Can a startup have two CEOs?
If you’re starting a company with a co-founder, you have to, at some point, decide who takes what role. In many cases it’s obvious from the get-go or becomes clear early on. The more tech-savvy co-founder becomes the CTO, and the more commercially-oriented one becomes the CEO.
But sometimes, companies start with two Co-CEOs.
That’s usually the case when the founders are less complementary and more similar in terms of their strengths and weaknesses. There may be two “commercial” founders, both of whom could be the CEO, sharing the job. Or there are two tech founders, and none of them really wants to be the CEO, so they share the burden. Or, the co-founders just don’t know who’ll make a better CEO.
In cases like this it’s natural to start with two Co-CEOs, and if the co-founders are fully aligned, it probably won’t cause any issues in the early days. Up to 15–20 people, everyone is more or less in the loop on almost anything and understands what needs to be done, so you can live without a clear organizational structure.
There can also be situations where one of the co-founders would be the natural CEO, but the co-founders want to remain fully equal partners, whether it’s to make sure that both co-founders’ voices have equal weight or to avoid the awkwardness of making one co-founder the other co-founder’s boss.
Furthermore, a company may have two CEOs because it’s not clear which role the non-CEO founder would have if they were no longer Co-CEO, and the founders try to avoid a difficult decision by just keeping them as Co-CEO. Finally, and this is probably the most problematic case, a company can have two Co-CEOs because each co-founder thinks they should be the CEO and neither is willing to back down.
Whatever led to the Co-CEO setup, though, at some point, inevitably, the question will come up: is this the best setup to grow the company?
The discussion may be triggered by investors, who tend to have a strong preference for a single CEO; senior hires, who tend to have the same preference; or slow decision-making or other issues that often come with the Co-CEO setup.
So… can a startup have two CEOs?
If we go back to the reasons why startups have two CEOs, founders rarely say, “We need to have two CEOs. That’s the best way to run a company”. These cases exist, but more often, it’s less intentional. There are always factors that explain why a company started with two CEOs, but these factors usually don’t mean that the Co-CEO setup is the right choice for the longer term.
By now, you can probably sense that I’m not a fan of the co-CEO setup. Here’s why I think companies are ultimately better off with one CEO.
1) Faster decision-making
If you need two people to make a decision, it takes more time than with just one person. It’s as simple as that. Of course, that doesn’t mean that the founder CEO shouldn’t listen to their co-founder(s) and other stakeholders. I can’t remember any situation where the founder CEO didn’t discuss an important decision with their co-founders. But it helps to have an ultimate decision-maker to prevent deadlocks. If co-founders can’t decide how disagreements between them are resolved, how do they expect employees to deal with these issues?
What’s more, having clarity on who gets to decide what helps with the many smaller decisions that a startup has to make (including the many relatively easy to reverse decisions, where speed of decision-making matters as much as trying to make the right decision). This, of course, benefits the non-CEO co-founder as well, since they’ll be the one making decisions in their area of responsibility.
2) Clear responsibilities
Another side effect of having two CEOs is that it’s less clear who does what. Even if it’s clear to the Co-CEOs themselves, it won’t be clear to everyone in the organization. As a consequence, team members are often unsure who they should talk to about a particular topic or whose OK they need to get for a certain decision. Co-CEO A, Co-CEO B, or both of them?
If you do go for the Co-CEO setup, try to make it as clear as possible which area of the company each of you focuses on and make sure everyone in the company has exactly one boss.
3) A Co-CEO setup makes it harder to attract top VPs
Experienced leaders tend to have a strong preference for single CEO setups:
- Even if they don’t have first-hand experience with dual CEO setups, they may have been in other similar situations where teams or departments didn’t perform well because they’ve suffered from slow decision-making and poor accountability.
- They want to know who they’ll be reporting to.
- They might wonder if you let your ego stand in the way of doing what’s best for the company and if you’re able to make tough decisions.
“Engineering VPs are in high demand because of the sheer number of options they have. A great engineering manager can start their own company, join a tech giant like Facebook, consult, teach, or can join any one of dozens of other startups who are also also looking for their perfect VPE, like you are.
If a candidate is good enough for you to hire, many other companies would also like to hire her, so if you want a great VPE, you need to know why yours is the company she would choose.”
If a candidate has the impression that people in your company get roles and titles based on whether they’re a co-founder instead of optimizing for the best person for each position, that may scare them away.
But what if neither of the two Co-CEOs is confident that they’re a great solo CEO? You might be in a situation where none of the Co-CEOs thinks they’d be a great CEO alone, but as a Co-CEO team they can make it work. Assuming this is a correct assessment and not based on imposter syndrome, the logical consequence is that you will eventually (and presumably sooner rather than later) need to look for a new CEO. For all the reasons mentioned above, having two half-CEOs is only a temporary fix for one real CEO. It works until it stops working.
If you’re still convinced of the Co-CEO setup, here are a few questions that I got from Michael when I discussed the topic with him a little while ago, and that you may want to ask yourself:
- What are the motivations for Co-CEO? Does it come from an honest conviction that this is the right way to run the company, or are they just avoiding conflict or delaying making a decision?
- What steps have they already taken to mitigate some of the problems of being Co-CEOs?
- How will they make certain hard decisions? What if one of them isn’t performing? What if a key executive isn’t performing? What if they have a fundamental disagreement?
And last but not least: What are the circumstances that would result in their stopping the arrangement and either designating one of them CEO or bringing in an outside CEO? How will they know when that happens?