Character traits of a CEO
8/8/2012 1:02 AM EDT
Entrepreneurism is alive and well in the software segment, especially the EDA market, apparent from the 200 or so exhibitors at DAC last month, most of whom were either startups or emerging companies.
EDA and social networking startups share at least one common denominator. Funding for either doesn’t take a huge amount of money—unlike a semiconductor startup that needs to raise about $50 million to get its chip to market.
Instead, many of the DAC exhibitor startups are in the $3-5 million revenue range, ready for the next phase of their growth, which often means expanding the management team with, possibly, making way for an experienced chief executive officer. This transition gives the technical founder, serving as the CEO pro tem, additional resources. Moreover, it enables him or her to go back to what he or she does best and signals that the company is serious about moving to the next inflection point.
Of course, some technical founders grow into the CEO role and are comfortable developing a broader vision that could include the development of strategic relations with customers and partners, mergers and acquisitions to strengthen the company and other complex business transactions. I find that a strong indicator of entrepreneurs growing into successful CEO’s is the ability to ask for help.
As a member of the board of directors for several small EDA suppliers, including Breker Verification Systems, I’m often asked what character traits make a good CEO. I think there are several, most notably being humble and having the ability to ask and listen to the answers. A CEO who thinks that he or she has all the answers is a recipe for disaster.
Being humble may seem counter-intuitive in a role where individuals need to appear bold, forceful, direct and visionary. Being humble with customers, prospects, partners and employees often takes restraint for the CEO because he or she is the ultimate decision maker. With that weighty responsibility, it can be easy to forget to listen but trusting people and listening to them empowers them to do their best.
Of course, industry experience is an important asset, as are the CEO’s network of contacts and connections. An investor once said that he only hired CEOs from within an industry because he didn’t want to train a CEO and help build their network with his money.
CEO selection committees should have a primary goal of creating a cohesive, complete management team. This means looking for an individual to complement the technical founder and entrepreneur who will often continue to drive the technology. Committees also need to make tradeoffs when building a short list of CEO candidates. One may have a strong business background that includes sales, marketing and financial expertise, a good complement to the founder’s skills, while another has a more technical background, augmenting the founder’s skills. Yes, it can be a tricky process trying to understand each candidate’s strengths and weaknesses and matching them with the founding entrepreneur’s. After all, no one has the full set of skills required for the role.
A varied career is useful as well. I worked for a large company within the M&A group, a terrific experience. It taught me plenty and helped prepare me for my next career move to a fledgling EDA startup as CEO, then negotiating its acquisition several years later. Prior to working in M&A, I was a marketing executive for several EDA companies and started my career as a design engineer. It was as a young designer that I knew I needed to keep challenging myself and growing, and set a goal for myself to move into a CEO role at a later point in my career.
At the large EDA company, I watched the CEO surround himself with highly technical people, complementing his own strengths that were on the business and financial side. They were bright, talented and given plenty of opportunity to voice their opinions and he listened to them. Watching him taught me to see the potential in other team members as well as their limitations, understanding their strengths and weaknesses. I learned how to be a mentor, a rewarding experience.
Certainly, character traits and skill sets are different for a CEO managing a $5-20 million company than one charged with running a $500 million company, though being humble and having an ability to listen serve both. Building a company, no matter what the size, takes patience, too. It’s also satisfying, surely a reason why entrepreneurism continues to thrive in EDA. The ingredients for success are all there, for those who chose to take the risk and know when to accept help.
Michel Courtoy is a former design engineer and EDA executive who sits on the boards of directors of several firms.