Two CEOs are Better Than One

Mar 2, 2022

Two CEOs are Better Than One

@svenefftinge's avatar on GitHub Sven Efftinge @JohannesLandgraf's avatar on GitHub Johannes Landgraf

At Gitpod, we have operated unofficially with two CEOs for the past 1.5 years. Today, we make our dual leadership around Sven and Johannes official.

Whether a Co-CEO setup is good or not has been a matter of contention throughout the years. While still a little uncommon, we see more and more very successful companies such as Atlassian, Salesforce, and Netflix operating with two CEOs (we are working hard to add Gitpod to that list ツ). We believe this is superior to having a single CEO if done right. Below, we dive into the advantages of a modern dual leadership setup, discuss typical preconceptions, and share what we believe makes the structure successful for Gitpod.

Benefits of running a company with two CEOs

When it comes to the people you work with, quality matters more than quantity. Hence, one great CEO is better than two mediocre ones. Conversely, if both CEOs think too similarly and care about the same parts of the business, you don’t get many of the benefits below. But if you run your company with two CEOs who operate with high trust and full transparency, are aligned in terms of direction and culture, and have complementary skill sets, your company will see a lot of benefits:

  • Fewer skill gaps. Let’s face it, we all have our strengths and weaknesses. We are motivated differently and are more or less passionate about the various responsibilities of a CEO. With two complementary CEOs, you can cover much more ground effectively.

  • Defer the entire C-Suite. As a company grows, you need to build out its structures, so that information flows efficiently and effectively. Director, VP, and C-Level layers are the standard answer to scaling companies. But adding such a layer comes at a cost (longer information flow). As a single CEO, you’ll feel the need to delegate to a CFO, COO, etc., much earlier. With two CEOs, you can defer adding that layer because you cover more ground (fewer skill gaps). With Chris as our CTO, our executive team consists of three people that are highly aligned while adding different perspectives to the conversations.

  • Grounded Decisions. A common preconception is that decision-making would be less efficient with two CEOs. The contrary is the case if you do it right. For one, if you have two CEOs, each needs to have clear Areas of Responsibilities (AORs). It becomes straightforward for everyone who makes the call. There are, however, some shared AORs as well. For those critical areas, you get more grounded decisions. When we reach out with a significant change, the whole team knows we’ve at least run this by the two of us (of course, we consult with others in the decision process).

  • Team over individual. Company culture is essential for a modern tech startup. Not only to attract the best talent but to make sure everyone is having a great time building a superb product for your users. Our culture at Gitpod is based on openness, humbleness, empathy, and generally an egoless team spirit. A dual leadership embraces and emphasizes these values, while a single CEO model quickly leads to throne building.

  • Reduced Burnout. Running and building a company can be stressful. As a single CEO, you are not only responsible for everything that happens and goes wrong, but you also need to look after and be on top of so many things. Hiring, Fundraising, Company Building, Operations, Finance, and then you also need to make sure the product gets better and provides more value. Doing this alone isn’t great for many reasons and can amplify the stress level. You should get help from coaches, friends, and advisors but nothing beats having a partner in crime with whom you can share everything.

  • Minimize bus factor. A single CEO also means a single point of failure. It doesn’t need to be the bus or the prevalent burnout, but it can be something as simple and straightforward as taking two weeks off to recharge and spend time with your family.

So are there only advantages to this? Almost. One disadvantage is that there are many preconceptions about such a co-leadership setup, especially in venture capital. Let’s discuss why some of them dislike running a startup with two CEOs.

Typical Preconceptions about Two CEOs

If you search the web for opinions on running a company with two CEOs, you’ll find a few articles. Christoph Janz has recently written down his take where he lists three reasons why a single CEO is better. Sorry, Christoph, your article was just the most recent one 🙃

  • Faster Decision Making. “If you need two people to make a decision, …” That would be very inefficient indeed. But you don’t need two people. With two CEOs, you need trust so either one can make many of the calls themselves without mutual approval. This works great as long as you align in vision and direction. If there is not complete trust between CEOs, this will not work. Actually, the same is true for every high-performing team.

  • Clear Responsibilities. “Another side effect of having two CEOs is that it’s less clear who does what.” That is not a side-effect of having two CEOs, but unclarity arises when you are not explicit about clarifying AORs. You need to clarify responsibilities with clear decision-making guidelines - again, this must exist between CEOs and the entire organization.

  • A Co-CEO setup makes it harder to attract top VPs. “They might wonder if you let your ego stand in the way of doing what’s best for the company and if you’re able to make tough decisions.” As we hope has been clarified by now, we do not run Gitpod with two CEOs because both CEOs have too big an ego and couldn’t sort it out. Quite the contrary: Sven used to be the single CEO and decided that there is a better setup for Gitpod, so he asked Johannes to help. Ego is the enemy.

Christoph is looking at this topic from a certain angle: many co-founders avoid having difficult conversations to clarify who is leading the company. In those setups, dual leadership is not a conscious decision but rather a legacy arrangement due to large egos. If you don’t talk candidly about why two CEOs are suitable for your company at the current state, you are also likely to not set it up for success in the first place. In the end, your job in any venture-backed company is to maximize long-term shareholder value and not to work on your hubris.

When you do it, do it right.

At Gitpod, we naturally grew into the co-leadership setup over time and have successfully practiced it for some time. There are a couple of reasons why this worked so well for us:

  • Complementary Skill Set - Sven built development tools, programming languages and grew open source communities for the last 15 years. His passion, strength, and energy source are around building Gitpod, the product. Johannes deeply understands the developer tooling market and worked in venture capital before Gitpod. He excels at building Gitpod, the company, and runs everything from go-to-market, fundraising, operations, to finance.

  • High Trust - over the last 1.5y we became friends and partners. Without complete trust and psychological safety, co-leadership does not work, and you can not leverage the respective strengths of each person. We always help each other out, can speak up, and trust in the other person’s decision-making. If there are problems, we confront those issues quickly, get relevant input, and find practical solutions.

  • Full transparency - the human mind is excellent at fooling itself by painting an unwanted reality in comfortable ways. We openly share everything and constantly give positive and constructive feedback to stay true to reality. No information is held back.

  • Clear AORs - when several people share responsibility for an action or process, often that action doesn’t get done well or at all. We prevent this from happening with Areas of Responsibility - a routing layer that ensures nothing falls through the cracks.

  • Clear Goal Setting - We follow a quarterly goal-setting process that creates alignment, focus, accountability, and aspiration to set direction and drive our business forward — both between executives and the whole organization.

Leadership decisions are distinctive and specific to the company you are building. That said, we believe many of the reasons to embrace a dual leadership model apply to other companies, too.

Read our 7-part blog series about the Gitpod Company Operating System

This article was the first in a series in which we share how we are building the Gitpod company operating system. We will walk through the tactical resources we are putting in place to create a fully distributed company. The title of the next article in this series is Set Direction (Purpose, Product Vision, Brand). If you want to stay in the loop drop your email address below and we will reach out once the next article launches.

 

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