A good question, and one most professionals get wrong. Even professional recruiters. Although this can depend on many factors, generally speaking the CEO does not need to come from the industry.
The existing employees and team should bring the industry and domain expertise. If it is a raw startup with no staff, that is really a co-founder, not a “CEO hire”. And no good CEO is going to work for a founder that has little experience. Most experienced CEOs do not want to take raw startup risk, they come in later when the risk is fleshed out and scaling up is the challenge. The founder better bring large industry experience and/or management experience and a killer business plan, having completed deep market research, competitive intelligence, and other development work. A company is worth zero dollars until this is done.
It is often better if the CEO is not buried in the industry standard belief systems, as then they can go beyond it. Any company...
The best way to destroy your credibility with investors is to say we are going to attack, and own, a multi-billion dollar market. Although this may intuitively seem to attract investors, in actuality it is a fatal mistake raising capital. Your credibility using $100B or $1 trillion markets is shot to hell. Here is why.
No startup should be going after a market larger than $1B five years out. An ideal market niche size is between $100M and $250M. Niching down is not optional. It is basically suicide to tackle huge markets. Even better is a series of niches in a portfolio of markets shown below.
I have often done with 100% success a “Portfolio of niches” strategy for market entry. This means laying out and ranking many niches and then prioritizing them by various factors. And it sets you up to be very agile, too. The product roadmap and target niches expand each year, as shown below. The first chart shows the long-term market potential for a horizontal product...
There are many factors, and it is too complex to offer a standard answer. You need to hire a consultant that is a CEO/Founder with lots of experience to discuss things for 1–2 hours.
One way around this is to set hourly rates for the founders and track time to allocate it according to contribution. Shares are earned with seat equity. A simple spreadsheet with monthly invoices submitted by everyone is easy to do. There are plenty of software solutions for this too, but likely best only when it gets complicated with many founders.
People and Founders are never “equal” in what they bring to the table. So, splitting 2 or 3 ways is not usually an unfair solution.
Factors to consider:
It continues to amaze me how ANYONE is willing to vote for Donald Trump. Sure, we need to get back to more conservative values (obliterate DEI, quotas and the out of control woke nonsense like pretending transgender people are normal and educating young children that this is okay), fiscal policy and reduce government by maybe 50%, or more at all levels. Do not get me wrong, I am 100% for equality of treatment of people. Just not equal outcomes. It seems our younger generation cannot tell the difference.
Trump is clearly not very bright, is totally unethical, is a prolific criminal and will be going to jail soon too. I doubt anyone ever got indicted for over 100 felonies and got off without a jail sentence. Only corruption in the system would prevent him from getting a long sentence.
How can anyone think voting for him, instead of insisting on better candidates, is a good thing?! It means they are either ignorant of the facts (listed below which are in the news everywhere), dumb or...
Ideas are worthless. And it would be totally legal for them to steal them. Maybe you are confusing patents, copyrights and other intellectual property.
An “idea” has no legal protections. And you can be pretty sure you are not the first one to have any given idea too. And if anyone can steal a single “idea” and replicate your business, it is a very bad business. What you need is lots more including many things like a business model, target market, product/service and hundreds of ideas.
Companies need a team, plan and many protectable ideas. These are protectable intellectual property when kept as trade secrets, patents and copyrights. Almost every company should have some of these and contracts with employees to prevent them from taking them.
Investors do not sign non-competes or non-disclosures because they need to meet too many people.
Frankly, if your “idea” is all you have, you should not be talking to investors as you are...
Here is a short list, but there are many more things which come only from experience and feel interviewing. This is why it is best to have at least 15 years' professional experience before starting a company.
It all starts with a strong, documented values statement that is taken very seriously at every stage. This means enforcing it and using it as a basis for reviews, bonuses, and promotions in a visible way.
Here are more key component of a process that will work:
Startups should never, ever, never compete with big companies. They must offer something different. “Differentiated” is the most important word in designing a startup market entry strategy.
Look at this diagram and decide how you can adjust your company to be in the top right quadrant. Without that you have no chance of surviving, never mind profiting, because you will compete with companies 100 to 1,000,000 times larger than you with already developed marketing and sales channels and huge budgets.
Only these kinds of companies will attract investors (needed to grow) and top employees because they know the stock options can be game changers for their personal wealth.
The personality traits that a strong entrepreneur must have include:
A reasonable salary for any CEO or founder is a $100K to $200K today. This depends on their experience and market value which could easily be $500K+. A CEO with ten years in that seat is worth $300K to $500K base salary, but investors want them to have skin in the game and urgency too.
Like a salesperson you never pay them enough in base salary to be totally happy, or financially comfortable. Stock value should be the main long-term motivation. At 20% capital gains tax, not 50%+.
What is more important is that the base salary is a small fraction of the upside of their equity. Investors want founders 100% focused, not worried about paying their personal bills, or moonlighting to do that.
Building a company is a marathon not a sprint. All the founders need to be committed for a 5 year period. And in any VC level opportunity ought to have at least $10M to $20M upside with reasonable success. With 3 to 5 key players that's a $100M stock option pool. Normally at least 10% of the company,...
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