Business Forum: Do You Have the Team to Execute the Dream?

By Isaac Cheifetz
Published June 17, 2002

The aftermath of the dot-com era has seen numerous new ventures fail or not reach expectations. People are the most important factor in the success of new companies.

The following is a Top 10 list of common mistakes made in assembling executive teams for technology start-ups. Unlike a David Letterman Top 10, they are not ranked by how funny they are, but how likely they are to make investors weep.

As you can see, nearly all these dilemmas result from leaning too far toward creativity or too far toward management discipline in filling each executive role. The goal is a middle ground that intertwines aggressiveness, innovation and discipline.

1. Overly Visionary Chief Executive Officer (CEO). Yes, a new venture requires a leader who can paint a vision of where the company is going and how it will transform its industry. But being a successful leader requires just enough creativity to win, yet not so much as to get lost.

Bill Russell once said of his Boston Celtics coach Red Auerbach, winner of nine National Basketball Association championships, that he wouldn't want to go into battle against him. Red was creative enough to figure out how to beat you, but no more. The rest of his energy went into executing the plan.

2. Technical CEO. CEOs with a technical background can become obsessed with having the most elegant product in the market. The reality is that dominating companies are good at product development, and great at marketing and sales. There are no notable exceptions to this.

3. Administrative CEO. The opposite of the Visionary CEO, most often a senior executive from a large company who has had success managing and growing existing businesses. In a start-up, he must create a new business, or even a new market -- a different challenge altogether.

4. Chief Technology Officer (CTO) as Architect. The executive in charge of designing and developing a product ought to be a superior technologist. But above all he must be a competent executive. A brilliant architect who is a weak manager of projects or people will leave a trail of unfinished products and political turmoil. Instead, position this person as the "Chief Architect" reporting to a talented (if not brilliant) vice president of engineering.

5. Cowboy CTO. Brilliant, charismatic and undisciplined, his vision is catnip to investors, customers and employees. A focused person of this caliber will be wildly successful.

Unfortunately, the Cowboy uses his abilities in a shotgun manner, leaving as much chaos as accomplishment in his wake. He is too smart to beat in an argument, and his brilliance seems essential to the enterprise, until the day it closes its doors.

6. Marketing Vice President as Brand Manager. The best marketers are trained at companies such as Procter & Gamble and General Mills. They create and promote world-class brands in commodity markets, selling their products for twice the price of the generic competitor on the shelf below.

But while developing a brand in technology is important, it has limitations. Complex functionality and revolutionary innovation make branding (but not sales and marketing) somewhat less critical. Avoid the marketing executive who focuses on creating a brand image rather than on positioning a product in a niche where it can gain traction.

7. Vice President of Sales and a Bit of Marketing. Some successful sales executives have little strategic marketing experience. Their idea of marketing is attending trade shows.

But without proper positioning, a great product sold by an aggressive sales force probably will not succeed. Hiring (and listening to) a director of marketing can make a non-strategic vice president of sales and marketing effective.

8. Vice President of Sales as General Manager. A successful Fortune 1000 sales executive may have had responsibility for a 60-person sales force producing $200 million in annual revenue. But did she inherit the sales force rather than create it? If so, building a sales function for a new company may feel overwhelming.

9. Bookkeeping Chief Financial Officer (CFO). A new company may attempt to save money by hiring a chief financial officer who has a tactical background as a controller. But a bookkeeping CFO can be a liability in negotiating with venture capitalists and investment bankers. They may leave enormous amounts of money on the table through their inexperience and can hamstring a successful company for years through unsophisticated financial structuring.