Why Startups Hire Ex-entrepreneurs

Ex-entrepreneurs often make excellent leaders

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We have often seen new-age businesses giving former entrepreneurs a preference over others while hiring for senior roles. Many believe that former entrepreneurs are a great fit for businesses of any size and scale.

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When startups hire, they look for certain qualities such as agility, ability to solve complex problems, and creativity, among others. More often than not, former entrepreneurs possess all these qualities and more.

Why ex-entrepreneurs stand out

"Ex-entrepreneurs make excellent leaders. They are versatile leaders capable of articulating the vision, setting goals, assigning responsibilities, and meeting deadlines. They're capable of devising creative ways to solve complex business problems. It's not unusual for them to think outside the box. These are people who have had to innovate and pivot out of the tangent for their company," said Mitesh Shah, partner, Physis Capital.

Every day comes with a new set of challenges when one is running a business. Not all employees take these uncertainties well. However, former founders are usually already equipped to deal with it. "Former founders have experience working in environments that are uncertain and dynamic in nature. Considering the rate of change in technology, market fluctuations, and supply chain issues, their experience makes them adept at mapping a path forward, often new and different. It enables them to set up systems and processes and think through possibilities," added Shah.

Amit Ratanpal, founder and MD, BLinC Invest says entrepreneurship is like doing an MBA in the real world where you work across functions, strategy, finance and organization building. "Sometimes, we say the entrepreneur plays the role of a sweeper to the role of the CEO because they have to look after everything and much like the cleaner in any company, they tend to know a lot, they see a lot and this is why new businesses prefer entrepreneurs. People say an Entrepreneur is a Jack of all trades and a master of none, but they never complete the proverb. 'It's Jack of all trades and a master of none but often times better than a master of one.' And that's my simple but efficient answer to this question," he said.

Further, due to their previous experiences with risks, opportunities, and failures, they are well-equipped to deal with them in the future. "Ex-entrepreneurs, for example, are familiar with early adoption, risks and benefits, and they help the companies decide which practices to implement and which to pivot from in case they do not deliver the desired results. Having these skill sets for a company definitely adds value. The industry is also a witness that their management tactics are more confident and they tend to focus more on the big picture and pursue success relentlessly," said Mahalakshmi Satish, India director, Prodigy Education.

Former entrepreneurs are often a great fit for large and small businesses both. "Leadership, speed, creativity and ability to chase business outcomes - that's what you get when you hire an ex-entrepreneur, which is why some CEOs might prefer hiring them for senior roles. An ex-entrepreneur brings cross-domain understanding, empathy and ability to understand users and market/business dynamics to the table -a set of competencies that help a lot in leadership roles," said Vibhore Sharma, partner, Capital 2B.

Roles they fit in

Kaushal Pawar, director, people and culture, Leap Scholar believes that the valuable experience entrepreneurs bring in building and scaling businesses from the ground allow them to wear many hats. "From a talent perspective, their problem-solving mindset and leadership skills allow them to drive growth and see the big picture. In addition to solving complex business problems, they are by default good at managing teams. With the right autonomy to build and execute, make strategic decisions, and foster innovation, entrepreneurs thrive in co-creating an agile and value-driven culture," he said. The leadership team at Leap includes former entrepreneurs with experience in building and scaling businesses.

In addition to their specialized roles, the former founders can be hired for a variety of roles. "A team member who performs multiple roles would be ideal in most businesses, and since these entrepreneurs have had to carry out multiple functions in their business, they are excellent multitaskers. Be it client management, creating a presentation, forecast, or estimate for a project, they have most likely done all the tasks. Companies today realize that former founders should be evaluated for their suitability for the role. If a company needs a marketing manager, it makes sense for them to hire an ex-CMO, and if they need a senior developer, they will prefer to hire an ex-CTO," said Shah.

BLinC Invest's Ratanpal says that he always tries to understand why these entrepreneurs failed if they did and what was his or her key strength and whether they were unable to work beyond that scope. "Did they fail at HR, sales and marketing, go-to-marketing strategy, or finance? A CTO can't become a CEO just by giving himself a new designation. He has to have those qualities," he said.