A bad case of CEOitis

Do you remember that guy who got a funding of $3million in his the series A round, he had an impressive business plan, he displayed rapid growth and claimed he was 12 months from breaking even? Do you remember how he delivered his commitments during the first 6 months, which was followed by a series of losses? This situation is all too common, we have all seen this, but now instead of ignoring this situation, lets shed light on how this could happen, and what signs can we watch out for.

The key personality trait in this type of a CEO is over-confidence. If this was the CEOs first time receiving a large investment, it is only natural for euphoria to trigger in his personality, and a sudden aspiration of proclaiming himself as the next Larry Ellison kicks in. The only difference is that Larry made it, and this CEO did not.

Once this CEO is able to attain a few wins and exceeds his 6-month targets, the personality trait of fiscal conservatism starts to wane, and the materialism trait emerges from everywhere. The large expense accounts and flashier cars appear, all of which are a justification given for past and future growth. It is unfortunate that during this crucial time of growth, the CEO starts missing out on critical KPIs related to quality and delivery, and the efficiency of the sales channel. Yes, growth is taking place, but is it sustainable, is there a risk analysis that is conducted? Sadly no one asks the question about how rapidly this CEO expects the market conditions to change, and if is there a plan to monetize on that change.

After the first year, the business is on track, but a month shy of breaking even. The market conditioned changed slightly and an opportunity to sign a potential cash-cow client was missed because the sales strategy had not been tweaked. How could this have happened?

Well let us suppose that this CEO had stronger type A personality than your regular CEOs, which when combined with the materialism trait leads to a lesser emphasis on the suggestions made by COO about delivery, and by the VP of Sales about distribution.

If we were to suppose that this CEO did not have the type A personality, but still maintained the the materialism trait, then an alternative outcome from this dangerous cocktail of personality traits can be witnessed. The CEO may have listened too carefully to faulty information presented to him, and did not bother do his homework on assessing the pulse of the market.

In either case after the 15th month the company is beginning to bootstrap, as the CEO continues to maintain his lifestyle through creative corporate accounting. Raising more money could be an option, but maybe it requires another CEO with a different set of personality traits.