This post continues a conversation on ageism in biotech introduced in an earlier series:
CEOs become by requirement generalists, and the reason why companies are built on teams. Where seniority, experience, network is a recognized gap, as is typically the case with younger Directors, investors, the company, and its board should strive to solve for this problem. The alternative threatens to introduce further risk to the venture, destabilizing the investment rather that accomplishing the intended goals of improving a company’s chances of success.
An older more connected chief executive officer (CEO) with several wins under their belt will certainly be more networked and should have an easier time securing financing than a younger or first time CEO. One way of solving for ‘ability to raise capital’ is by recruiting a more experienced and recognized name to serve as a mentor for the CEO and ‘voice of reason’ for the company. While the operational plan might not change, their years of experience provide a ‘steady hand’ when the company inevitably hits road bumps along the way. Investors are sensitive to risk, and knowing that there is someone who has been through the trenches (and survived) looking out for the company while they aren’t, can help assuage inherent hesitation that comes from backing a young CEO.
This working model should sound familiar to most academics, where it is more often practiced and recognized. Universities will regularly pair young faculty with more senior, tenured professors to serve as formal mentors. In addition to providing guidance and support that involves participation in joint lab meetings, sharing equipment and reagents, accessing lab managers, and helping drive early publications through strong internal collaborations, faculty mentors help young principal investigators secure their first independent funding, setting them up for future success.
Corporate examples are also not hard to come by. Eric Schmidt was named executive chairperson of Google (now Alphabet) in 2011 where he acted as advisor to both co-founders Larry Page and Sergey Brin. An executive chairperson (EC) functions both as an executive (meaning they report to the CEO), while serving in an ‘executive officer’ capacity. In the case of Google, this included ownership of “the deals, partnerships, customers and broader business relationships, government outreach and technology through leadership.” Definition of roles will be company-specific. A Forbes article by George Bradt titled ‘The Right Way to Divide Responsibilities Between Chairman and CEO’ provides another useful case example. Mr. Bradt describes the leadership structure of Rita’s Italian Ice and Falconhead Capital (the investment firm that owns a controlling interest of the company) where the EC and CEO roles have been divided as follows:
The EC takes the lead on:
- Running the board of directors
- Dealing with external funding (investors and lenders)
- Joint venture pursuits and relations
- Compensation practices
- Management development
- CEO succession
- Strategic plan guidance
The CEO takes the lead on running the company, across its:
- Strategic process
- Operating process
- Organizational process
Mike Lorelli, Rita’s executive chairperson confirms that “The roles of executive chair and CEO should not just be additive but synergistic as well.”
In academia, mentoring professors are often named in new grant applications by the junior faculty member as a way of de-risking the proposal. The function served is the same. Investors (in this case the funding agency through its grant review committee) are no less sensitive to risk and no less hesitant to back ‘unproven’ leadership who haven’t got a track record of successful publications and grants under their belt. A strong mentor placates much of that hesitation by assuring investors that there is an accomplished advisor behind the team to help direct the program and provide the ‘voice of reason’ and ‘steady hand’ to help navigate challenges as they (inevitably) present themselves. Once the CEO or principal investigator has a couple of ‘wins’ under their belt, the expectation is that they too will pay it forward with the next generation of young entrepreneurs/investigators. And so, the cycle continues.