Should the Computer Science Guy Be CEO?

compuguy84 asks: "I'm a Computer Science major. A Finance Major friend and I are starting a business based on an innovative idea I had. I came up with the concept and developed the overall model we would use. He loved it, and we've been working on our business plan ever since. We've both donated our respective expertise, covered major ground, and agreed from the start that everything will be split 50-50 (ownership, power, etc). Unfortunately, the time has come to incorporate, and potential investors have advised against assigning Co-CEO's. So who should be the CEO? Should the Finance Major get the job based solely on his Business knowledge, or should the Computer Science guy get the job because it was his idea? We've both have shown ourselves to be savvy business folks, but I don't have the 'schoolin'. All signs so far point to giving him the job, but I can't shake the feeling I'm getting robbed. If it was my idea, shouldn't I call the shots at the end of the day? Has anyone been through this? What did you do?"

Comments

There are plenty of shots to go around

[SeanTobin]

Seriously, if this is anything big enough to where you have investors, let your friend be the CEO. Go ahead and take on the role of CTO or whatever 3-initial title you find appropriate.

You're going to have enough on your hands just making sure that your idea gets implemented correctly. Let someone else handle the issues of licensing, stocks, quarterly filings and investor reports. Do what you each do best. Don't let your friend muck with the servers, and don't you go stepping in the books.

That doesn't mean that you should give him free reign or that he is more valuable. Make sure that if you agreed to split 50/50 in the beginning, that you are still split 50/50 as far as profitability and ownership goes. Just make sure that you're clear that if there is a technical issue to be resolved, you are the final word. Also make sure that you understand that a Finance Major should have the final word on financial matters.

As far as splitting "ownership, power, etc" don't bother. Again, let each of you do what he/she does best. Let your friend have all the "power" on the corporate side of things, and you have all the "power" on the technical implementation side of things. Leverage your strengths and don't let jealousy get in the way of bringing something to life.

And remember - keep him away from the damn servers!

CEO isn't the only C*O title there is, you know

[Rude Turnip]

If your friend has been working on the business plans and can serve as a "face" for the company, then he should be the CEO, if only for those reasons. He should probably also be the CFO, although most finance students out of college don't have any practical knowledge to speak of. Since you're clearly the nuts and bolts guy, you should be the Chief Operating Officer, or COO. When I interview clients to evaluate their companies, I ask the CEO or CFO about the financial questions and the COO about the operations.

By the way, I will have to charge you now for my corporate planning advice. Just kidding (but not really) :)

Depends...

[Shadow Wrought]

Do you want fortune or glory? If you want the company to be successful than having a business major at the helm is going to sit better with investors and will likely help you gather better employees, too. Once you're talking about investors though, your idea no longer really matters because they will own it. So, as long as all you're doing is managing you idea, let your buddy be CEO and do what you do best- create killer apps. To put it bluntly, don't let your ego blow the chance for success because you feel the need to have CEO in front of your naame.

My $.02

Been through it

[bmarklein]

I've co-founded several companies - a couple of them are gone, a couple of them are still around, none household names, but all were fairly serious efforts (VC-backed, one had 30 employees, etc.) I've got a CS background and started as a software engineer, and I've usually been CTO of the companies I've co-founded. One way to handle it is to be both CTO and chairman of the board of directors. One of the jobs of the board is to oversee the CEO.

If it really were to come down to firing the CEO, or other major decisions like taking investment or expanding the stock option pool, you'd need the board to vote on this, and it sounds like you're set on a 50/50 stock split so you'd have equal say. But having the chariman title would at least be a signal to the outside world that you don't "work for" the CEO, which is really what the issue sounds like here.

I have actually seen one instance where a co-CEO arrangement worked, but I do think it's the exception. Whatever you decide, good luck, I hope the company is a success!

You can do like QNX

[Tester]

QNX has a really nice structure, they have two co-founders. One is the CEO and one is chairman of the Board and they switch every year, but they really run the company together. You can do that, and have you has CTO and your friend as CFO (titles you'd keep).. Titles like Chairman and CTO, and CEO/CFO are really cool.

Go Co-CEOs

[mysidia]

If it makes potential investors nervous, you've got to ask why... It should make you nervous to take 50/50, and then give the other guy the official label and final word, unless it's purely symbolic and you agree something to the effect of "CEO in name only," with no special benefits, and an agreement to that effect.

There are lots of businesses in the world. The business IDEA is something very important however, it is your whole basis for starting. Technology decisions need to be made well, or the business has an increased risk of failure -- without a good marketable product, even excellent financial decisions will not help, if you don't have an IDEA for a product.

Finances are important, because you need resources to develop technology based on an idea. Finance decisions need to be made well, or the business has an increased risk of failure. The IDEA may still be an asset, but without the resources to develop it well-managed and supporting the most important elements of proper research & development, marketing, and manufacturing, you have no product based on the idea.

There are other things that are very important for a business that develops a product, that are not finances OR technology, but are related to them both: Where and how you get supplies, how you get your great new technology made into a product, i.e. how you get it manufactured, how you price and sell your products, and how you protect the business, like any warning labels you need (Legal) and how the business chooses to represent itself and its product (Public Relations).

There are decisions to make that involve many things other than finance, and added finance background is no indication that one guy should be CEO over another guy: it will depend almost entirely on things that have not been mentioned in the article.

The best CEO may be neither of you, or both of you -- it depends on your other abilities, like Leadership skill, and experience in CEO roles.

If you are 50/50 in terms of power, then perhaps you should consider Co-CEOs despite investor nervousness, or find and hire a third person to be officially "labelled" CEO; give that person a 2% stake in decisionmaking, leaving each of you a 49% stake, and agree that the CEO has no special to a final word: final decisions are always ones that either all 3 of you support, that 2 support and 1 opposes, or that 2 of you support and the other is not available on an extended basis.

Giving that third person a 2% stake, assures there would normally not be a "tie": where neither side agrees, so no decision is made. I'm afraid if you place the other guy as CEO, even if you're supposed to be 50/50, you've given him de-facto, authority to break ties in his favor, and with only 50%, you can't later deprive him of that right once assigned -- of course it depends on the wording of your agreement the CEO's job description, and his ability to have either agreement/description ammended without you having to read and sign off on the change.

A Couple of links

[cgreuter]

Both Eric Sink (the founder of SourceGear) and Joel Spolsky seem to think so. (You'll have to search for the relevant articles yourself--I'm not going to dig through years worth of archives for you.)

Their thinking is:

1. If the guy in charge doesn't understand the technology, he (or she) will make bad strategy decisions. Spolsky's example is John Scully's decision to build a device that recognized handwriting (which is impossible, or at least very hard) vs. Bill Gates' asking his developers to write a reusable rich text edit control (which Microsoft ended up reusing for everything).
2. At the small company level, business stuff (aside from law and accounting, both of which can be outsourced) tends to be easy enough that a geek can learn it without too much trouble. Therefore (says Eric Sink), it's a better use of money to get technical people than business people.

On the other hand, the business guy is your friend and anyway, he's willing to talk to investors and answer the phone during the daytime (I'm assuming) so he's probably worth keeping around.

I think that what I'd do in your situation is give the business guy the job of CEO but retain a 51% ownership of the company. That lets him do the day-to-day business stuff and give the people he talks to a sense that they're talking to the guy in charge while at the same time letting you set him right if he tries to do something stupid.

Disclaimer: I have no actual experience in this. I'm just makin' stuff up.