Recently I attended a 30th anniversary celebration honoring 3 colleagues from my former company, PDI Ninth House. Like me, they had spent most of their careers working with Global 1000 firms all over the world. We shared memories of jet setting around the globe, working with top executives at major companies throughout the US, Asia, Europe, and the Middle East.
People were naturally curious about why, with all of my Global 1000 Company experience, I preferred to work with CEOs of small privately held companies. The short answer to that question is that I admire their courage and their total commitment to the success of their business and their people.
Jay Goltz expands upon this point in a New York Times article entitled “There are Two Kinds of CEOs” that appeared February 2, 2011. The article features a conversation between the writer and Rafael Pastor, the chairman and chief executive of Vistage, a leading organization of chief executives. They agreed that one of the biggest differences between CEOs of big public companies and CEOs who run small privately held companies is how connected the CEO is to the success of the business. While CEOs of both types of companies have significant upside consequences, the consequences of a business downturn are far more severe for the small private company CEO.
As Jay Goltz explains:
“When things get tough, instead of getting multimillion-dollar payouts to quit, many small-company C.E.O.’s are compelled to put even more money into the business. Mr. Pastor of Vistage recently polled the organization’s members on this question: “During this economic downturn, did you at any time pledge personal assets or invest personal money into your company to help weather the storm?” Forty-six percent said yes.
To many, betting the house may seem an insane risk to take. And maybe it is. But if small-business owners weren’t willing to take that risk, there would be far fewer small businesses in America. You see, many entrepreneurs are what I would call “all in”: all of their money, most of their time, and most of their ego and self worth and pride are involved. Sometimes they put too much in, at the expense of their families and general well-being.
But the fact is that when small company chief executives fail, they often face dire consequences. And that’s an aspect of business ownership that is rarely noted in the glamorized view of entrepreneurship that we frequently see portrayed. Nor is it fully understood by public officials who always seem eager to have small businesses borrow more aggressively and hire more aggressively.”