There is a fun and contrarian piece on Always-On by Bob Sternhill speaking to why venture folks obsess about hiring star CEOs, and why that often leads awry.
Fair enough, and too often venture firms do confuse risk reduction with installing a star CEO, but what is the alternative? Hiring CEOs with no track record? Hiring blemished CEOs? It is a species of Hobson’s choice, me-thinks.
The practice of venture capital is riddled with myths, misconceptions, and half-truths, not the least of which is the notion of the “Rock Star CEO,” as in, “This project is a certain success the company has a rock star CEO?.” It should only be so simple.
For certain, the choice of leadership is probably the highest-leveraged decision a board can make. And all other things being equal, somebody at the helm “who’s been there/done that” is certainly highly desirable. What could possibly be wrong with a successful past CEO with relevant knowledge of the product/market space, potential customers and strategic partners, and solid ties to good VCs and the Street? On the face of it, nothing. So what’s the problem with Rock Stars?
Well, first, Rock Stars frequently behave … well, like Rock Stars. They can be overly confident, highly demanding, poor listeners, and very expensive to put on the payroll. They may also want to bring their “entourage” along potentially another cost burden. Also, when Rock Stars surround themselves with lots of familiar faces, it can promote a two-team culture, the inner and the outer circle not good for morale in any organization.
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