For more than a decade, Todd Schwartz and Evan Richman have been sitting directly across from each other in the same office as co-chief executives of SkyKick.
When they started the cloud automation startup in 2011, it was clear to both that they would split the leadership role, relying on their friendship to see eye-to-eye on the vision and direction of the startup.
Since launching SkyKick, the duo raised hundreds of millions in capital as SkyKick became a large player in cloud automation. It now ranks 29th on the Startup 200, our list of the top tech startups in the Pacific Northwest.
“Any great business partnership is like a personal relationship or marriage,” Schwartz told Startup. “You just gotta have that relationship chemistry. And I would say, it’s not for everyone.”
Their decision was a rare bet on a co-CEO model. This unusual approach to company leadership, splitting a role more commonly held by one person, can begin in a variety of ways: longtime work colleagues, mergers and acquisitions, or even through a college friend.
A recent leadership shakeup at Salesforce put the model in the spotlight. Two weeks ago, the customer-relationship management giant announced that its co-CEO Bret Taylor would step down, returning the sole leadership role to Marc Benioff, who co-founded the company in 1999.
Tensions between the co-CEOs reportedly grew as Taylor spent much of his time on outside obligations, such as his involvement on Twitter’s board of directors. This is the second time in nearly three years that Salesforce had one of its co-CEOs step down.
Critics say the dual structure creates dueling decision-makers, leading to friction and confusion over whom to hold responsible if a company fails meet its key performance indicators.
But co-CEOs we spoke with cited numerous benefits: dividing tasks, refining decisions, and stability if one leader is out or decides to leave.
They say some of the secrets of a successful co-CEO arrangement are communication, alignment and trust, as well as buy-in from employees, managers and investors.
“If you asked me as an investor how I think about co-CEOs, I would say it really goes against my instinct,” said Andy Sack, a longtime startup investor and current co-CEO of Forum3, a new NFT-based customer engagement startup.
Sack, the former managing director of Techstars Seattle and co-founder of seed-stage investment firm Founders’ Co-op, said the co-CEO model is uncommon among startup founders. He estimates that of the more than 500 startup pitches he’s heard, fewer than 10 had two chief executives.
Having more than one chief executive is also uncommon in the broader public markets. From 1996 to 2020, of the 2,200 companies listed in the S&P 1200 and the Russell 1000, just 87 companies were led by co-CEOs, a Harvard Business Review study found. Notable examples: Netflix, Chipotle Mexican Grill, Warburg Pincus and SAP.
However, public companies led by co-CEOs outperformed their peers in average annual shareholder return. The average return was 9.5%, which was better than the average of 6.9% for each company’s relevant index, HBR found. Co-CEOs had a tenure of about five years, on par with the average sole-CEO workspan.
We spoke to three Seattle startups that adopted a co-CEO model to get a sense of how it formed, the challenges, and the advice they’d give to others looking into the model.
Co-CEO origin story: For Schwartz and Richman, who first met at MIT’s Sloan School of Management, the decision to team up was obvious. While in grad school, they entered multiple business plan competitions together. After that, they both worked at Microsoft for seven years as product managers. “It didn’t really make sense to split it up,” Schwartz said. “We go back a long way. And we come from similar backgrounds.”
Advice: Schwartz said it’s important that co-founders contemplating a co-CEO arrangement understand that it requires commitment. The decision should be intentional, he added, understanding that the co-CEO model requires two people who have a strong relationship chemistry, success metrics and commitment.
Roles: Unlike many co-CEOs, Schwartz and Richman are always in a room together, working on the same problems. They attend all their customer, employee and investor meetings together. “One of our early HR consultants used to say how rare it was that we were just literally in the same room all the time for 20 hours a day,” Schwartz said.
Debates: “There’s plenty of discussions, and they can even get heated,” Schwartz said. “But when you got similar values, trust, respect, alignment, and clarity of goals … then it works beautifully.”
Start from scratch: Schwartz said it could be difficult to retrofit a traditional business after it’s been run by a single CEO, rather than just starting with the framework. “If you start from scratch, then the exception becomes the norm,” he said. “And everyone is comfortable with it.”
The bigger picture: Schwartz added: “The more that this becomes an accepted practice, or there’s more examples of how it can work, it opens up the possibilities for others to even consider it.”
Co-CEO origin story: Sack first met Adam Brotman more than 20 years ago when he moved to Seattle. Brotman, a former chief digital officer at Starbucks, later became an advisor to Sack’s venture capital fund, and the duo discovered they had a complementary skill set and launched a startup together.
“We decided that if it doesn’t work for the company, or for us at any point, we’ll change it,” Sack said of the co-CEO model. “That’s how we think about it.”
Divide and conquer: Brotman works on product management while Sack handles more traditional aspects of the business, such as communications, financing and marketing. This can sometimes lead to confusion for employees, Sack said, but they reconcile it by treating their roles as separate departments.
Challenges: “You have two mature adults who are experienced and who do not have the same opinions,” he said. “And you have to reconcile them all the time.”
The benefits: “It’s a heck of a lot more fun than doing it alone,” Sack said. “We might be a little slower in our decision making. But I think in general, our decisions are better.”
Green Canopy Node
Co-CEO origin story: For Green Canopy NODE, the dual leadership structure came together after a merger. Aaron Fairchild and Bec Chapin became co-CEOs when NODE, the Seattle-based, carbon-cutting construction company that Chapin co-founded, combined with Portland’s Green Canopy, an eco-focused real estate developer and home builder.
This ensured the companies maintained cohesiveness after the merger, Fairchild said, and also gave them the opportunity to combine their entrepreneurial strengths.
Roles: Chapin focuses on the product side of the business, while Fairchild handles finances and partnerships. “I have a lot more extensive network within the ecosystem of real estate, which is just a matter of fact,” Fairchild said. “But when those relationships align to product, it’s really easy for me to get out of the way.”
Learning moment: Fairchild said one of the most important lessons he learned in the beginning stages of sharing the leadership position with Chapin, who is younger and identifies as queer, was handling rank and power dynamics.
“I’m a classic white male paradigm real estate guy,” he said. “You’re bringing two different world views together into a very intense working relationship.”
In order to rectify these differences, the company hired an executive coach who specializes in power rank dynamics. This helped flatten the hierarchies, Fairchild said, and now the coach works with each member of the C-suite.
Mission: Fairchild said that the broader mission with his co-CEO partnership with Chapin is to set an example of diverse leadership, especially in a staid industry like real estate. “We’re trying to create a positive expression of what’s possible,” he said.