Lesson #375: Why Having Co-CEOs is Usually a Bad Idea

 Oftentimes, two co-founders think
it is a good idea to share CEO responsibilities, as Co-CEOs.  The logic being they can separate their roles
and responsibilities, with one person leading certain departments (e.g., sales
and marketing) and the other person leading other departments like (e.g.,
technology and operations).  The reality
is, this is a pretty bad idea.  The
business should only have one leader at a time that can “lead the ship” and
make sure everything is perfectly coordinated across the entire company.  This post will teach you the potential pitfalls
of a Co-CEO strategy.

Lack of One Sole Vision/Control

Anytime you add additional people
to a decision-making process, that is most certainly going to involve you
making some sort of compromise, where you are not doing exactly what you would
have done if you were a stand-alone CEO. 
On minor points, it probably doesn’t matter.  But if it is important strategic level points
you are compromising, you end up diluting your own personal instincts and convictions.  And it is those same instincts and convictions
that are often the difference between good outcomes and average outcomes.  You never want to be in a position of
“managing towards the happy middle-ground”. 

Lack of One Sole Voice With the
Team 

When there are two leaders, and
those people are not necessarily in 100% alignment on the vision, they may be
saying conflicting things to the team, in terms of the directions they are providing
to the staff. That can create a lot of confusion with the
team members, as they are unclear on whose voice to listen to the most, as they
are both Co-CEOs.  And worse, it makes it
look like the Co-CEOs are not in alignment, and are not communicating well with
each other, which has the team nervous that leadership at the top doesn’t know
what they are doing. 

Lack of a Tie-Breaker

What happens when the two Co-CEOs
cannot come to an agreement on a topic? 
There is no one there to break the tie. 
Which either creates a level of paralysis where no decision gets made
and the work doesn’t get done at all. 
Or, it requires one of the Co-CEOs to back down, and agree to the other Co-CEO
(usually with the louder voice and personality winning).  And that can create resentment towards the
other person who is constantly not getting their opinions listened to or acted
upon.

Different Management Styles
Could Cause Friction

No two people are exactly the
same; what happens when there are philosophical level differences in management
approach.  Let’s say one of the Co-CEOs
is a “top down” strategic level thinker that likes to “see the big picture forest”
and the other Co-CEO is a “bottoms up” execution level thinker that likes to
“live in the trees”.  Those two styles
are completely different ways to make decisions and can easily “ruffle the
feathers” of the two Co-CEOs over time, forcing them to think and act in ways
that is not their preference.

You Lose Control on Half of the
Business

If you are the “Sales &
Marketing” leading Co-CEO, that doesn’t mean you don’t have opinions on how
“Techology & Operations” are being run by the other Co-CEO.  But by dividing up the responsibilities, you
are basically handing off all decisions in those other departments to the other
Co-CEO.  If you trust the other person to
operate alone in their silo, that is fine. 
But what happens when you have a fundamental disagreement on how those
other departments are being operated? 
You can communicate that to your Co-CEO to try and fix it, but it is
ultimately up to them to make the desired changes you want, which they may or
may not do.

Your Co-CEO Refuses to Stay “In
Their Swim Lane”

Even though you may have divided
up the management responsibilities with your Co-CEO, that doesn’t mean they
will always stay in their “swim lane”.  CEOs
that like to lead and control, typically have a really hard time giving up
control to anyone else.  And when that
“likes to control” Co-CEO, starts drifting into the “swim lane” of their other
Co-CEO, having to have input on every decision in their departments, that will
really piss off the Co-CEO.  At that
point, you don’t really have a Co-CEO structure at all, with one person needing
to control all decisions.  That will end
up very badly.

Limits Your Exit Options

When it comes time to sell your
business, the new buyer would prefer to have one CEO be their sole decision
maker, with which to sit on their board and work with the investors.  Also, when you are ready to sell, your Co-CEO
may not be ready to sell.  Now you are
stuck owning and working in a business that you no longer want to be working
in.  Or worse, your miss “your open
window” to sell, and market conditions change by the time your Co-CEO is
finally ready to sell, but now the window has closed and you can’t sell.  You never want to be in a situation when you
can’t get an exit for your equity, handcuffed by a Co-CEO’s opinion, when you
see an exit as the right path forward.

Closing Thoughts

Hopefully, you now have a better
understanding of the challenges at hand when you are considering a Co-CEO setup
for your business.  There are examples
where Co-CEOs have worked together perfectly—think the Google founders (Sergey
Brin and Larry Page).  But more often
than not, it ends up not working out very well at all—think the Salesforce executives
(Marc Benioff first with Keith Block and then with Bret Taylor).   So, if
you are considering this Co-CEO path, buyer beware, as it is ripe with
potential pitfalls and most likely will not end up working well for the
Co-CEOs, the staff or your investors.

For future posts, please follow me on Twitter at: @georgedeeb.