Choosing a launch commander - Venture capitalists reveal what qualities t=
hey
look for in the executive who will lead a start-up team.
By CHRIS NERNEY
Network World, 09/13/99
=C2=A9 Copyright 1995-1999 by Network World, Inc
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You've come up with a brilliant idea to solve your company's troublesome
network problem, and you're ready to turn that idea into a hot start-up t=
hat
could be the next Cisco or Microsoft. The venture capitalists are
interested - very interested. They like the technology, they like the mar=
ket
opportunity and they like - well, they may like you, too, but that doesn'=
t
mean they think you're the right person to lead the start-up to a big pay=
off
down the road.
Many venture capitalists show great faith in an inexperienced founding te=
am,
while others lean toward importing veterans to run the show. "In a perfec=
t
world, everybody wants the person who has done it before, the person who =
is
financeable," says Charles Potachi, an IT recruiter at Heidrick &
Struggles/Fenwick Partners, a Chicago executive search firm that works wi=
th
numerous venture capital funds seeking top high-tech talent. But a severe
shortage of experienced, high-level talent in the IT industry has left
venture capitalists operating in a less-than-perfect realm. "It's actuall=
y
rare to find a CEO who has the complete game," says Warren Packard, a
director at venture capital firm Draper Fisher Jurvetson in Redwood City,
Calif. "You're definitely going with people whose r=C3=A9sum=C3=A9s don't=
scream out
'CEO.' " Short of that ideal candidate - someone, say, who has guided a
start-up from a Silicon Valley garage to the Nasdaq ticker - venture
capitalists most often cite three characteristics that are critical to
successful high-tech start-up CEOs:
Leadership skills.
Domain expertise, or a clear understanding of the target market or
technology sector.
An indefinable spark that sets a handful of candidates apart from the res=
t
of the pack.
"Someone with leadership skills has the ability to articulate the company=
's
vision to his employees and the outside world, to create a shared vision,=
"
says Promod Haque, general partner at Norwest Venture Partners in Palo Al=
to.
To Packard, "a leader is someone who can leave for a week and the company
keeps going. Also, it's someone who can really hire and really motivate. =
You
want 'A' people hiring 'A' people." Of course, having a top executive wit=
h
industry-specific experience also is helpful for recruiting talent becaus=
e
the executive comes with a network of qualified potential employees, Haqu=
e
says. Bill Hulley, general partner and co-founder of Adams Capital
Management in Sewickley, Pa., says his firm emphasizes domain knowledge o=
ver
high-level industry experience or name recognition. "Our CEOs and senior
managers have always been first-timers," he says. "We think it's possible
for someone to learn how to be a CEO." Susan Mason, a venture investor at
Onset Ventures in Menlo Park, Calif., agrees, but she warns that it's
important to recognize when the founders are in over their heads. "One of
the worst things that can happen to a company is a CEO trying to learn on
the job," she says. To cut down on the learning curve, Mason's firm likes=
to
determine a start-up's business model before finding a chief executive.
Onset also looks for people who can turn on a dime. Moreover, the company
wants independent thinkers. "We're looking for the maverick, the guy who'=
s a
little bit weird," Mason says. "You want that sparkle, that essence."
Packard calls that essence " 'the cult of personality.' Steve Jobs, for
example, has a personality. He has a unique ability to sell a vision." Ma=
son
and Packard say that if their venture firms decide a portfolio company ne=
eds
outside talent, it's important to find someone who brings in complementar=
y
skills. "If your founding team has great engineering backgrounds but no
marketing experience, then we try to bring in a super marketing person,"
Mason says.
Then there's the matter of personalities.
"A lot of it has to do with chemistry, with how the new CEO will blend wi=
th
the existing team," Hulley says. And while inexperienced founders may be
able to grow with a brand-new company, a start-up that is well down the r=
oad
toward an initial public offering may need someone with a proven track
record on Wall Street.