Perspectives: Under30CEO Co-founder Jared O’Toole Shares 3 Big Challenges Facing Young CEOs

Like a lot of freshly minted college grads, Jared O’Toole wasn’t having much luck getting his career off the ground after graduating from Ithaca College in New York in 2008.

“I graduated with a finance degree at probably the worst time to graduate with a finance degree,” says O’Toole. “With the financial system on the precipice of historic collapse, it wasn’t exactly a hot job market.”

So, O’Toole improvised. He moved back home to live with his parents, took odd jobs to keep busy, and started brainstorming possible entrepreneurial ventures with childhood friend Matt Wilson. If some big corporation wouldn’t hire them, they’d just hire themselves.

In their first six months, O’Toole and Wilson tried a handful of new ideas and failed at most of them. “Looking back, some were pretty ridiculous,” O’Toole remembers. “But with every failure came new experience. We learned a lot in a short period of time.”

Ultimately, that allowed them to successfully launch Under30CEO, which started as a social network to connect young entrepreneurs and grew into a leading media site that covers news, advice, trends, and events for burgeoning executives.

More than a million readers later, media outlets like Fox News, The Wall Street Journal, and Entrepreneur.com have featured the site, while O’Toole and Wilson have begun to focus on building city-specific spinoffs of their website. Now, with a scalable revenue model that should allow the business to grow headcount and sales, O’Toole and Wilson have Under30CEO ready to make an even bigger splash.

OpenView sat down with O’Toole to talk about the roadblocks young executives often face and why now is as good a time as ever to start a business.

More and more young, first-time entrepreneurs are starting and growing businesses, what are the most common challenges they’ll face as inexperienced executives?

Well, we know the easy part, right? The idea is often the simplest part of starting a business. The hard part comes when you have to actually build a successful revenue model or actually sell your product to real customers. If you don’t have any experience doing those things, it creates a pretty steep learning curve right out of the gate. Or maybe you need to raise funds to get that idea off the ground. Do you have access to enough capital to actually build your product? Can you survive without a paycheck for six months? A year? Two years?

I think compared to an older, more seasoned entrepreneur, there are three big challenges that young CEOs face.

The first is that the net worth of your network is much less at 22 than it is at 42, making it much more difficult to acquire the capital you might need to get started. The great thing about starting a technology or web-based business today is that it can be relatively inexpensive. You don’t need venture capital or, in most circumstances, an angel investment to get going. Sometimes, a $20,000 loan from your friends or family is enough to get the ball rolling and keep the lights on until you’re creating real revenue.

But when you’re 22-years-old and fresh out of college, how many people do you know that you can hit up for $20,000? For most of us, accessing that kind of money — as little as it might seem like — is much more difficult to do when we’re 22. And it’s not just the value of your personal network. If you walk into a bank at 22-years-old and ask for a small business loan, you better have a phenomenal idea, because you probably don’t have the assets to offer up as collateral.

The second thing that seems to trip up a lot of young CEOs is their misplaced ambition or overconfidence. The problem with the success of people like Mark Zuckerberg, Groupon’s Andrew Mason, and FourSquare’s Naveen Selvadurai is that every 21-year-old thinks the company that he’s is building is a billion dollar idea. So, as a result, that person might spend an inordinate amount of time trying to build a perfect product or a perfect company before ever launching it. The problem with that? The CEO is building his ideal, rather than the customer’s.

On the flipside, an older CEO knows that it’s all about launching, experimenting, accumulating feedback, and then building on or iterating around all of that. The sooner you get to launch (without getting there too quickly), the sooner you’ll become successful. But young, inexperienced CEOs are usually so ambitious and confident that they just delay until everything is perfect or they build something that they want, rather than what their customers wants.

And lastly, I don’t think that time, contrary to popular belief, is a young CEO’s friend. I know that everyone says that the best time to start a company is when you’re young, and there’s a lot of truth to that. Young CEOs have fewer responsibilities, fewer financial commitments, and, for the most part, no family to support. They have more time on their hands and less pressure to be profitable immediately.

But time can be a young entrepreneur’s biggest enemy, too. When you’re young, everyone’s asking what the heck you’re doing. If you’re six months into your new venture and it hasn’t taken off yet, then you’ll have your mom, dad, brother, girlfriend’s dad, and friends suggesting you get a “real” job. The truth is that whether you’re 42 or 22, two years without a salary and any savings can seem like a very, very long time. Your friends are getting promotions, taking trips to Europe, and buying new cars, while you’re still holed up in your parents basement trying to make things work.

That can take a toll on younger people who aren’t able to think long term and haven’t been forced to grind many things out in their lives. The simple truth is that overnight successes are the exception rather than the rule. So the challenge becomes, can you be patient long enough to actually make it work?

Let’s say a young CEO has overcome each of those hurdles and built a successful, expanding business. As the company grows, what’s the biggest new challenge they’ll encounter?

Without question, it’s recruiting and managing top talent. If founding a company was your first job, you’ve probably never had a large team of people working underneath you. So, do you know what to look for? Do you know how to manage them? Should you be a hands-off or a hands-on CEO?

As a business grows, you’re staking your livelihood on other people’s performance. A lot of young or founding CEOs don’t possess the ability to step back, look at the talent gaps within their company, and start delegating responsibility to tasks that they used to handle. It’s like handing over your baby.

But the best founding CEOs know when to ask for help. Sometimes, that means taking on a CEO advisor that can help you develop as a leader and manager. Other times, it means being willing to hand over the reigns and hire a new CEO that can take the business to the next level. That doesn’t mean you have to relinquish total control of your company, it just means that you have to be honest with yourself and do what’s right for the business’ future.

All of that being said, you still think there’s never been a better time for young people to start and grow their own company. Why do you think that will continue to be the case?

Honestly, it’s as simple as cost and opportunity. Twenty years ago, young executives were taken far less seriously and the cost of starting a business was significantly higher. Today, you can build an Internet company from your parents’ basement and watch it grow organically with a lot of elbow grease and hard work.

There are a lot of smart, energetic young people out there who aren’t being given a chance out of college. So, especially in the tech scene, they’re just creating their own opportunities.