July 6th, 2022 | By: The Startups Team
“What ARE we?” Ah, the age-old question — defining the relationship (or in this case, the title) of Founder and CEO, or Founder or CEO. While both titles sound impressive in conversation, does it really matter what the title is, or is that just something for teenagers trying to land their first relationship, or what to write on their business card? Well, we’re about to have “the talk” right now.
For leaders of companies who don’t know whether they should introduce themselves as the Founder vs CEO (or Founder CEOs) — here’s some information about what those titles mean, with insight from our amazing Startups.com Founders community on which title (if either) is the best fit.
Technically, yes, but there isn’t really a definite answer to this question. Some people claim that job titles don't matter, particularly at startups, but they do, and there is plenty of research to back it up.
Job titles define employee roles, which extend even up to the Founder and CEO level, and according to various studies, they do a lot more than that.
Titles can help you attract talent, get introductions, and network more strategically. Everyone wants to be part of something exciting and new — and everyone knows that titles are a shortcut to getting people interested in your business. When it comes to the roles of Founder and CEO, the weight of responsibility is a lot heavier than say the title of “office clown." Arguably, the amount of juggling is the same.
But executive titles can also be a distraction from the real work at hand (“I don't care what your title is, get me those numbers!”) within the startup. At the same time, they can set expectations for roles and responsibilities within an organization, which is useful for both employees, potential investors and other stakeholders.
At the early stages of a new company, you'll find many Founder / CEOs simply by virtue of being the only member of the team. Not only the top position, but all the executive positions in the company are filled by the Founder. As the business grows the Founder / CEO may shed some of the other titles
So do titles matter when it comes to the Founder or CEO of a company? It depends on how you use them and the role of responsibilities you are performing in the organization.
Community member, Nigel Hibbert, chimes in to share thoughts on this in a little more detail:
“Founder” would be the term if you started the company from the start. Apple would have been started by Steve Jobs and Steve Wozniak, Microsoft (was) founded by Bill Gates and Paul Allen, and Walt Disney would have founded his company in his own name.
As a startup head, the title of Founder can help you find investors and funding. The main drawback is that if you list yourself as a Founder, it will show that you are in the early stages of your business and therefore can be perceived as being a risky or potential high-risk prospect.
Tim Cook of Apple or Steve Ballmer of Microsoft, Robert Iger, and Michael Eisner of Disney are examples of the role of the CEO and they have a much greater responsibility to the whole business operation.
You would have to demonstrate that you have the necessary knowledge and experience to be holding the position of a CEO within the company and with all the necessary capability of what that means.”
It’s important to know the definition of Founder and Chief Executive Officer and what those titles mean and the different skills they require.
Founder: The person who started the company. It is someone who has an idea and creates a business around that idea. They are the “Founding Father” of the company, as the company would have never existed without them creating it. They are often focused on vision and big picture of the start up.
CEO: The head of the company, responsible for overseeing all aspects of it and making sure everything runs smoothly. The Chief Executive Officer runs it as a business, sets the long term plans and drives towards success. They also communicate directly to the board of directors. A Professional CEO will have the distinction of having risen through the ranks, and brings a different set of experiences and skills than a new CEO. Experience in how a CEO works at large companies may not translate directly to how a CEO will work in newer, smaller businesses. However, professional CEOs will have better understanding and experience in communicating with a board, setting success metrics, and providing an example to the rest of the team.
Head of a company or managing director? The difference between these roles is good to understand in further detail. A head of the company (e.g., chairperson or chairman) might be responsible for administrative issues such as the finances, whereas a managing director (MD) will typically be involved in day-to-day operations and decision-making.
But don’t just take it from us, here is feedback from a couple of our community members sharing their take on Founder vs CEO position titles:
“The most important message to convey via a practical title is:
a) did you start the company - ex: Founder, Co-Founder
b) what is your key role (whom you make most of the decisions as) - ex: CEO, COO, Business Development, Product, Marketing.” — Heislyc Loh
“The term "founder" describes your relationship to the history of the business. Page and Brin will always be Google's founders. The term "CEO" is about your position in the current organization's hierarchy. Some founders will be CEOs, at least for a while.” — William Pietri
If you're a founder without another title, you may have to work extra hard to earn respect in some cases. This is especially true for female founders. Establishing authority by using the right title can play a part in getting funding and customers. However, professional CEOs bring skills and experience in hiring employees and recruiting advisors, talking to venture capitalists, communicating with the board members, partnering with other companies and distinguishing your specific role within the executive team.
While titles are a great way to understand the roles on your team, they aren't the same thing as roles. A title doesn't define someone's role in a new business (e.g. "CEO" doesn't mean you're responsible for everything). In fact, thinking of titles as defining roles can be a bit misleading because it can make you feel like titles are something that's set in stone — they're not! Titles can change over time. At the end of the day, having the right title will not be what determines if you build a great company or not.
Titles are also just one part understanding what each person does on your team — they also indicate what experience someone had before coming into their current position and provide clarity to people outside of your company.
Don't forget the option of Founder / CEOs. From Steve Jobs, to Jeff Bezos, Mark Zuckerberg to Bill Gates, Founder CEOs are a common occurrence. It is also useful when we have a co-founder to distinguish between their [respective roles of the co-founders](https://www.startups.com/library/expert-advice/startup-founders-and-cofounders). Understanding who is the most senior executive when there is more than one founder is useful. This is true from a small business to one seeking funding from venture capital firms. This is even more important when we have many founders. Obviously, in the case of multiple co-founders, not every founder can be a Founder CEO. Founder CEOs may also find that they hold this title temporarily - eventually being replaced by another CEO. For example, Google Founder and CEO Larry Page resigned from his role as CEO in favor of Sindar Pichai some 20 years after Google's creation. This is common among Founder CEOs.
It is certainly the case that companies exist with a Founder AND a CEO.
Some Founder CEOs step back from the CEO role, retaining the Founder title, possibly switching out a board of directors seat.
In these cases either a co-founder, one of the other employees, or an external ceo / professional CEO can fill the role within the company. This often comes with very different cash compensation than the Founder / CEO enjoyed during their tenure, and is often accompanied by equity grants.
While Founder / CEO are definitely the most common titles, if you're the head of a company and want a more creative title than Founder / CEO here are some suggestions. Additionally, some companies have a business model that might dictate different roles to suit organizational operations.
This position is ideal for someone who loves to lead and make decisions in a fast-paced environment. They manage the staff and budget of a company, guide their direction, and make sure it's compliant with their mission statement. Presidents will also make presentations to other executives, reviewing strategy, and plans for short-term and long-term projects.
The principal of a company is responsible for the management of daily business operations. They work to develop their company's mission and think of strategies to achieve the organization's goals.
A director of a company is responsible for the organization's development and implementation of policies, procedures, and operational reporting/metrics. Directors develop and implement consistent inventory and cost accounting policies, procedures, and operational reporting/metrics.
A managing partner is a challenging role that requires considerable expertise, experience, and leadership skills. The person in this role should be equipped to handle tasks from supervising daily operations to achieve organizational goals and objectives.
If you're not yet at a stage where you feel justified in referring to yourself as a Founder, a CEO, a Founder / CEO or similar, but want people to understand that you're working on an original idea - Entrepreneur can be a good bridge title until you feel like you fit in with the other Founder / CEOs.
Titles are good for business cards and social media profiles, and they can help bring you a sense of authority or confidence. But when it comes to running the company, what you do matters more than your title. A leader is there to inspire the team and make sure everyone is on the same page in terms of what's important to the organization as a company.
So, which title is best for the head of a startup, Founder vs CEO? It all comes down to what the head does within the company. Use the tips and definitions above to make sure it aligns with the description of the work you are doing and you will have the best title for your role. Don't worry about keeping up with all the other Founder CEOs, Founders, CEOs, and Founder / CEOs :D.