The curious case of the first-time CEO.

A study of top executive leadership within 200+ growth-stage social ventures

Portrait of Kevin Brown, Co-founder & CEO of Mighty Ally

KEVIN BROWN

What if we’re over-investing in individuals and underinvesting in leadership? And is there a chance the social sector is too focused on finding the next unicorn instead of developing a stable of experienced workhorses?

We analyzed the top executive profile of 200+ growth-stage ventures within the Big Bang Philanthropy and Skoll Foundation portfolios. These nonprofits and social enterprises are some of the highest potential, highest profile in the game – collectively netting hundreds of millions in funding each year.

We had a hunch. But the data was surprising.

Exactly 80% of organizations backed by Big Bang funders are run by a first-time CEO. Even among Skoll Award winners, 70% were first-time Executive Directors, Presidents, or the top leader title of choice. And to round out the study, first-time CEOs across the Mighty Ally client roster to date account for 95%!

Most telling, only 5% of all orgs we analyzed are led by a CEO that has run something more than once before. By the way, our definition of having “run something before” means being the top executive or a co-founder, partner, or owner in the past. While many current CEOs have valuable previous experience, we’re not including a role like a director within an INGO since it’s more of an actor in a play vs. producer of the show.

And while age is impossible to perfectly infer through a study like this – using LinkedIn and website bios as the data source – total previous experience is a helpful indicator of where and when growth-stage leaders might need support. Among the Big Bang orgs we studied, the median age when becoming CEO was right at 30. Almost 47% became the top executive in their 20s, with some in their teens! And there are very few senior leaders in this growth-stage space, with only 3% of current CEOs over age 50.

A comparison to the private sector.

But wait, isn’t the corporate world full of young, first-timers who make it big? Sure, Bill Gates started Microsoft as a teen and Zuckerberg co-founded Facebook from his dorm room. But these are exceptions, not the norm.

According to research from Duke University, the Kauffman Foundation, the Founder Institute, and Northwestern, the average private-sector entrepreneur is actually 40 years old when launching his or her first startup. More interestingly, in the fastest-growing new ventures, the mean founder age is 45.

Similarly, this article from Harvard Business Review references a random sample of successful founders. They discovered 39 was the average age at founding, with only 31% of CEOs coming in under age 35. In our analysis, 72% of Big Bang-funded CEOs became top dog under age 35!

And if we go further up the corporate chain, the average age of an incoming CEO to an S&P 500 company is 53.

These sources demonstrate that private sector leaders are getting 10-20 years more real-world experience before becoming a CEO, when compared to a Big Bang-funded organization. The top leaders of the social ventures we studied had on average eight years total experience before becoming CEO.

“The research shows that an older age is actually a better predictor of entrepreneurial success. We theorize that the combination of successful project completion skills with real-world experience helps older entrepreneurs identify and address more realistic business opportunities.”

ADEO RESSI, FOUNDER OF THE FOUNDER INSTITUTE

Why do these findings matter?

It seems that within this niche of the social sector, we’re placing our hopes, pressure, and investment on a whole lot of relatively young people who haven’t yet built (or scaled!) a business. That’s challenging in and of itself. But we’re also rarely providing them a roadmap for leadership success. They’re typically talented, courageous, and have the raw materials for greatness. But are funders, boards, and ecosystem partners like us supporting them to turn that individual potential into organizational impact?

Many of these rookie CEOs made a huge leap from a previous profession to top exec overnight. And let’s face it, most didn’t first complete an MBA or training program on leading an organization. We found prior roles like doctor, bricklayer, filmmaker, teacher, yoga instructor, platoon commander, fellow of this and that, and Peace Corps volunteer. It’s tremendous these entrepreneurs saw a social need and jumped in. But were (and are) they prepared?

I know from experience how much I didn’t know in my first executive role, where I learned loads from my two (more seasoned) co-founders. This fourth time running a business at Mighty Ally, I finally feel dialed in. But I still fail and adapt every day. And despite all my business experience, I’m definitely not qualified to stand in front of a classroom to teach children or jump into an operating room to do surgery. That kind of leap is the same career switch many first-time CEOs make to run a social venture. 

Foundations are likely willing to bet on the engineer-turned-entrepreneur because they think they’re getting the next “Uber of development” unicorn. When in reality, we as a sector should focus on building up more experienced workhorses. We need more CEOs who can do the work day-in and day-out, all powered by good leadership skills and healthy orgs. 

Silicon Valley can let nine in 10 startups fail – does it matter if another mobile chat app doesn’t make it? But the social sector doesn’t have that luxury. We’re collectively tackling inequality and injustice, and time is not on our side. There are lives at stake.

There are also other lives to consider: those of the first-time CEOs. Few want to admit it, but I will: it’s terrifying being in charge of something for the first time. And this pressure can take a mental and physical toll on rookie leaders (the future of this space!) if we’re not better about supporting them.

The River Group, an advisory firm that develops leaders across sectors, releases an annual study about the experience of becoming a CEO for the first time.

On a 1-to-10 scale, first-timers felt preparedness dropped from an average of 7.2 on their first day to 3.5 six months later.

After starting the job, new CEOs learned several emotional, cognitive, and personal challenges inherent in the role. Like being under a microscope, dealing with boards, time vampires, feeling alone in the crowd, the weight of conscience.

As a two-time CEO in their study said: “You are an order of magnitude more prepared the second time you become the CEO.” 

To dig into the subject of pressure placed on young leaders, we spoke with one of the few CEOs in our study who has run multiple ventures. Krupa Patel is currently the Co-founder & CEO of Silverleaf Academy in Tanzania, with previous partnership and leadership roles at Anza, Kili Hub, Last Mile Tanzania, Kauli, and Iko Eco. She’s a serial social entrepreneur, if you will, but doesn’t hide the fact she started young and felt the burden along the way. 

Krupa discussed the need for self care, as young leaders often sign their names to an intense long game. And the importance of viewing personal sustainability as a set of rhythms and rituals to ensure rookie execs remain their wholesome, hearty selves.

“We create this heroic idea of a young, dynamic startup CEO and have unhealthy expectations. We idolize this ability to work around the clock and invest everything you have physically, emotionally, and spiritually. But if we buy into change that will take multiple decades, we need to see ourselves as a resource. We talk about sustainability of our enterprises but need to think about ourselves as a critical resource in driving that change.”

KRUPA PATEL, CO-FOUNDER & CEO, SILVERLEAF ACADEMY

Advice for first-time CEOs.

This is all not to say first-timers shouldn’t start social ventures and we shouldn’t support them if they do. But we should agree they need help. If the sector is going to be reliant on young and hungry leaders, we can at least elevate this topic and the need for solutions. It’s a big enough challenge to change ingrained systems and symptoms of inequality. We can’t afford a lack of practical leadership capacity to derail organizations.

So for those of you running a growth-stage social venture for the first time, here are four thoughts.

1. Look in the mirror first

There’s no shame whatsoever, but the humility to say “I’ve never done this before” will do wonders. You have to earn diplomas and complete years of training before a life is in your hands as a doctor. But anyone can start a social venture without prerequisites and end up with thousands of lives depending on them. And many of you have done just that.

Yes, you’ve maybe led a successful university project and been through countless fellowship programs. Or perhaps you’ve already impacted thousands of lives in another non-executive role. But now you have to make the big mental switch from working in a business to working on a business. And your entire outlook must evolve to match your growing responsibilities.

To diagnose your strengths and weaknesses, take (and spend time with!) a DISC assessment and/or tools like StrengthsFinder. Also, you’d find great value in gathering your funders, board, and management team to take part in a Start, Stop, Keep feedback exercise. It’s simple: each person shares the one thing they think you need to start doing, stop doing, and keep doing to be a better CEO and hit your impact goals.

Our analysis showed that first-time CEOs had been on the job an average of nine years. That’s a long time for the world to change while you were head-down kicking ass. To ensure you continue growing as a leader, we recommend joining the board of another org or two (in and out of the sector), to broaden your perspectives and learn about the challenges other leaders are facing.

And finally, every first-time CEO could use some books to help run the company: The Five Dysfunctions of a Team, Essentialism, Traction: Get a Grip on Your Business, The Advantage, Small Giants, Think Big Act Small, and Mastering the Rockefeller Habits.

Our advice echoes that from Scott Roy, Co-founder & CEO of Whitten and Roy Partnership, which provides sales consulting for many social enterprises within the Big Bang portfolio. After his 300+ projects over the past 10 years, Scott said the number one determinant of a successful change process is engagement from the leader. He’s inspired by young CEOs, and said he would take their passion, vision, and energy over knowledge and experience any day. But he recognizes that a young CEO might miss some of the basics of business building, due to their inexperience. For instance, what Whitten & Roy sees with sales-based organizations, as one example.

“The disadvantage with less-experienced and/or first-time CEOs is that some may not fully understand the tremendous leverage that selling plays in the mission as an effective behavior change mechanism. Less-aware CEOs may discount the importance of sales and treat it as an afterthought. In these cases, the impact on their brand, mission, and finances can be damaged quite badly.”

SCOTT ROY, CEO, WHITTEN & ROY PARTNERSHIPS

2. Build an experienced team around you

After you diagnose your individual strengths and weaknesses, one of the most important tasks you have to prioritize as CEO is designing a healthy organization. Not creating the next big innovation. Not raising the most money. Maybe not even scaling your efforts yet. A healthy, high-performing organization starts with you, and building a cohesive leadership team.

There’s no better way to lay a proper foundation for social venture success than bringing on co-founders or C-suite peers that have been there, done that. Then ensuring there’s compatibility, talent diversity, trust, conflict, commitment, accountability, results, and management skills among you. Here’s a tool for organization design that can be a guide. We believe in our own Four A’s framework that org design is how you align your brand internally before you can amplify and scale externally.

Since leadership and people make up ⅔ of a healthy organization, it should be obvious as a first-time CEO that you’ll need help to accentuate your gifts and fill gaps for your shortcomings. Because none of us can go it alone. Though many attempt it.

Krupa Patel shared that many young leaders (such as her earlier self) try to fight stereotypes and overcome odds to accomplish the mission without traditional senior leadership. But she discussed the need for rookie CEOs to surround themselves with seasoned managers not only to compensate for the literal lack of experience, but also for the aesthetics of being a first-time top executive. She noted that in many cultures and contexts, you still have to pay tribute to the perceived wisdom that comes with older team members. So she’s found a balance between recruiting youthful and dynamic staff, while building a middle management layer of more seasoned executives.

“In the early days as a young female CEO, I was bullish on fighting every stereotype and injustice as I tried to drive an agenda within the government. But I had to realize the true fight that was important and put energy into that cause, and yield to other fights along the way.”

KRUPA PATEL, CO-FOUNDER & CEO, SILVERLEAF ACADEMY

3. Push for funder & board support

If you build the right team and still realize you need help becoming all you can be, two important levers you can pull are funders and board members. Don’t put on that you’ve got it all together and don’t need help. They can see straight through the bravado, because few 30-something first-time CEOs know what the heck they’re doing. Even after 40, many of us are still figuring it out.

At Mighty Ally, we’re beating the drum about post-investment support from funders. Money alone is not enough. And in some cases, too much investment can do more harm than good.

First-time CEOs: we understand you often don’t know what you need other than fundraising. Or, you’re so unselfish you want every dollar to fund the program and beneficiaries you serve. Not to mention that funders are measuring you by programmatic impact, so it’s natural to put money there instead of leadership development. But we believe it’s part of a funder’s job to nurture this critical capacity building for you. A foundation making the claim they’re giving an unrestricted grant and stepping out of the way is avoiding their stewardship responsibility, in our minds.

So CEOs, you might have to look your funders and boards in the eye, and demand more support in turning you from a talented individual into a proven leader. Krupa Patel underlined this point, admitting she would get attracted and distracted early on by the show lights of fellowships and conferences. “Young CEOs can be opportunistic or excitable at times, but a board can see from 30,000 feet and ensure opportunities are values-aligned. Many young CEOs see boards as a hindrance and a stickler. But I’ve come to realize the importance of a small, nimble, but sturdy board and what they provide in times of fluctuation.”

On this topic, we spoke with John Rendel, founder and former CEO of PEAS who now works in philanthropy at The Peter Cundill Foundation. John started PEAS as a teacher in his mid-20s and grew it from nothing to an organization with $10MM in annual turnover and 1,000+ staff. So he’s seen this curious case of the first-time CEO from both sides of the coin.

John discussed the role of investors in developing rookie leaders. He believes the key is providing non-grant developmental support, to be accessed at the discretion of the leader and not forced upon them. “That support should help them step back and reflect, build peer networks of similar founders, and give them access to high-quality expert advice and content. The absolutely key thing is to avoid any temptation to micromanage or you will kill the very thing you are trying to grow,” he said.

John also emphasized the need for board mentorship for young entrepreneurs.

“While I mainly learnt at PEAS through the ‘mistake and course adjust’ process, I also found an excellent mentor to act as our first Chair. His focus on and trust in my ability and potential rather than my inexperience and weaknesses was critical to my development in the role.”

JOHN RENDEL, FOUNDER OF PEAS

4. Consider passing the baton

And here’s the final thought. It’s one thing to have an idea good enough to raise a million in startup funding – there are foundations everywhere hungry to place bets on good people with good ideas. It’s another thing to scale a sustainable, healthy business beyond growth stage.

There’s a big difference between what a startup needs to achieve (like validating a model and product/market fit) and what a growth-stage changemaker needs to accomplish (scale!). A startup CEO needs to experiment with strategies and fail a lot, whereas growth-stage leaders need to refine and repeat a proven recipe over and over. In other words, the skills that make a CEO good at running a startup are not transferable as the organization grows. And few people have the skills for both.

Scott Roy provided excellent input on the different stages of organizational development. He noted that when you’re small you can get your arms around it all; as you grow you must adapt and change your style to empower others and manage them well; and as you scale you must take your hands off the day to day and trust your well-trained teams to run things. Scott said, “This evolution of leadership is what is so challenging. The degree to which a CEO is self-aware, collaborative, and has a modicum of humility will determine whether or not s/he will adapt and grow as the organization grows.”

In the private sector, most founders surrender management control long before their companies go public. In “The Founder’s Dilemma,” Harvard Business Review found that by the time corporate ventures were three years old, 50% of founders were no longer the CEO. And fewer than 25% led their companies’ initial public offerings. We like to celebrate the handful of founder-CEOs in corporate America (RIP Steve Jobs), but again, they’re the exceptions to the rule.

Unlike the corporate world where it’s common to start something then get out of the way, our study found that 90% of current Big Bang-funded CEOs were founders of the organization. So tough love folks, but there may be a point (soon) when it’s time to hand the baton to an experienced executive if you want your baby to reach full potential and you’re not the one to take it there. Even Zuckerberg realized that Facebook had outgrown him.

“The position of Founding CEO carries a dual edge. On one hand it feeds the soul of the organization and inspires deep purpose and commitment. On the other hand, it can blind the leader from doing what is needed to run a successful organization and grow the business.”

SCOTT ROY, CEO, WHITTEN & ROY PARTNERSHIPS

Is leadership a (the?) missing link?

The 200+ growth-stage social ventures we analyzed are doing some of the world’s most important work. The need is great. Their models are innovative. The founders and leaders are whip-smart. And within this dataset alone, 17 Big Bang Philanthropy members are each spending at least a million per year to fight poverty and fund three organizations in common.

But by many accounts, we as a sector are off track to hit the Sustainable Development Goals.

So it’s worth repeating and further unpacking the findings from our study. 80% of growth-stage social ventures are led by a first-time CEO. And these first-time CEOs are taking the helm with 10-20 years less experience on average than private-sector counterparts. Then most of them are staying in the pilot’s chair a long time – likely due to their tenacity, but despite a lack of leadership support from most funders and boards.

What if we invested a bit more time and money into these individuals? And to be fair, what if first-time CEOs spent less time on products and programs… and took their share of responsibility for the leadership development to be done? How much could the sector (and collective impact) improve if we all prioritized organization design as a key component of building a brand and scaling a venture?

Could leadership be a (the?) missing link? We think so.

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