‘arguably, a large fraction of startup organizations failing to get off the ground is a result of coordination headwind problems rather than bad ideas or lack of a need. in larger organizations that already exist, arguably an even larger fraction of efforts at change fail because of these problems. i’d estimate somewhere between 60% to 90% of all efforts to start new organizations or scale existing ones fail due to coordination headwind problems. at the very least, simply recognizing coordination headwinds as a real phenomenon, as real as the weather, is a big step forward. most people never get past viewing it as some sort of moral failure on the part of someone else, somewhere else in the system.’ — venkatesh rao
there are two completely different types of ceo’s and confusing them has a lot of consequences. i think if i understood this a while back i would be about $10m richer.
if ur an operator ceo, ur making the execution decisions. ur in the code, the design, the systems. ur making the actual day-to-day decisions about what gets built and how.
if ur a deal maker ceo (biz dev ceo), ur making the initial condition decisions. which means ur also making day to day decisions but from a different level of abstraction. ur hiring the product manager and making extremely clear decisions about what the mandate is, what success looks like, what the constraints are, what the sla should be (or not depending on how good that pm is). then u let them make the execution decisions. ur not saying u have no opinions on the product - ur making those opinions extremely clear at the initial conditions space-time. then u let them execute.
think elon vs trump. elon is in the factory, in the design reviews, making execution decisions about the rockets. trump is making initial condition decisions with the people who will build the buildings - setting the vision, the constraints, the success criteria, the mandate. then letting them make the execution decisions. u could be more thorough in the initial conditions than trump.
most ceos don’t know which one they are. so they’re stuck doing the wrong job wondering why everything feels so hard. lalalallala.
deal makers make deals with the people who will do the work. im a deal maker and i also do the work but the work is called the initial conditions. a deal maker sees connections others miss, build relationships and networks, create partnerships and alliances, find arbitrage opportunities, orchestrate existing resources, open doors and make introductions. lalalallala.
when a deal maker builds their own companies, they operate the same way. they hire the pm and make initial condition decisions with that pm. they hire the head of engineering and make initial condition decisions with them. they’re not making the execution decisions day-to-day - they’re making extremely clear decisions about what success looks like, what the constraints are, what needs to happen, what the sla is, what the mandate is. then they let people execution.
a different way of saying this is that for the deal maker management is a synonym of coordination debt.
the superpower is coordination and setting conditions. they look at the world and see a giant puzzle where all the pieces exist (or can exist if they hire the right people) - they just need to be connected correctly with the right initial conditions. lalalla
trump is the archetype. real estate exists. banks exist. contractors exist. deals with china. his skill is making initial condition decisions with these people about what needs to happen. he’s not designing the buildings himself (execution decisions) - he’s making extremely clear initial condition decisions with architects and contractors about what he wants, the constraints, the success criteria, the mandate. then letting them make the execution decisions. sometimes people call this type “entrepreneurial investors.”
operators build directly. they’re in the details. they’re making product decisions, writing code or reviewing it closely, designing systems, solving technical problems themselves, building teams by actually working with them. their superpower is execution. they stay close enough to the work that they’re essentially building it.
when an operator thinks about the product they think: what should we build? how should this work? what are the technical tradeoffs? they’re in the design reviews, the standups, the technical decisions. again a deal maker can do so but it’s during the initial conditions.
elon is the archetype. he’s in the factory. he’s in the design reviews. he’s making decisions about the rockets and the cars. he’s not hiring a head of product and letting them figure it out - he is the product person, deeply involved in what gets built and how.
i.
there’s this fake idea that u need to be an operator first and then become a deal maker. this is wrong.
when ur a deal maker that doesn’t mean u cannot build a product company. but ur not making the execution decisions about the product - ur making the initial condition decisions with the people who will make those execution decisions. a product can have many many many initial conditions. deal makers who try to operate like operators get lost in execution details and micromanage. but deal makers who operate like deal makers make such precise initial condition decisions that the thing runs well. they’re not in the weeds of execution decisions - they made crystal clear initial condition decisions upfront about what those execution decisions should optimize for.
the mistake is thinking u need to grind through operator mode to earn deal maker mode. that’s fake. if ur a deal maker, be a deal maker from day one. just learn how to nail those initial condition decisions with the people u hire. make extremely clear decisions about the mandate, constraints, sla, success criteria.
(and yeah, obviously u can run an ops-heavy business as a deal maker. u just need to make the right initial condition decisions with the right ops person. ur still making huge decisions - about what the initial conditions should be, what success looks like, what the mandate is. these are massive, high-leverage decisions. ur just not making the execution decisions day-to-day. the business type doesn’t matter - what matters is whether u make the execution decisions or the initial condition decisions.)
ii.
most founders go through the same thing:
u start a company. u have to do everything - make deals and build things. there’s no choice. ur the only person.
the company grows. u hire people. but u keep doing what u were doing before because that’s what worked right?
now ur big enough that u actually need to specialize. but u don’t. u keep trying to do both. and one of them feels like torture.
if ur naturally a deal maker, being in the execution decisions feels like pulling teeth. u keep wanting to hire someone to own it, but then u don’t know how to let go because u never made a clear deal with them about the initial conditions. u didn’t set the sla, the mandate, the success criteria clearly enough. so u end up micromanaging the execution or being too hands-off because u can’t figure out the right initial conditions to set.
if ur naturally an operator, hiring a program manager type and not being in the execution decisions feels exhausting. u hired this person but u can’t help diving into their work because u see exactly how it should be done. ur not making decisions about initial conditions - ur just trying to make their execution decisions through them.
and then ur doing half ur job poorly instead of doing one job exceptionally well.
iii.
this isn’t just about personal preference. this confusion creates massive organizational debt.
when a deal maker ceo tries to operate like an operator:
they hire people but can’t let go of the execution decisions
they micromanage because they never made clear initial condition decisions about what success looks like
they avoid setting clear slas, mandates, and constraints upfront and then wonder why nothing works
the team never knows if they have real ownership or if the ceo is going to dive into execution
when an operator ceo tries to operate like a deal maker:
they hire people but then make their execution decisions for them
they can’t help being in every execution decision because they see exactly how it should work
they try to delegate but end up just being a bottleneck in disguise
the team never knows if they should make execution decisions or wait for the ceo
every hire u make, every system u build, every strategy u set reflects whether u think ur job is to make initial condition decisions or execution decisions. get this wrong and everything downstream is wrong.
and here’s why this distinction matters so much: if u don’t understand which type u are, the distinction isn’t manipulatable. u can’t take the right actions because u don’t know what the right actions are. the whole thing stays fuzzy.
if u understand ur a deal maker, suddenly it’s obvious what to obsess over: the sla with ur coo. the exact success criteria in the initial condition decisions with ur pm. the constraints u set upfront. the mandate u give. the deals that give u maximum leverage. these become the levers u pull. u can manipulate these variables precisely because u know they’re ur variables.
if u understand ur an operator, suddenly it’s obvious what to obsess over: the actual execution decisions. the technical tradeoffs. the systems architecture. being in the right meetings to make the right calls about what gets built and how.
without clarity on which game ur playing, u can’t manipulate the right variables. u just flail around not knowing what to focus on.
iv.
the fix requires honesty.
figure out what u actually are. ask urself: do u want to make the execution decisions or the initial condition decisions? when u hire a gm, do u want to be in their 1on1s talking about features (execution decisions) or do u want to set clear success criteria, constraints, and mandate upfront (initial condition decisions) and let them run? do u get energized by making the actual product calls or by making the deals about what those calls should optimize for?
there’s no right answer. just ur answer.
then restructure ur role around that.
if ur a deal maker, ur job is making extremely clear initial condition decisions with the people u hire. what’s the mandate? what’s the sla? what are the success criteria? what are the constraints? hire an operator as coo/president who will actually be in the product, making the execution decisions day-to-day. let them own those decisions. u focus on setting pristine initial conditions that give u maximum leverage. make the deal so clear that they can execute without checking in constantly.
if ur an operator, ur job is making the execution decisions. being in the product, the engineering, the operations, the systems, the building. hire a deal maker as chief commercial officer or chief strategy officer who will make deals with partners, customers, investors and set initial conditions for those relationships. let them own the external coordination and initial condition setting. u focus on the actual decisions about what gets built and how.
and this is where most people fail - they hire the complementary person but then can’t actually let them operate in their mode.
if ur a deal maker and u hired an operator coo, don’t micromanage their execution. u already made the deal about what success looks like. let them execute their way even if it feels slow to u.
if ur an operator and u hired a deal maker cco, don’t dive into their deals. u already set the product direction. let them make deals their way even if it feels hand-wavy to u.
the whole point is that their brain works differently than urs. that’s the value.
v.
“but steve jobs did both!”
sure. steve jobs was exceptional. most people aren’t steve jobs. and honestly even steve had different modes - sometimes he was in the details (operator mode) and sometimes he was making deals with people about what needed to happen (deal maker mode). but he knew which mode he was in.
“but i need to be well-rounded as a ceo!”
being well-rounded means u understand both sides. it doesn’t mean u do both sides equally. if ur a deal maker, u need to understand enough about product to make good deals with ur pm about what needs to happen. if ur an operator, u need to understand enough about partnerships to set direction for ur deal maker. but understanding ≠ doing.
and no, u don’t need to “pay ur dues” as an operator before u can be a deal maker. that’s startup mythology. if ur a deal maker, ur job is to make such clear deals with the operators u hire that they can execute without u in the details. that’s a skill in itself.
“but my company needs both!”
exactly. which is why u need two people. one person making the actual decisions really well beats one person trying to both make decisions and make deals about decisions at the same time.
vi.
look at successful companies - jobs (made product decisions himself) + cook (made deals about operations), gates (made technical decisions himself) + ballmer (made deals about business/sales), zuckerberg (makes product decisions himself) + sheryl (made deals about business), bezos (made decisions himself early, then hired operators and shifted to making deals about what they should optimize for).
the pattern is always the same: one person making the decisions, one person making deals about what other decisions should be made. sometimes the same person at different stages but usually not.
vii.
if ur a ceo and things feel harder than they should, ask urself: am i trying to make the execution decisions myself or am i trying to make decisions about the initial conditions and then let others execute?
if ur confused about this, u have two options - restructure ur role (hire the complementary person, split responsibilities clearly, stop trying to be both) or find a different company (maybe ur a deal maker but u need to be in the product details for this stage, or ur an operator but u need to be doing more external deal making right now).
operators make the execution decisions. deal makers make the initial condition decisions - what success looks like, what the constraints are, what the mandate is, what the sla should be.
neither is better.
u just need to know which one u are and structure ur life so ur doing that thing most of the time.
the goal isn’t to be good at everything. the goal is to be exceptional at one thing and partner with someone exceptional at the other thing.
figure out which game ur built to play then play that game and find someone else to play the other game.
❤️