Home Venture Q and A Which Partner Should be CEO?

Which Partner Should be CEO?

Entrepreneurial Insight by Susan Schreter
Special to Seattle24x7

Q. My brother and I are organizing a cellular game and content supplier business. We’ve been developing our first features on the side and now are ready to market them to cell phone carriers.  Does it matter who is CEO?  (I’m female)  We really don’t care about titles but have to put something on our first business cards. Our goal is to eventually get financing and go all the way.

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A. Congratulations on entering one of the hottest markets for startup businesses! Cellular gaming is a relatively new industry with tremendous growth potential.  As you probably know, phone carriers around the world are scrambling to add fee-based downloadable games, puzzles and music to generate more monthly revenues from their customers.  They need product from imaginative companies just like yours.

You’ll be pleased to know that venture investors have been investing in the cellular game “space” as they say because the profit margins for cell phone games are much higher than video games.  Plus, companies can produce cell games and get them listed on carrier web sites in less than 3 months whereas more complex video games can take two or three years before reaching a store shelf.  That’s a fast return on development dollars.

But just because you are entering a growing market with high profit and cash flow potential doesn’t guarantee you’ll get funding. What matters is the strength of your business plan, customer acceptance of your games, and how well you and your brother manage your company’s day-to-day operations.

So, who should be CEO?  Actually, the right question to ask is who is better able to serve as CEO?  In a small business or big business, the #1 job of a CEO is to make sure there is always enough cash to fund continued operations.  CEO’s should enjoy working with finances, making presentations to potential investors, and being the public “face” of a company.  In startup organizations, the job of a CEO is to make key sales calls, establish vendor relationships and negotiate agreements with potential partners.  It’s a non-stop job.

If your brother dislikes travel and prefers the more solitary, creative process of writing code and building games, then I’d say your decision is easy. Your brother is better suited to a SVP Technical Development or Chief Technology Officer role.

It doesn’t matter if a CEO is male or female to get venture funding.  Smart investors don’t walk away from a good, well-managed business with lots of financial upside.  In fact, you may be at an advantage because your company’s founding management team does include a female.  Why?  Studies show that 58% of women download cellular games for entertainment whereas only 10% of women play video games.  Cellular carriers may look to your company for games specifically targeted to the emerging women’s audience before your competitors.

If you and your brother have early success selling your games to carriers but can’t convince investors to back your big growth plan, ask if the investors would be more inclined to invest with the addition of more experienced executive leadership. Sometimes adding top talent early-on is the fastest route to getting major venture capital backing and having the realistic opportunity to be a big player in a big industry. Good luck on your venture climb and let me know who gets the top spot! [24×7]

Build the business of your dreams.  Send your fundraising and small business management questions to susan@insideentrepreneurship.com.