Social media and social enterprise guru Dan Morrison is back again, this time with a personal lesson learned through his experience with Citizen Effect. He cuts to a core question founders must ask themselves after receiving their first big investment: am I really the best person to lead this enterprise into the future? He asks entrepreneurs to analyze their skill sets and determine if they are sprinters or marathon entrepreneurs before it’s too late.
Originally posted on The Guardian
We live at a time when there is a hyper-expectation that everyone should be an entrepreneur. It is even worse in the social-good sector. If your passion is to make the world a better place, creating a social enterprise is quickly becoming your only fundable option. Not only is this creating a #SocEnt bubble but it also devalues the roles and talents of people who are not entrepreneurs. Well functioning, collaborative, successful teams need leaders, followers, type As, type Bs – and everything in between – to push, stretch, test and confirm world-changing ideas.
But let’s assume you have decided you are an entrepreneur and, in this case, a social one. The immediate assumption is that you are a chief executive officer (CEO), and it is one of the worst assumptions a social entrepreneur can make. Social entrepreneurs start with an idea and fuel it with a passion to alter the fabric of society. None of that speaks to the broader skill set a CEO needs to start and grow a successful enterprise.
At the outset, founders are de facto CEOs because there is no one else to take on the role. You then convince some friends, interns and volunteers your idea is worthy of their blood, sweat and tears. They help you prove your concept, you persuade someone to give you some money and even hire some folks for near slave wages. Then, if you are lucky, you get your first large check bearing five or six zeros. It is that moment when every founder needs to look at themselves and determine if they are a CEO or a founder who needs a CEO.
For me, that moment was the summer of 2009 when Citizen Effect received a $300,000 check from TomorrowVentures, a venture capital firm connected with Eric Schmidt of Google. And, if we hit certain performance metrics, there would be much more to come. For my ego, the decision was easy. I had just convinced one of the greatest tech leaders of our time to give Citizen Effect a six-figure check and place one of his advisers on our board. Heck, yeah, I was a CEO! Well, my ego is an idiot.
We never hit those performance metrics. Why? Because no matter what my ego likes to believe, I am not a CEO. My talents are in creating innovative ideas, modelling concepts and businesses, and generating creative marketing campaigns that introduce new ideas with the world. I am a classic “sprinter” – someone who gets energy from problem-solving, modelling and creating. Those can be CEO traits, but CEOs also need to be marathon runners, possessing a long-term vision and an attention to detail to ensure maximum speed, while not burning out before the finish line. My strength lies in advising CEOs, not being one.
The signs that I was not a CEO appeared early. The golden rule of fundraising is capital begets capital. The $300,000 I raised from Schmidt should have been the chum I needed to raise $3m. It wasn’t. I was too focused on what I was personally drawn to – creating a revolutionary crowdfunding platform for social good and citizen philanthropy – rather than pounding the pavement, knocking on doors, and melting my mobile with a never-ending stream of fundraising calls.
What should have happened? My funders and board should have sat me down, muzzled my ego and said: “Dan, you are going to be founder and chief innovation officer and report to the new CEO we are now conducting a search to find.” Great social enterprise boards do this because they know that entrepreneurs and social entrepreneurs are very different animals. With an entrepreneur, you are investing in the person – someone you believe is an early-stage CEO who will do everything it takes to succeed. With a social entrepreneur, you are investing not in a person, but a world-improving idea that the founder may lack the skill set to execute.
At the end of the day, it is not my board’s fault but mine for not being honest with myself. If I had been, there’s a high probability that a real CEO would have paused tech development, taken the data from our pilot along with the credibility that TomorrowVentures’ investment gave us, and hit the road to raise the capital we needed to assemble a powerhouse team and build a human and technology platform that would have changed the lives of millions for the better.