Interesting CEO profiles: Myths vs Realities

Everyone's frothy right now, like a bunch of rabid dogs chasing a bone truck. There's money to be made, gold to be mined, in technology right now. It's a risk-on environment for sure. But classic mistakes are being made in hiring, or at least contemplated, daily.

My advice for CEO recruiting? Don't fixate on "big personality/big resume" CEOs thinking they'll make the difference for you. Focus on what your candidates say they'll do for your company as they get close to it, and that will drive your decision process. Don't get hung up on style or even resume. The best CEOs, in my view, behave like level 5 leaders, are calm and measured, mature, and seldom come into the success stories armed with a big resume and gaudy track record. They come in with a plan or at least an approach that makes sense. Ready to listen, to understand the work, develop relationships with Founders, management and Board. The ones to watch out for are the heroic, "get out of my way and let me at this thing" types, the ready-fire-aim strategy. And if anyone asks "what about Steve Jobs," please stop reading this, refer back to history, and many of the points here will be made for you...

Examples of solid CEOs who were not "big personality/big resume" profiles before their last success (this list is a mixture of current CEOs and a couple of big notables from history):

1. Fusion IO ($2B market cap, 2011 IPO); My firm ran a CEO search there and talked to a bunch of veteran CEOs with big resumes, ultimately recommending that the Board stick with Dave Flynn. He had a great plan and management was behind him. We're glad the Board made the right call. Because sometimes, the right call is a non-call!

2. 3Par ($2B acquisition after IPO); Dave Scott is a solid engineering type guy, not a lot of hype. They plugged away and outlasted competitors stuck to their knitting and never took their eye off the product vision. Solid execution drove value here, even though they burned too much VC money en route.

3. Data Domain (2B acquisition after IPO); Frank Slootman is a competitor. He’s very polished but hard nosed, serious minded and holds peoples’ feet to the fire. Working for him is a labor of love. And I consider Frank a good personal friend, so I say all of this with great respect. He is NO hype, NO handwaving. Hired young, unproven people with just OK track records and made them work like animals, focused them, didn’t let anyone BS him, ever, especially not sales people. Slootman would say “execution, not sales nor even strategy, drove us. The strategy became apparent as we executed.” Frank had a so-so resume before DDUP.

4. NetApp (huge hit, still public, industry leader); Dan Warmenhoven: engaged the Founders successfully, has the scratchy voice of a smoker, has a sort of nervous energy to him, was fired in his previous role but was a steady, no-nonsense hand on the wheel. He was anything but the glamorous hire when Lee Schweichler found him for NTAP...

5. Cisco; John Morgridge. He was frugal, and humble. He had a great eye for talent. He’d been fired from his previous company and was pretty measured stylistically, though driven (people see "measured" and think "low energy." Huge mistake far too often). He hired John Chambers. Another great Lee Schweichler discovery (both Morgridge and Chambers).

6. Microsoft; Bill Gates. Geek. Founder/CEO...Maybe Andreesen Horowitz is onto something here? People should think twice before taking out the Founding CEO in some cases.

7. Mark Zuckerberg. Geek. Founder/CEO...hates being on stage. Didn't even HAVE a resume coming into FB...

Let me illustrate an example of where big personality/big resume loses. A few years ago, I hired a CEO who’s a huge personality, very compelling, extremely articulate. Big, gaudy jobs in a globally recognized company mixed with a couple of interesting startups. He took a 20 person company worth almost nothing to an IPO worth a billion. But it hit the wall and is now worth a fraction of that because this person is a victim of his own success as a salesman and didn’t line up execution with hype. The company will be acquisition bait, ultimately, and declared a success. But it could have gone a lot farther had he dialed back the hype and focused more on quiet, focused execution--managing investor expectations and outperforming them, vs going for huge valuations which wouldn't ultimately hold up. To be sure, this guy has done more with the company than anyone could have dreamed, but it could have done a lot more. Ironically, he'll probably be a much better CEO the next time around!

So in my opinion, the difference between flash in the pan startups and those who really make it big is about walking softly and carrying a big stick. Staying quiet until you are ready to knock someone out and punch big companies in the mouth with a brass knuckles equivalent product and business plan. It isn’t about the resume, nor is it about the big personality of the CEO…And history will easily show this when/if people get around to doing their homework to reach the same conclusion...

Enjoy!

Reference your references

References are the single most critical component to any executive search and need to be conducted thoughtfully, but for reasons far beyond the obvious. This is true of any hire, from Board members to CEOs to VPs on down. Take the time to get the complete picture on an interesting candidate. B candidates? Don't bother to reference them--you shouldn't even be talking to them in the first place. But when you think you have an "A" candidate, make sure you don't overlook them due to quick, out of context "referencing" done by people who aren't equipped to "reference the references."

We see great people overlooked because the untrained eye (sometimes our clients, or someone involved in a hiring process) will "do a reference" on a candidate, which is nothing more than a passing conversation during which an offhand comment is made. The "reference" can be highly suspect for a bunch of reasons. Among them:

1. Competition for talent. If you wave someone off a great candidate, you have a better chance of grabbing the person yourself. If you're a PE or VC firm, chances are, one of your partners is looking for a CEO and because there's a huge imbalance between the supply of great CEOs and the demand for them, this is a critical competitive edge that any firm would want to gain.

2. Almost never are these references done contextually. We never hear people actually walking the reference through the specific situation at hand, and having a thorough, balanced conversation to really flesh out someone's qualifications for a given situation.

3. Everyone's controversial. The more senior, the more visible, the more controversial. Steve Jobs. Enough said....

4. Personal vendettas are everywhere, and no one goes through a serious career without making a few enemies. Those people talk more loudly than one's supporters, typically, because people love to complain, especially in this day and age.

I could go on and on, but here's a real-time example of where a "back channel" (generally thought to be the best kind of reference and worth 10 listed references) almost cost me a world class CEO candidate.

• I'm running a high profile CEO search. My target is a CEO whose company was acquired, returning about 100% to investors over 4 years. A spectacular performance.
• I called the former COO, whom I know very well, and consider a good professional friend.
• My source had been part of the former regime, which was replaced by my target.
• Reference was highly negative. My source gave me anecdotes of what other team members complained about.
• I almost eliminated the target from consideration. But I stepped back and asked "how objective was my source?" This guy was passed over by the Board for the CEO role, and the "old guard" was clearly unhappy about it. So it was impossible to get a balanced read on the target from this particular source. His "followers" would naturally complain about the new regime and leadership in general.
• So I and my client ran about half a dozen other informal references, and then looked more analytically at how the company performed under my target's management. It was stellar. References were stellar. But they're binary: old guard unhappy, new guard ecstatic.

So this is a simple example of why, if you're going to run references on someone, take the time to do it right, really think about it, and give any candidate adequate consideration before moving on them, or moving on.