Executive

CEO

The role of the CEO‍

Compared with some of the searches we perform at LF Partners – think external board members, for example – a CEO hire is more straightforward in a lot of ways. Unlike some of the other disciplines like a product marketer or a general counsel, the CEO is frankly pretty straightforward in terms of what you're doing -- you’re in charge of everything.

The CEO is responsible for setting strategic direction, making major corporate decisions, and managing the overall operations and resources of a company. They are the primary point of communication between the board of directors and corporate operations.

When to hire a CEO

‍A CEO is typically hired at the inception of the company or when a significant leadership change is needed to steer the company through growth phases or major challenges.

One instance is in a rollup where one business bought a second business and they need a new leader for the combined entity. Then there’s the inverse, where one business is being split into multiple businesses and you need a CEO for the second organization.

You could also look to replace a CEO during a strategic pivot, where the board decides to replace an established CEO with someone maybe with more experience who is better suited for the next phase of growth. And then there’s of course if the CEO decides to leave their role.

What makes a world-class CEO?

A world-class CEO displays visionary leadership, exceptional communication skills and the ability to inspire and mobilize a diverse team. They have a proven track record of success and resilience in the face of challenges.

If you're placing a chief credit officer, for example, there’s going to be discussions about things like the credit performance and the product suite. There's the trajectory of the business aspect to it. But when you're searching for a new CEO, it's much more about where you're trying to go and why and what type of leader is going to get you there.

Getting a feel at the board dynamics level is critical for finding the right person.

If there's one controlling investor, the CEO maybe doesn't have to worry about managing board dynamics as much since there’s one group that they're really accountable to. But if there are five investors and they each have 20 percent of the cap table, you need CEO candidates that have been used to that type of dynamic, someone who knows they will be spending a lot of time engaging with the board and getting consensus.

When that's the case, sometimes you may over-index on a higher EQ antenna or you’re bringing candidates that are a bit more diplomatic. It’s a different type of leader from when you have a controlling shareholder that just wants someone to go out and executes.

The other aspect to keep in mind is the projected end state for the business. If you're going to be going public or you think that's a likely outcome, your new CEO likely needs to be someone that has been through that process before, someone that brings credence to the table and who would give future public investors confidence in the business.

If there’s little chance of a company going public, maybe an incoming CEO would be more focused on cutting costs and making the business as attractive for a buyout as possible. That required a different type of person.

Those dynamics in terms of where the company is trying to go, who is around the board table and what the cap table dynamics look like are all critical inputs when we're evaluating candidates.

We have seen numerous examples where you have exceptional visionaries, exceptional CEOs who can rally the troops, but who, when you hit the air pocket and need to batten down the hatches and execute hard, may not be the right person for that.

The outgoing, gregarious type of leader who can try to lead the moonshot is unlikely not the same leader who need when there’s a tough turnaround on the horizon. A wartime CEO isn’t the same as a peacetime CEO and that’s OK. And sometimes, you may even consider bringing in a new person at the president level, almost as a trial to see if they can step into the CEO role. If they can’t, you can repeat the process. It’s typically easier to do this with someone who hasn’t been named the CEO a few months earlier, but we always strive to get the right person the first time around.

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President

The role of the president

The president often serves as the second in command to the CEO, with responsibilities that include overseeing daily operations, implementing strategic plans and managing executive staff.

When the CEO elevates from being heavily involved with the day-to-day and they need to move out into either a more fundraising role or into a more outwardly facing  roles, that's when you bring in your president.

As mentioned in the CEO section above, you may also bring in a president as a pseudo interim CEO with the intention of rapidly moving them into the leadership role.

When to hire a president

A president is hired when the size or complexity of the company requires a distinct role to focus specifically on internal operations and execution of strategy. This is a later-stage role in most companies, since early stage businesses do not have a need for both a CEO and a president.

When the expectation at an earlier-stage company is for a president to eventually assume the CEO role, the search is centered more about succession planning.

What makes a world-class president?

A world-class president is highly strategic, operationally adept and excellent at executing company policy. They thrive under pressure and are skilled in people management and cross-departmental coordination.

More often than not, the president will have more operations experience, more like a COO. By contrast, the CEO is going to have a more outwardly facing sales personality -- not sales like business development, but more interpersonal, interfacing with investors and boards.

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General Manager

The role of the GM

The general manager oversees a specific division or location within the company, managing all aspects of operations, from budgeting and personnel to strategy implementation and resource allocation, and they will typically have full P&L responsibility for a given or multiple business lines.

An example might be a GM of the Americas for an international remittances business where this person is accountable for the financial performance of this business unit, both in terms of revenue generation and cost management. They will have direct reports and access to certain tech resources that are specifically focused on their individual portfolio and product marketing operations with the ultimate goal of achieving profitability.

A GM of retail is going to own the P&L of the retail business. A GM of lending is responsible for that P&L of the credit product. By having these general managers overseeing different business lines, you remain nimble by having someone that's able to make decisions more quickly, but at the same time, you're able to utilize the breadth of the entire organization.

In some ways, a GM functions like a mini CEO, integrating with the broader company and working collaboratively across other business units to make sure the left hand and the right hand are on the same page.

When to hire a GM

A general manager is crucial when the company expands geographically or needs focused management in specific business units or departments.

What makes a world-class GM?

World-class GMs are known for their robust leadership skills, ability to drive profitability, and knack for fostering strong customer relationships. They excel in dynamic and competitive environments.

While every GM starts their journey somewhere, LF Partners typically tries to place GMs who have had that P&L responsibility before. If you’re a lending business, hiring an experienced GM that knows what good, great and exceptional looks like from a credit perspective and that also has the leadership presence and ability is highly valuable.

It’s the difference between someone who can tell you what they do versus someone who can show you what they do. A marketer who has spent their entire career as a marketer might struggle to find immediate success as a GM, whereas a former COO that grew up in a credit business and had prior ownership of different functional areas might be a logical candidate for a GM of lending role. The ideal candidate would likely have had that same career experience but with P&L responsibilities.

Understanding how to make trade-offs, how to build and grow world-class teams and how to work cross-functionally across various aspects of a business is more important than just skills. You can have a really great functional expert that might not make a good GM when you are launching a new product or expanding into a new geography.

While some organizations may continue with a much more typical hierarchical view, we are seeing a greater need for the GM-type role where people report into the function they impact, rather than into a COO where it doesn’t make as much sense.

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Board of Directors

The role of a board member

An independent board member can provide a different, largely impartial, perspective around the table compared with those on the cap table of your company.

There are two main scenarios when you’d require a board search – either when someone steps away from the board or when you need to bring in specific industry expertise to help better understand something.

When to hire a board member

Companies typically start thinking about whether a board search is right for them when they get to the scale of an early-stage growth company. It usually happens around the Series B or Series C stage as they think about whether an external independent advisor is a good fit for their business.

As you get later in stage, it becomes more important to surround yourself with the right people around the table to help you with that end-game plan. At the earlier stage, an independent board member might be more of a coach or advisor that helps you think through strategic decisions on product-market fit, recognizing that an exit is probably years out. 

What makes a world-class board member?

There are two main things you should look for in bringing on a world-class board member.

1. They have to have reps in the space that you need. If a company is thinking about a long-term roadmap that includes going public or another kind of liquidity event like being acquired by another firm, an ideal board member would be someone that's been through that process before.

2. They need to have the time to be able to really dive in.

Yes, it may add credence to your company to bring in a well-known name, but more often than not, you really want someone that has expertise and has the time to really help out the company, really actually dive in and be there as an advisor. 

Having functional expertise there is more important than having someone who has taken two companies through an IPO if you’re pivoting from a B2C product to a pure B2B option. In that scenario, you need someone that really understands large commercial partnerships and can help open doors and advise a chief revenue officer.

Part of the value a search firm brings is an existing network of people that could play these types of positions and we know what people in that network are looking for – it accelerates the process. Could they have stumbled across the exact right person from our network on their own? Absolutely. But it likely would have taken much longer and been happenstance as opposed to a purposeful process with an intentional focus.

Another benefit of using a search firm like LF Partners is that at times you want to be a little more delicate around what is public and what isn't. Having a search firm do something that's confidential in nature provides a buffer and helps keep the company one step removed. This is also true for when companies want to add diversity to their board but can’t explicitly say they want to hire a specific type of person. We will always hire the best person, but that degree of separation can play an important role.

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