Sramana Mitra: In the scenarios where are you doing deep tech and you need to bring in a CEO to manage a tech-savvy team going after an interesting market opportunity, what nuggets or lessons from the trenches can you offer as guidance to our audience?
Karthee Madasamy: It’s a hard question. I sympathize with you. It’s not easy to bring in an outside CEO. Oftentimes, it’s not the right fit. It’s just a theoretical fit. It doesn’t work a lot of the times. The first thing you need to be clear about is what the need of the company is and then bring in a person who is going to solve that. The immediate response is bringing in a salesperson. For me and the companies, being only sales-focused does not happen for a long time.
Sramana Mitra: I think it’s a big mistake to bring a sales executive earlier on in a deep tech company.
Karthee Madasamy: Exactly. Where we have seen success comprised of two things. One is where the founders themselves are bought into the idea. It is very important. They need to be like “Here is what needs to happen. Here is what our limitations are.”
As a board, we tend to spend time on that part first. They need to agree to the deal. Oftentimes, you should have over-optimization for the right person. We over-optimize for the fit. Sometimes it might be that a person has worked with the founders in the past. It’s not the best fit, but in terms of the natural transition from the current founders to the CEO, that is a much better option. We look for those types of things where the chemistry and trust are there. We try to look for that.
We also try to identify some metrics of how they define success. We have brought in people as a consultant first to see how this is going to work. We want to test the parameters in terms of the ability to work with the technologist to help with the go-to-market and carry the conversation in a product-minded company. We try to bring them in for three to four months as a consultant to the CEO.
A lot of the incoming CEOs like it as well because they have an out as well. They can say, “The fit is not there. The founders are not as successful as we thought. The willingness to let go is not there.” Those are the things that we have seen.
More importantly, we found that the human aspect is more important at different stages. We try to optimize more for that. If the current team rejects the new CEO, then it’s of no use even if someone is very good. We try to make sure that the bind is there. Again, we try to identify the need. Most of the time, people who come from a big company are used to a brand name and the sales force behind them, but in a startup, that is not there.
Sramana Mitra: In an early-stage seed tech startup, you can’t afford to lose the technical team. If it becomes a toss-up between the technical team and the external CEO, you have to get rid of the CEO.
Karthee Madasamy: I agree.