Larry Ellison achieved it. Jeff Bezos continues to be doing it. However, not all entrepreneurs can intensify to day-to-day leader.
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An incredible number of entrepreneurs start their businesses with a picture-perfect dream and a checklist: Launch the business enterprise, direct the business enterprise, hire the team, reap the gains and retire as a multi-millionaire.
Related: Shocker! Entrepreneurs Often AREN’T CEO Material.
And, because most founders are passionate and thinking about their idea, they anticipate being the main one to oversee its execution.
However the day-to-day management of a company is a CEO ’s job, no entrepreneur’s (necessarily), right? So, will a business owner automatically make an excellent CEO?
Defining the difference
Entrepreneur, CEO, businessperson and manager are four terms often used interchangeably, because so many of the roles and responsibilities among these four titles overlap. A business owner, however, manages creating a business, often from the ground upwards, while a CEO manages owning a business once it’s already built.
"Businesspeople" can serve any role, provided they tend to seek opportunity and profitability, as the title of “manager” can describe anyone who oversees other folks.
Entrepreneurs, meanwhile, generally have skills focused on discovering new ideas, pitching to investors and creating a business infrastructure with limited resources. CEOs’ skills concentrate on maintaining and growing a business once it’s recently been established.
Both have to manage other folks and secure profitability, and both can serve as a figurehead for his or her respective businesses. But, beyond that, you often will already see some crucial differences in training and expertise.
So, the question becomes, how do those differences affect an entrepreneur’s or CEO’s impact when she or he leads a business?
Related: Not really a Mandate for Entrepreneurs to be CEOs at their Own Startups, Says Stanford Professor
The case "for"
Let’s check out the case for entrepreneur CEOs:
There are numerous types of successful entrepreneur-CEOs. In today’s marketplace, there are numerous types of companies whose original founders became CEOs and led their companies to success.
Take Amazon, for instance, that was founded by Jeff Bezos in a garage when he was 30. Today, that garage guy is currently attracting $61.09 billion in annual revenue. Bezos can be now overseeing 97,000 employees.
Another example? Consider Larry Ellison — a college dropout who founded Oracle without much experience — and somebody who only stepped down from being CEO in 2014. So, anecdotally speaking, entrepreneurs can serve nearly as good CEOs. Furthermore:
Entrepreneurs know their business intimately. Will Schroter, founder and CEO of Startups.co, has estimated that it requires at least four years for a startup to create enough momentum to become “real” business, and between seven and a decade to become real success.
CEOs who move around in after a startup is set up, therefore, lose out on the business history an entrepreneur knows intimately; as such, they have to learn about the business from scratch; and that can indicate missing key details which may be vital that you the company’s future development.
Entrepreneurs are in it for the future. Ben Horowitz, of Andreessen Horowitz, has explained his philosophy that founder-CEOs are much better than professional CEOs partly because they’re totally focused on the long-term success of the business.
Professional CEOs, alternatively, want to lead an effective company, and if indeed they look for a better offer, they might be inclined to jump ship and pursue it. Founder-CEOs don’t want to lead just any business — they would like to lead their own company, and that fact makes them naturally more committed.
The case "against"
Next, how about the arguments against entrepreneurs as CEOs?
Entrepreneurs often don’t have training. CEOs typically have to have a business degree, and years of experience in leadership and management. A business owner can feasibly launch a startup with bit more than a good notion and a solid pitch to investors.
Yet, though there are exceptions, entrepreneurs often aren’t as skilled, focused or experienced as their professional-CEO counterparts, which naturally makes them less effective leaders.
Entrepreneurs have a problem with change and hard choices. It’s feasibly a very important thing that entrepreneurs are passionate and thinking about their own ideas, nonetheless it may also have negative consequences. Namely, if entrepreneurs are fixated on the original vision and original team, they’ll often be resistant to improve.
There is also to help make the difficult choices, and could find it tough to help make the right ones when confronted with an inevitable necessity to pivot.
Types of successful entrepreneur-CEOs will be the exception, not the rule. According to Noam Wasserman, writer of The Founder’s Dilemma , by year three of a startup’s course, 50 percent of founders are no more CEO, and by year four, only 40 percent remain active. Fewer than twenty five percent of these who were their company’s original founders remain around to lead that company’s initial public offering, Wasserman wrote.
This doesn’t explicitly imply that founders make poorer CEOs than their experienced counterparts, nonetheless it does present them with a hard choice (the “dilemma” the book poses): Founders can either cede leadership to someone more capable, or risk complete failure continue.
Ultimately, entrepreneurs don’t necessarily make good CEOs. Because they’ve had a forward thinking idea and executed onto it doesn’t mean they’re built with working out, skills, experience as well as the mindset essential to run a business.
Related: Former Apple CEO John Sculley Includes a Message to Entrepreneurs: ‘Don’t HESITATE to Fail’
That doesn’t mean entrepreneurs don’t often achieve success CEOs, but it’s vital