Like Bill Gates or Kiran Mazumdar Shaw, most entrepreneurs want to build and lead their company for as long as possible. This expectation is not unrealistic in itself, however as a startup grows so does the number of stakeholders. Board members, investors, and founders are then faced with the impending dilemma of finding the right leadership. In most cases, the conflict arises when founders are convinced that only they can lead their company to success. After all, they are the ones with the vision, insights, passion, and hunger to drive long-term growth for their enterprise. Based on this, the founder then hires people to build/ and scale business, developing strong relationships with their first team. From the very beginning, everyone in the organization — employees, customers, business partners and investors, inadvertently identify startups with their founders. Naturally, it may seem like these reasons make for a strong case to have founders playing the role of CEOs and COOs. At the same time, it is important to remember that for a startup to succeed, it is not enough to have a ground-breaking idea and unfailing passion. Flexibility, resilience, empathy, humility, and great communication skills are equally important.

Who is the right leader?

Great leadership is the difference between growth and stagnancy in any business. In the case of an emerging company, the right leadership sets the tone for its future, shaping the road ahead. Which leads us to the question, who is the right leader in a startup, and how does one identify them?

Leadership in startups cannot be motivated by control. Finding the right fit becomes a lot easier when the driving force is the business’ long-term goals. This enables an unbiased examination of what a startup needs from its leader. The debate should never be about hiring talent from within or choosing professional leaders from an external network, instead, the focus must always be on who fulfills the needs and demands of a growing startup.

Hiring for C-level positions (or any position, for that matter) requires a good amount of thought and research. In our opinion, startups must approach the question of internal Vs. external talent by evaluating the following:

1. Experience

   Does a homegrown leader bring years of industry experience to the table? While experience is not the only deciding factor, it does play a vital role in decision-making, structure, and setting up processes in the organization. Investing in experience always pays long-term dividends.

2. Company Culture

   Hire to define your company culture. We find this to be one of the most powerful hiring approaches. Learn to look past the titles and achievements on a CV. Dig deep into the how and why behind those achievements to gain insights into how the individual will impact company culture.

3. Risk-Taking

   Leaders may not always have business ideas, but they will always have a vision. A startup needs leaders who are willing to take risks and go the extra mile to bring their vision to life. No business can succeed without risks. A key factor in hiring leaders is to get an understanding of how they view and handle risks.

A Balanced Approach

In some cases, hiring leaders from outside the organization makes sense when the company is in crisis and needs a fresh perspective. A CEO drawn from the larger corporate universe can start afresh, without any past baggage. They not only bring their industry experience to the table but also provide a new set of eyes with which the organization can determine its vision. On the other hand, homegrown leaders come with a sound understanding of the startup’s intricacies. Since they already know the ropes of the organizational ladders, they are able to translate this into actionable results. Both choices come with their own advantages and neither outrightly guarantee 100% success.

Regardless of where a leader comes from, it is important that they are able to build more leaders of tomorrow, sharpen and define the values that hold a company together, and attract more talent.

In the end, it is all about what works for your startup.