Technical founders need a demand-focused co-founder from the start
OCV companies are a bit different from a typical startup, in that they are founder-led but not founder-started—OCV starts the company and recruits founders into the CTO and CEO roles. OCV starts open-core companies so finding a CTO is usually pretty straightforward—we recruit a technical leader from within the open-source community whose passion for the project motivates them to push hard for success. However, hiring a CEO is not as obvious. This isn’t a scenario where two people have come up with an idea together and the company is their joint brainchild.
In this scenario, we are looking for someone who can bring vision and a business lens to someone else’s idea with the same commitment as the originator. Someone motivated by the fulfillment of creating something from the ground up regardless of where the idea started. Someone ready to adopt a bud, help it grow, and make it flourish.
Over the years, OCV has explored different timelines for the most critical and impactful time to bring in a CEO. It can be a chicken and egg situation. Recruiting a founding CEO means finding someone who is completely bought-in and it’s easier to convince someone to take a chance when there’s already momentum behind a company. However, bringing in a CEO too late could stall momentum and hinder the company’s growth.
When to recruit a founding CEO
At first, OCV recommended that new companies wait to find a founding CEO for around six months after establishing a team and initial product-market fit. The expectation was that up until that point, the CTO and a small team of engineers would work on improving the open-source project, add paid features, and gain visibility through content marketing. When the company had enough traction to fundraise, they would recruit a founding CEO to lead that effort. Waiting to recruit a CEO was fiscally responsible and the odds of finding a great match were higher once the product had traction.
The recommendation stemmed from the fact that most open-core companies start with a built-in community of contributors and users. The CTO could tap the existing community for product insights, early testing, and feedback to get early traction. They could immediately hire 5-6 engineers, preferably from within the community, to accelerate product building. Creating content showcasing their work and perspectives in the field would help them extend their reach. Our hypothesis concludes that focusing on building company awareness and contributor growth for the first six months would organically lead to user growth.
We learned that asking the CTO to build the product and generate demand caused too much tension around identifying priorities. Product and sales are equally important, but when a single person is responsible for both it’s nearly impossible to put pressure on one without loosening up on the other. Having a CEO in place around the nine-month mark was too late—our CTOs needed a demand partner from the start.
Makers aren’t necessarily entrepreneurs
In technology startups, CTOs are typically the product developers and makers. OCV’s CTOs are the makers of open-source software who, after years of moonlighting, finally have the chance to go all-in on their passion project. Naturally, they want to focus on building the product. Startup CEOs are entrepreneurs. They focus on driving demand and are tasked with generating momentum and turning momentum into revenue. They talk to users and potential customers and share insights to influence product direction.
One of the worst things a startup can do is spend months building a product without getting any feedback to indicate if they are going in the right direction. The second worst thing is not vetting who’s providing the feedback. Fast product iteration cycles informed by qualified feedback is key to startup success because startups are measured by how quickly they can grow. To grow, there needs to be a great product and someone needs to sell that product—you can’t have one without the other. Building the wrong thing for six months can be catastrophic for a startup. Building the right thing but not gaining traction fast enough is equally detrimental.
Starting a company with two distinct co-founders builds the flywheel effect into the business from the start. As product improvements are made, the CEO tests them with real users. They bring back real-life feedback that guides the direction of the next set of improvements. In theory, a single person could do this but pushing the flywheel from static to spinning takes the maximum amount of effort. It doesn’t make sense to go at it alone.
Recruiting a startup CEO
Recruiting a CEO is one of the value-adds of OCV’s model. We rigorously vet candidates before introducing the top few to the CTO. We look at two primary qualities when hiring a startup CEO: experience and motivation. Under the experience bucket, we look at track record, industry/domain experience, and fundraising abilities. When looking at motivations we look at their leadership ability—does this person drive change, or do they have an employee mindset?
Vetting experience: We only recruit people who have started companies before and strongly prefer those who have been through the Y-Combinator program. Most of our CTOs don’t have experience running a company and need a partner who’s been through it before. We look for YC alumni because there is an inherent alignment between what’s taught at YC and how we operate at OCV. YC instills in founders to set clear goals and move fast. Going too slow is the #1 thing that goes wrong for most startups.
Vetting motivation: We want to know what drives people. Understanding what they find attractive about the opportunity says a lot about how they would run the company. Early startups have to move fast and that speed can be grueling. It’s challenging to keep pace when a person isn’t motivated by the right factors.
Ultimately, founding CEOs and CTOs need to complement each other’s skills. They need to align on a shared vision, trust each other, and get along. Recruiting a founding CEO is a match-making endeavor that boils down to personality alignment as much as skills and experience.