Differences between a CEO and a founder

However, there are key distinctions between the two, particularly in terms of responsibilities, scope, and the stage of the business. Understanding these differences can help clarify their roles in the business world.

1. Definition of a CEO

The CEO is the highest-ranking executive in a company, responsible for overseeing the overall operations, resources, and strategy of the organization. The CEO ensures that the company's vision, mission, and long-term goals are met while leading the company's daily operations. In larger, more established companies, the CEO is hired by the board of directors and is expected to manage the company from a top-down perspective. Their role often involves dealing with high-level decisions, including mergers, acquisitions, setting company culture, and making final calls on significant business moves.

2. Definition of a Founder

A Founder is someone who creates or establishes a company or organization. They typically have an idea or vision that drives the creation of the business and are involved in the initial development, fundraising, and often the first stages of scaling. Founders are usually entrepreneurs who see a gap in the market and create a product, service, or solution to fill that gap. They are responsible for setting the initial direction of the company, assembling a team, and creating a business model that is sustainable.

3. Role in the Company’s Lifespan

Founder: The role of a founder is most prominent in the early stages of the company. Founders are responsible for the initial idea, vision, and execution of the business. They typically wear many hats during the start-up phase, from fundraising and product development to marketing and sales. Founders set the tone for the company’s culture, and they often play a hands-on role in building the company from the ground up. Over time, however, their role may evolve, especially if they hire a CEO to take over day-to-day management as the company grows.

CEO: The role of the CEO becomes crucial once the company has scaled or is ready for further growth. In larger companies, the CEO is responsible for making strategic decisions about growth, revenue, and overall direction. A CEO can be hired by investors or the board of directors and may not have founded the company. In many cases, the CEO's role is more focused on leadership, company vision, and external relationships with stakeholders, investors, and partners. While a founder may still be actively involved in the company’s development, the CEO takes on the responsibility of running it smoothly, ensuring profitability, and executing strategies.

4. Ownership vs. Management

Founder: As the creator of the company, the founder often retains significant ownership and equity in the business. The founder has a deep emotional and intellectual stake in the company’s success and may continue to drive the company’s mission even if they step down from active roles. Many founders stay involved with the company even after hiring a CEO, often serving as chairpersons or in advisory roles.

CEO: While a CEO may own equity in the company, they typically do not own the same level of control or stakes as the founder. In many cases, the CEO is hired and compensated through a salary and performance-based incentives (such as stock options or bonuses). The CEO’s focus is less about ownership and more about management, operational effectiveness, and delivering results to investors and stakeholders.

5. Visionary vs. Executor

Founder: Founders are often visionary individuals who come up with the idea or concept that sparks the creation of the company. They are typically forward-thinking, passionate about their product or service, and deeply committed to seeing their vision come to life. Founders may be seen as the creators, inventors, or disruptors in their industries. They are involved in crafting the identity of the company and ensuring that their original idea is implemented in a meaningful way.

CEO: A CEO is more focused on the execution of the founder’s vision and the strategic management of the company. CEOs take the big-picture goals set by the founder (if they are still involved) and work toward making them a reality through actionable plans, team management, financial oversight, and external communications. While the CEO is expected to be a visionary in their own right, their role leans heavily on operational and organizational leadership, aligning the company's resources to meet the founder's vision and deliver growth.

6. Influence on Company Culture

Founder: A founder often plays a key role in establishing and shaping the company culture. As the person who started the business, the founder sets the foundational values, mission, and purpose of the company. The culture they create is influenced by their personal values, work ethic, and vision. The founder’s involvement in early hires, office culture, and core beliefs influences the overall environment and work ethic that permeates throughout the company.

CEO: A CEO’s influence on company culture can be significant but often comes after the foundation set by the founder. As the leader of the company, the CEO shapes the company's strategic direction and leadership style. Their personality, leadership approach, and management style can have a lasting effect on the company’s culture, but it is built upon the values and principles laid down by the founder in the early days. In a startup or small company, the CEO and founder may both influence culture, but in larger organizations, the CEO’s role in this is more strategic and focused on scaling the culture for growth.

7. Transition and Separation

In some companies, especially successful startups, the founder may eventually step down from their day-to-day role or may be replaced by a professional CEO as the company grows. This transition can be difficult for founders who have emotional and intellectual ties to the company but can be essential for the company’s growth, as the CEO brings in experience and management skills necessary for scaling.

In other cases, the founder remains in the company, either in a reduced capacity or in a different leadership position (like chairperson), while the CEO runs the daily operations. This dynamic allows for a balance between the founder’s vision and the professional execution needed to take the company forward.

Conclusion

In summary, while the roles of CEO and founder often intersect, they are distinct in their responsibilities. The founder is the originator and visionary behind the company, focusing on creating and establishing the business. The CEO, on the other hand, is responsible for executing that vision, managing day-to-day operations, and ensuring the company’s growth and success. As companies mature, these roles become more specialized, with the CEO assuming greater leadership responsibility, while the founder may take on more of a strategic or advisory role. Both positions are critical to a company’s success, and their dynamic can evolve as the company grows.