Hire 1 to hire 10. Never hire individual team members, always focus on making a single hiring of a manager or executive who can make every consecutive decision. Instead of hiring 10 sales people, hire a VP of sales who can go and build the team without your intervention. A CEO is the purest form of this rule. It’s hire 1 to hire 100s. CEO is to be interchangeable with department head or franchise owner for smaller businesses.

The CEO’s job IS NOT to be a bit of everything. Part sales person, part marketer, part finance person… NO, they should have a mastery of all those things, but they shouldn’t DO all those things. A good CEO (or owner in SME’s) should be able to be run over by an ice cream truck and have the company continue to operate for months or years without any problem. In our opinion, a CEO should be a human router, feeding opportunities and talented people into a machine of their own design. That’s allocating capital.

When a company has truly exceptional leadership, the machine generates its own opportunities, talented people, and design improvements over time. A great CEO or owner focuses on 4 core areas:

1. Setting the strategy of the business. (What do you want to achieve? What is the ultimate outcome and direction?)

2. Building and tweaking the machine that achieves this goal. (How does the business work? What goes in and what comes out? What is the process to get there?)

3. Putting the right people in the right seats within the machine, and swapping them in and out over time (Is this the right person for the job? Who do we need to add? Who isn’t working anymore?)

4. Creating incentives that pull the team together and make them want to perform. (How do we structure bonus and equity compensation in a way that pushes people towards a goal without second order consequences?)

1. Innovators – the inventor of the burrito
2. Remixers – the founder of Chipotle
3. Scalers – the person who rapidly grows it to 100+ locations
4. Optimizers – the person who dials in margin + process in a steady state

You’re never going to hire #1 or #2 since they like the entrepreneurial journey. You need to focus on #3 and #4 and you want them to have these qualities:

1. Expert knowledge of best practices for the industry
2. Experience operating an adjacent or similar business
3. Has run a businesses that is at least double the size
4. A sterling reputation and good culture fit

Once you hire them, do absolutely nothing… hand them the reigns of your business and quietly monitor from a distance. If they come in with a strategy, you have to let them execute and see the results play out, otherwise they’ll resent you for getting in their way. Ultimately, they are in charge, and as soon as you start second guessing/directing them, everything goes poorly.