 27001 registered and lots more stuff.
Every day I love going to work. Don't get me wrong - it's still hard. I came into work the other day and found an employee in tears. I sent them home (obviously, I can't say too much here). Two of our employees have moved on and then come back again (one of them was once a lover of one of my business partners). Thanks to our past involvement with a large firm whose name is saucy, we have several customers these days that you will probably have heard of.
One thing that I think we have is that we have three Directors - a Triumvirate if you like. Any two can gang up on one - it works very well.
I'm a very lucky person. I'll never be a millionaire but I'm very comfortable as far as I'm concerned. I'm a shopkeeper and fucking proud of it.
Cheers
Jon
IMO thats a classist lie that keeps people in their place. Any reasonably smart CEO can learn his way from 10 - 10000. Yes, (s)he may not be capable of 10k on day one, but they can grow along the way.
It's absolutely true that some people can evolve from a leader of a small company/team/project into a leader for a much larger one. But it's also absolutely true that not everyone can and that the skills to lead that larger endeavor are significantly different from the skills needed to get something off the ground. It's likely that Docker would never have gotten off the ground without someone like Soloman to take a very opinionated stance and drag people towards his vision. But if Docker is to continue to succeed, it now needs to expand its reach learn to be what people need rather than convincing people that they need Docker. Not being on the inside, I can't say for sure whether Soloman is capable of evolving into a leader that can move Docker in this direction, but the superficial view from the outside suggests to me that this was probably the right decision. It's no knock against him as either a leader or a technologist, it just feels like it's not the best fit going forward and his efforts would be better spent on something new that pushes a new vision forward.
Sorry but this is extremely naive and I'm sorry that your naïveté has caused you conclude things which are simply not true.
This is a very strong assumption, and a lie that is peddled by the media (Zuck is the greatest example of this) to create a novel story. I'm not saying it's impossible, it's just a dangerous assumption.
For the record, I've interviewed over 75 software founders (CEO/CTO) and I can tell you right now that there is nowhere near even 50% of them who have the ability to scale their companies.
Furthermore, there is a reason many of my clients (PE investors) replace management teams who cannot scale businesses and when they do, they reap financial awards as a result. So my conclusions are based on following the money...
What direct experience do you have with this to justify that claim?
Obviously sometimes people brought in are nothing more than sacks of potatoes that make noises, but I think its insulting to the intelligence of everyone involved to believe even a significant proportion of people fall into that category.
It's just a different set of skills to the ones for 'technical founder' and involve things like... organising, collaborating, compromising and socializing... you know, grown up things that leaders are expected to be able to do without screwing up.
Scaling a company is lot more than just scaling the tech.
I know way more people whose money is on the line that will gladly take that bet.
Analogy: (far) less than 50% of military officers have what it takes to be a general/admiral/other “logistics at scale” type. But yet still, military officers with experience commanding in smaller engagements are the only good source of those high-level strategists. If people couldn’t grow into roles requiring more responsibility of them, militaries would be “making” admirals and generals from scratch.
Does that sound feasible? If not, then why would one be able to “make” a Fortune 500 CEO out of anything other than an existing, experienced SMB CEO?
Maybe, just maybe, Harvard Business School is the place for teaching better than 50% to do well and expand.
https://en.m.wikipedia.org/wiki/Higher_Command_and_Staff_Cou...
There is nothing inherently special about someone who runs a small vs. big company, except for experience. I agree with the poster above: classism at its finest.
I think the question is, given that someone can do one of those things really well, how likely is it that the same person can do the other really well too?
It seems obvious that the kind of traditional business ceo that investors often want to find to replace a founder is not going to be successful as a starter. Let's just accept the common assumption on that one.
I'd argue that what makes a great startup founder often makes a terrible leader for large corporations. I think every great founder has a reality distortion field (https://en.wikipedia.org/wiki/Reality_distortion_field) which projects their vision, keeps them pursuing seemingly bad ideas in the face of insurmountable odds and allows them to overcome the biases and assumptions that dominate so many business decisions.
Some leaders expand and adapt this to build great, crazy companies: Steve Jobs, Elon Musk, Zuckerberg (maybe). Often they also create a cult-like, maybe toxic, certainly messy corporate culture that still somehow succeeds.
Others can't do this: Travis Kalanick, Elizabeth Holmes, Parker Conrad. They let their "startup founder, growth at all costs, thumb your nose at the rules" attitude destroy their company culture and embroil them in ridiculous, easily avoidable legal issues.
In my experience, a corporation's culture is the manifestation of the most extreme personality traits of its leaders. There is a time, when crossing the chasm, that the exact traits that made the company grow rapidly and the founder extremely successful are the ones you want to suppress to create a stable, efficient and effective collaborative endeavor involving thousands of people: a corporation.
I think (and this is due to some reflection on my own ideas) that if you reject the idea that there comes a time when a company should abandon "burning vision" in favor of stability, process, predictability, and broad appeal, you're actually rejecting the idea of a corporation as a hierarchical system of power deployed to efficiently organize the work of thousands of people. And I'd probably agree with that. The traditional corporation needs a traditional ceo but it's a damn shame that every revolutionary startup has to end up as a traditional corporation.
In other words, you can't use a broken system to criticize leadership.
Second, if they do learn that skillset as the company grows, then they would be a great man/woman for that job.... at their next company. For this company, you'd want someone who has it right now, not someone who'll learn it halfway, from costly mistakes.
There's nothing classist about it. You could train an army corporal to become a general. But you can't just take an army corporal all the way to the experience needed to become a general in a year or two. It takes generals 20+ years before they have the skills to lead thousands of soldiers. To suggest that any reasonably smart corporal can go from leading a squad to leading a division in a few years of on-the-job training is just ludicrous. If I'm wrong, then please provide some data. Actual data, not anecdotes.
Nobody is saying that a corporal can't ever become a general. The suggestion of classism is implying that a corporal can't become a general because he's not of the right class. Of course a corporal can become a general (at least in the US Army) -- which is the very opposite of classism. We're just saying that a corporal doesn't become a general through a few years of on the job training and that a corporal doesn't become a general while on the battlefield.
What I'm saying is that a good large-company CEO is gets those skills over years of experience. If a founder-CEO slowly scales, then perhaps on-the-job training would work. But when an org goes from 10 people to 1000 people in a few years -- it would take an extraordinarily lucky person to be able to handle that transition without prior experience.
You assume that they all want to scale. There is a place for us boring people. We are the ones who do something well and are reliable. We don't blow the profits on fancy cars and houses. We have shit loads of cash in the bank at all times relative to t/o. In 18 years of trading there was one month that me and my partners didn't pay ourselves - to cover employee salaries without creating an overdraft.
Bugger scaling - I'm happy to sleep at night. Some of our customers are amongst those that you will almost certainly have heard of, regardless of which country you live in.
If they've taken outside investment based on a business plan of scaling, then it doesn't matter whether they want to scale. They either need to do it, or hand it over to someone who will.
I love nicely sized companies that are profitable and long term viable without the need to chasing after constant growth, but you only get to do that if the investors agreed to it. That's much easier when the investors are just the founders.
What you just wrote does not contradict maerF0x0's assertion. If you can recognize what makes someone capable of scaling a business, and what makes someone incapable, then what prevents you from teaching those skills?
I work for a Startup in valley, and I agree. Our founder CEO was fired recently. Why, you may ask?
Because he was a really poor Manager, so poor that even Senior Engineers could see it clearly. Luckily board came to senses and replaced him with a proven CEO.
Sad but that is the truth, to scale you need different skillsets and off course being a good Manager is just one of those.
(Are they unwilling to delegate and trust others to make decisions? Overly focused on trying to be involved in and influence everything?)
The kind of people who enjoy running a company with a ragtag group of 10 employees in the early days are rarely the kind of people who will be able to effectively run a 10000 employee operation.
If you’re growing fast there is no time for on-the-job training as CEO. You need to be effective immediately or else you are only hurting your company’s growth.
How about the reverse case? Would, say, Meg Whitman or Satya Nadella, for example, be able to act as a CEO or co-founder of a small company, say < 10 employees?
But then I thought about Bill Joy, Bill Gates, Larry Ellison, Steve Jobs, Jeff Bezos, Mark Zuckerberg, and, well, you hopefully get my point.
Which is, even though I agree that most startup founders probably would not be able to head the same company as it grew by multiple orders of magnitude, there are enough famous outliers that we know it can be done and can be done spectacularly well.
There must be a statistical name for this apparent paradox. (Or am I just experiencing confirmation bias?)
EDIT: grammar nits
Maybe at one point they could, early in their career, but by now those skills may have atrophied.
In this case, the appropriate term would be "survivorship bias". Those who survive are noticed and used to generalize to the group, even if their survival is atypical of the group as a whole.
Language changes constantly, and meanings often flip from one century to another. The previous meaning of "prove" doesn't obviate the modern usage inside or outside of the phrase in question or turn the clock back. That particular horse escaped the barn, long, long ago along with tens of thousands of other changes in the last few centuries. "Probable" existed before probability theory did, and it didn't refer to odds or math; it just meant "respectable."
I could follow your own suit, I suppose, and compliment you by calling your comment "smart", since that word used to mean "painful" in olde english and you prefer the old ways. But I won't. (I'll just say your comment was interesting, and not quite the full story.) I roll with the common currency: language as it is. Print greatly slowed these sorts of changes, and the internet will slow them even more, of course, as the decades and centuries roll on.
In general, I try to correct it in order to give the benefit of the doubt. Either somebody is misusing a phrase, which is a charitable interpretation, or somebody has a fundamentally flawed idea of how evidence works, which is rather uncharitable.
Basically, you can name the exceptions off the top of your head, but you could never do that with the non-exceptions because they're so numerous. Kind of like how in your parking example, you don't need to name the hours that parking is allowed, because it's a rule. It's always allowed, with some exceptions. You only need to point out the exceptions.
I would take your charitable interpretation and say you're misunderstanding the phrase. Since there are examples of this usage all over the Internet and a very long Wikipedia page detailing the various forms, I hope we can move past this wildly off-topic conversation.
What do you think an investment is? How do you think business works?
The guy didn't get pushed out in any event.
The argument is not what an individual is capable of learning and doing but personality fit. The founder who has a burning desire to unleash their idea to the world is generally not the same person who wants to grow the company at a larger scale.
1) I think the founder treats the company too much like a baby and sometimes the hard realities of the business are ignored. It is nice to have a fresh breath of air from leadership who have not been with the company from day 1. They have a different perspective that I believe can make a huge difference.
2) It is a different type of work. Perhaps the person can make the transition but I don't think that is normally the case. The challenges are different at size 500 compared to what t hey were at size 10 and I think a lot of CEOs who strive in the small scrappy environment do not really enjoy it at size 500. Sure they may trick themselves in thinking it is for them but I think it does more harm than good but it is also a learning experience for a lot of first time founders.
Don't confuse me. I am not saying its impossible to successful founder/CEO at size 500+ but I don't think the type of person who founds a company really enjoys it.
See, for example,
https://en.wikipedia.org/wiki/Organizational_life_cycle
and its sources.
Wow. What if the organization begins in Stage 5?
At the 5000 employee level, you are probably dealing with a ton of abstractions that were filtered multiple levels up.
Statistics are pretty clear in the failure rate of founder-CEOs when they scale past certain sizes. Even Zuckerberg -- if it weren't for Sheryl Sandberg, Facebook wouldn't have survived as well as it did. Zuckerberg didn't know the first thing about running a large organization, I might argue that he still doesn't -- but when a company can basically print money, there's a huge margin of error afforded to Zuckerberg-type leaders. If Zuck where competing in the energy business, banking or autos, he'd have been long since buried.
Steve Jobs also wasn't particularly good (managing a large org) during his first stint at Apple -- it took a lot of maturity and learning at Next and Pixar before he was really ready to lead Apple.
Mark Benioff is another founder-CEO that did really well -- however, he was an Oracle Vice President before starting Salesforce. He was both incredibly smart but also had experience within a large organization.
> Any reasonably smart CEO can learn his way from 10 - 10000. Yes, (s)he may not be capable of 10k on day one, but they can grow along the way.
Citation needed.
The list of successful founder-CEOs who have scaled to huge orgs is a very short list.
OK, but many (most, if others' claims in this thread are to be believed) of them don't do so. That contradicts your original claim, unless you want to say that many/most CEOs are not "reasonably smart", which is dubious at best and armchair quarterbacking at worst.
I mostly am rejecting the knee jerk reaction of "Company has grown 100x and now requires a new CEO" ... Who knew this would spark so much discussion?
The relative rarity of CEO jobs at sizes deemed large helps ensure that empiricism is complicated because the sample sizes remain small, so what the truth here is, who can say? It's tough to science.
The "classist" question is why is the pool of people with such experience so small and seem so exclusionary?
One specific thing mentioned up thread is the perception that not a lot of small, startup CEOs "graduate" to large, corporate CEOs and asked the question why doesn't "small, startup CEO" count for more experience in these searches than it seems to? The people that believe that classism may be to blame wonder if it is simply and inevitably because they are outsiders to the "proper" upper class or other such cliques. Anecdotally, there seem to be counter-examples on both sides of that hypothesis, and I don't think either side has enough data to prove or disprove the hypothesis.
CEO of IBM: Ginni Rometty -- grew up in a single parent home, with a mom that worked multiple jobs. Ginni got in to Northwestern and studied computer science and electrical engineering. She certainly didn't have any upper-class advantages. She went to public school.
Geisha Williams, CEO of PG&E (part of the Fortune 500) -- daughter of Cuban refugees -- literally arrived in the US with nothing, her father was a political prisoner in Cuba before being released. He worked multiple jobs to support his family. Geisha started her career as a residential power auditor and worked her way up to CEO. Hardly a "silver spoon" story.
Rex Tillerson (former) CEO of Exxon -- one of the largest companies in the world. Picked cotton and worked as a janitor before getting accepted to the University of Texas with a band scholarship. He joined Exxon as a production engineer and then worked his way up to CEO over the next 30 years. Hardly an "elite."
Tim Cook -- son of a dockworker and a pharmacy worker. Went to Auburn University (hardly an Ivy League, "elite" school.) He worked at IBM from 12 years working his way up to the director of North American fulfillment while earning a Duke MBA at essentially night school.
I could tell these stories all day. There certainly are some elites who do go on to be CEOs, but there are even more CEOs and self-made millionaires that aren't Boston Brahmins or cousins of the Kennedy family.
This whole "classism" idea is promoted by three types of people:
a. those who are actually ignorant about American business and its leaders. Spend some time actually learning the backgrounds of American business leaders and you'll see more "State U" than "Harvard U."
b. those from other countries where a public school girl from a broken home would never become CEO of IBM or a redneck janitor on a marching band scholarship could never become CEO of Exxon -- these are often Europeans where, in places such as France -- if you aren't a male who went to a Grande Ecole, you will never be CEO of a major French company. CEO of Groupe PSA (France's largest car maker) -- Carlos Tavares, graduate of Ecole Centrale Paris. CEO of Renault? Also a Grande Ecole graduate. Former CEO of Airbus? Louis Gallois, also from a Grande Ecole. CEO of LVMH? Bernard Arnault, another Grande Ecole graduate. The "egalitarian" French have nothing but elites leading their top companies. In the US, the most valuable company's CEO? Tim Cook -- Auburn University -- a state school. Rex Tillerson? University of Texas. CEO of Walmart (the top company on the US Fortune 500 by revenue) -- University of Arkansas and University of Tulsa. CEO of United Health? Dave Wichmannm, Illinois State University with an Accounting degree -- not even an MBA and he's the CEO of the number 6 company in the United States. CEO of United Airlines? Oscar Munoz, the oldest of 9 kids in a Mexican-American family in California and the first to graduate college in his family. Some elite. What "classism" helped Munoz? He's the CEO of the world's largest airline.
c. the type of person that is angry at their own life, their own bad decisions or their own lack of success that they want to create a political narrative that supports the "evil capitalism" trope. This is the type of person that feels like they have been wronged by life and society and rather than looking at their own failings, instead attempt to blame some boogeyman. Maybe their daddy didn't love them enough. I don't know. But these are negative people that claim conspiracy when there is none. They themselves just don't think they're good enough and they need an excuse to justify it.
Now, if we were talking about politics -- THEN I might agree that classism has some influence. When we have a brood of Bushes, a variety of Clintons and an infestation of Kennedys, then it's pretty clear classism does have a real impact. But in the C-Suite -- I would argue that the evidence suggests that classism isn't a factor at all, instead it's about hard work, tenacity, luck and intelligence.
All I read was that the needs and the skill-set to meet them vary with scale. There's no class-ism in that unless you project a lot of other stuff into it.
Having a number of hours in a small plane in no way disqualifies you to fly bigger planes.
Also in this case they aren't only the pilot but also the constructor of the "plane".
(That said while most pilots started small not all Cessna pilots should go on to fly passengers or even cargo.)
Unless I’m mistaken, that was actually the point being made; you made it again for him.
Your argument was going the other direction.
Running a company of 10 people is an experientially different thing than running a company of 1000, just like collaborating is an experientially different thing from doing stuff on your own and playing video games is different from using Excel. Being interested in one is no guarantee of being interested in another.
"Management of many is the same as management of few. It is a matter of organization."
With 1000-10000 you never seen most employees faces. You have no idea what they do whole day. They don't know you either and likely don't trust you. You manage by making general rules and by talking to few people directly under you. You dont see impact of your decisions directly, you have to guess from hints and long time.
Note: I'm not saying this is what's happening here, just responding to the general comment above.