The good news: your entrepreneurial venture is among the lucky half of companies that survived beyond the four-to-five year startup phase and is now growing faster than maybe even you imagined. The not-so-good news, you're not sure you have the management experience – or personality – to focus on the operational processes you'll need to scale for the future.
At some point in his or her career, every successful entrepreneur will grapple with that dilemma. The good news is that you don't necessarily have to give up your vision or even step out of the limelight to make this happen. There are a number of high-profile examples of companies that are run by co-CEOs, including technology powerhouses like Google and LinkedIn, as well as examples from outside the high-tech world such as Whole Foods and Chipotle Mexican Grill.
Drawing on those models, New York-based ShopKeep – which develops an iPad point-of-sale (POS) solution – has embraced the co-CEO organizational structure to prepare for its next phase of growth: it raised a $25 million round of Series C venture capital in April to support this. The founder Jason Richelson, a former merchant who created the system to handle his own technology needs, was actually looking for a chief operating officer (COO). But, ultimately, he and the ShopKeep board felt that establishing a co-CEO structure made more sense.
"My and the board's goal bringing Norm on is to bring someone who really understands how to scale a business so that I could focus on culture, product vision and being a customer advocate," wrote Richelson in his internal letter announcing the change in early May 2014. "The co-CEO structure is the best way to cement our partnership to work together and lead this company forward.
Richelson's CEO "partner" is Norm Merritt, a seasoned operations and finance executive whose most recent position was as CEO and president of IQOR, a $500 million business process outsourcing company.
Merritt's experience in scaling customer service operations, which happens to be one of ShopKeep's strategic differentiators, coupled with the ease with which the two were able to develop a working rapport, made the decision simple, Richelson said.
"A lot of young people feel like they have to do everything," he said. "They don't want to somehow look week for their team. But it is absolutely vital to bring on strong people and give them equity in decision-making."
In Richelson's case, the process of being a manager to seven direct reports was distracting him from what he loved: talking to ShopKeep customers with an eye toward improving its technology. "They were frustrated with me, because I wasn't giving them what was needed," he said
Under the structure worked out by Richelson and Merritt, all of the functional aspects of the 125-person company report directly to Merritt while Richelson focuses on product vision and corporate culture. The two meet formally every Friday for at least an hour no matter where they are, although they confer frequently during the course of the week. No big decisions can be made without the other's involvement. There's also a safety value in place: both of them report to the board; if they disagree about something, that's where the issue is resolved.
"It sounded right from the very beginning," Merritt said, when I interviewed him separately about his reasons for stepping into this still rather uncommon management structure.
The two actually spent almost four months discussing all manner of strategic issues before Merritt officially joined in May in a series of courtship dinners and brainstorming sessions. "You can't just jump into something like this," Richelson said. They also debated some sample scenarios of decisions they might face day-to-day, to find out how each would approach resolutions. "We didn't just talk about abstractions, we talked about specifics," Merritt added
Obviously, the co-CEO structure won't work for every company, and this new relationship is just two months old so the jury is still out. But here are 10 questions to help assess whether or not this approach makes sense for your own organization
Does your company have a distinct corporate culture?
- Does the candidate bring significant new skills or expertise to the organization?
- How big is the overlap in skill sets between the two CEOs, perceived or real?
- Are there well-defined processes in place for governing the relationship?
- Is each CEO "partner" willing to collaborate on decisions?
- Would they come to the same resolution on matters of strategic importance?
- Do they have the same goals?
- Does each CEO "partner" have a strong enough personality to balance that of the other "partner"?
- If one CEO is a founder, is he or she willing to cede control of some decisions or does he or she have a tendency to micromanage?
- Is there a board of advisors or directors that can diffuse potential conflicts?