Good (CEO) Help Is Hard To Find

I think overall your statement holds true. There are exceptions though, like Lou Gerstner, but then again IBM isn't as technology driven as other companies. I used to work at Lexmark, and our first CEO was an economics guy. Our second was a PhD EE, and I think they both did pretty well, but Curlander(the newer one) has definitely done better.

Here is my question to you as a VC. How much management experience is necessary for a technical guy to be trusted by a VC firm? I ask because as young guy with an MBA and a BSEE, I have a long -term goal of running an AI company. The technology is still 15-20 years away, but I am torn as to how to split my time until then. I have done FPGA design for several years, but am now moving into business development. I have done this because I heard Scott Moody (CEO of Authentec) speak about how much he was rejected by VCs despite his 15 years of management experience - they thought it wasn't enough to put him at the helm of a startup.

So, my own career strategy has been to choose management skills over technical skills. I figure I can learn the technology, but management skills are more of an art. I'd be very interested in any thoughts you have on this.

Rob,

Focus on developing a product/service that is scarce and will make your customers more successful. Combine tech- and business-savvy as appropriate.

DO NOT get caught up trying to derive an action plan by taxonomizing hopelessly under-defined terms like 'technical skills' or 'management skills'.

Tech skills are management skills, after all!

(Once dizziness subsides, proceed apace :^)

Rob,

A good illustration of my above (would-be) point can be gleaned from:

http://www.wiredcottages.com/books/whartonondynamiccompetitivestrategy/conjointanalysis.htm

The page contains the text of chapter 15 from Wharton on Dynamic Competitive Strategy:

USING CONJOINT ANALYSIS TO VIEW COMPETITIVE INTERACTION THROUGH THE CUSTOMER'S EYES

Even a cursory scan should make plain that it is impossible to credibly perform this analysis without business- and tech-savvy...

It's funny reading this in "Venture Blog" ... as I have yet to see a VC who took any company seriously that had a technical guy at the helm.

I myself served as CTO at a company well described by this article ... with the result being the same.

My experience is that the successful companies have the "technical" person as COO (or Sr. VP Egr), with a "sales/marketing" guy (with a technical background) as CEO. COO runs company. CEO raises capital, drives strategy, hand-holds customers, negotiates contracts - all which are non-technical.

Ever see a "pure engineer" give a presentation to investors? It's really embarrasing. I also agree with Mr. Volk that VCs don't fund companies with a scientist at the helm - or if they do, they push him out pretty quick to bring in "professional management".

Thanks Frank. It just seems that most of the company founders I have talked to over the last few years all had a hard time raising capital. The most common complaint was either lack of technical expertise in the field, or lack of management experience. But the truth is, it is hard to have lots of both. I have done FPGA design for 3+ years and most people are telling me if I want to be CEO I should get out and get into sales/marketing.

I have written about this at (http://www.ekagra.org/archives/000022.html).
Synopsis is "So a successful technology company can have either a geek or a suit as the CEO. He need to be tremendously customer focused and would need to understand the appropriate technology for the specific customer need. I think earlier these types were a rarity since most of the people who dealt with technology were programmers but today that is not the case. You would find a lot of suits who are in technology deeply and vice versa."

I think most of the tech businesses failed not because CEOs did not understand technology but they did not focus enough on the customer. If they had they would have found the right technology with the help of truckloads of techies they had in the company.

I would agree that a technology company has to have one strong technical person behind it, (but not necessaily the CEO, could be the CTO, chief architect etc).

He/she has to have the technical depth, and at the same time, is business-savvy. For most successful companies, one can easily identify such driving forces behind the success.

We call he/she an entrepreneur

Rob,

I hate to say it, but the amount of bus-dev or sales experience "depends." Firstly, there are exceptions to every rule in business, in both directions. We've backed some successful CEOs with no prior management experience, and some without much prior technical experience. As a general rule, common sense, judgement, people skills, presentation skills, and the like are more important than checkboxes on a resume. Usually the way pure technologists end up being CEOs is by being founders who demonstrate consistent skills as the company scales up from one person, to twenty, to one hundred.

My advice is that if you someday want to run a business, then do just that. I find that people who have run small, bootstrapped businesses often have a lot more business and entrepreneurial sense than people who have held formal Business Development or Sales and Marketing roles.

Finally, stick to what you're best at. Society rewards us for being the best at what we do, almost regardless of what it is. If you already have strong leadership instincts, go lead. If you're naturally an engineer, be the best one that you can possibly be. Take what you're naturally good at, and improve it at the margin until you are absolutely the best at it, and I guarantee that the rewards will follow.

Thanks Naval. Sounds like good advice.

I'll agree with the "customer focus." Too many entreprenuers are in love with the idea and not in love with what it can do for the customer.

The key is to be passionate about what you do and what you stand for; success will follow.

Naval, great list of bullet points; I agree completely. I would add that non-technology savvy CEOs will undervalue the importance of a properly architected v1.0 of product. Thus, making the proverbial chasm-crossing more difficult when trying to ramp-up customers 3,4,....n on a weak code-base. Seen this countless times.

A good CEO knows the customer base and sells the technology. They don't lead the technology. That said, however, they must be comfortable in a technology world and not get enamored with what might be rather than what is.

As an investor, here are two keys to pulling out:
- When the company builds a campus
- When the technical people want to re-architect the product

Real estate is a huge commitment, be very very careful. Let's see, companies that failed or did poorly after building a campus: borland, calma, rolm, cadence

Architect the next generation product and incrementally improve the current cash cow.
Mentor Graphics Falcom Framework comes to mind here - huge investment and the lost their market share and never regained it. Synposis on the other hand, slow, steady and what do you know, led by a technologist. Hmm...