Challenging the U.S. Market with a Professional CEO from Silicon Valley
On September 18, 2015, Authlete, Inc. officially incorporated as a company in Japan. For approximately 8 years since then, we deliberately left the CEO (Chief Executive Officer) position vacant. However, we are pleased to announce that our long-standing search for a CEO has finally paid off, and we have found a suitable candidate. That individual assumed the role of CEO at Authlete on September 1, 2023.
That individual is Mr. Michael Mansouri, who resides in Palo Alto, California, USA. He is a serial entrepreneur and a private investor with a strong track record, including taking iPass Inc. public on the U.S. NASDAQ market. Despite the strength that guides startups to success, he has a pleasant and gentle personality.
Authlete established its presence in the United Kingdom 🇬🇧 at Level39 in 2016 and in the United Arab Emirates 🇦🇪 at DIFC in 2021. Furthermore, with significant international clients such as the world’s largest digital bank, Nubank 🇧🇷 (case study), and the largest media group in the Dutch-speaking world, DPG Media 🇧🇪 (case study), Authlete has already achieved a successful expansion into international markets.
Nevertheless, why have we appointed a person residing in the United States as CEO? It is to make a full-fledged entry into the U.S. market and significantly propel the company’s growth in the world’s largest market.
The Reason for Having Left the CEO Position Vacant
At Authlete’s kickoff meeting during a time when we didn’t even have our own office, I handed over the book “The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup” to the other two co-founders and conveyed, “I want us to avoid the known pitfalls mentioned in this book.”
One of the pitfalls is title inflation. At the beginning of a startup, founding members may assign themselves CxO (Chief Something Officer) titles, but as the company grows, their lack of competence becomes evident, leading to a significant problem.
For example, when it becomes necessary to bring in experts to prepare for an IPO (Initial Public Offering), it can be a significant problem if a founding member who has been given the title of CFO (Chief Financial Officer) simply because of their past role in handling accounting tasks is unwilling to relinquish the CFO title despite lacking specialized knowledge.
If someone is appointed as CTO (Chief Technology Officer) during the founding phase simply because they created a product prototype, even though they don’t possess any special talent for software design and implementation, or just because there was no one else to write code, it can become challenging to hire more capable software engineers than that CTO later on.
It is rather rare for a CEO (Chief Executive Officer) who successfully leads a company during the startup phase to also possess the abilities and qualities required during the expansion phase. In most cases, investors will request a CEO change during one of the subsequent rounds of funding. If the founder CEO refuses such a change, it is likely to hinder the company’s growth.
In the case of Authlete, none of the co-founders were interested in titles, and to this day, none of them hold any CxO titles. Even the appointment of a representative director, which was legally required, was not decided promptly. After some back and forth among the co-founders, I ended up assuming the role of representative director. This is why I often introduce myself as “the company’s representative on paper (even though I don’t believe I have the qualifications).”
In any case, the careful planning and foresight we laid out during Authlete’s founding eight years ago have paid off. We were able to warmly welcome a professional CEO into Authlete without causing significant disruption within the company.
What I Shared During the Internal Meeting to Welcome the CEO
Exactly one month before the CEO’s official start date, we held an internal meeting to inform the team about welcoming the CEO.
I referenced the book “Good to Great: Why Some Companies Make the Leap… And Others Don’t” and reiterated the principles I hold dear, which have now become part of Authlete’s corporate culture. Finally, I introduced Michael to the team.
The following is what I actually discussed during the internal meeting.
FIRST WHO, THEN WHAT
Great organizations make sure they have the right people on the bus and the right people in the key seats before they figure out where to drive the bus.
When facing chaos and uncertanity, and you cannot possibly predict what’s coming around the corner, your best strategy is to have a busload of people who can adapt to and perform brilliantly no matter what comes next.
RIGHT PEOPLE
The right people don’t need to be tightly managed or fired up; they will be self-motivated by the inner drive to produce the best results and to be part of creating something great.
If an organization is composed solely of disciplined individuals, hierarchical structures, bureaucracy and micromanagement become unnecessary.
HOW TO BRING RIGHT PEOPLE ON BOARD AS TEAM MEMBERS?
What the Authlete co-founders kept in mind was to bring on board people who are better than themselves.
The co-founders did not give themselves any CxO titles. For the future need for professional CxOs, they deliberately left CxO positions other than CTO vacant since the company’s founding in 2015, for about 8 years.
DIRECTION OF ORGANIZATIONAL EXPANSION
If founding members of a startup are people who value titles, from the early stages of the organization, it will be filled with individuals holding impressive titles. As the business expands and manpower becomes insufficient, the founding members will hire people to be their subordinates. This kind of hiring process will be repeated. This can be considered as the organization growing in a downward direction.
On the other hand, if founding members of a startup understand that their value lies in how much they contribute to the organization, and titles are completely irrelevant, they will refrain from creating positions until necessary. As the business expands and manpower becomes insufficient, the founding members will try to bring in more capable individuals who are worthy of the roles. Such organizational expansion is carefully repeated. This way, the organization grows in an upward direction.
THE NEXT STAGE
Thanks to the disciplined efforts of all of you, we have been able to run Authlete with remarkable efficiency, eliminating the need for wasteful micro-management and motivation efforts. Our product’s competitiveness is exceptional, leading to profits and maintaining a healthy financial status, which is quite uncommon for a startup of our size. In fact, we have almost the same amount of cash in our bank account as the total funds raised in the past three funding rounds.
You may find satisfaction with our current state. However, if you are prepared for a greater challenge, you will not be able to resist taking it on.
The dreams we had since the company’s inception, such as expanding to the United States, becoming a unicorn company, and even being listed on NASDAQ, have become realistically attainable goals. However, our current management team lacks the required capacity. In other words, the time has come for Authlete to welcome a professional CEO.
We have been searching for a professional CEO for several years, and finally, we have met someone who is suitable and enthusiastic to take on the role — Mr. Michael Mansouri.
Competition in the Global Market
The software product offered by Authlete is an implementation of a certain set of global-standard technical specifications. These specifications are publicly available, and there is no need to pay licensing fees to implement them for business purposes. Therefore, anyone worldwide can participate in the market without any entry barriers.
There is an option to start a business in areas where Japan’s unique regulations or the Japanese language create entry barriers, and there are investors who recommend this approach. However, due to our competitive and ambitious nature, Authlete adopted a mindset of competing in the global market from the very beginning without anticipating any entry barriers. We believed that “the software we offer must be competitive in the global market,” and in order to proudly assert that our product is the best, “we must succeed in Silicon Valley.”
Authlete’s invention of the “Semi-Hosted Architecture,” specifically, “providing components for implementing authorization servers and OpenID providers as Web APIs as SaaS (Software as a Service),” has proven to be an excellent mechanism. It has become evident that, depending on the use case, Semi-Hosted Architecture is the only viable solution. Both Nubank and DPG Media, as mentioned earlier, reached the conclusion that they had no other options but to choose between using Authlete or building their own solutions after comparing Authlete with competing products.
Furthermore, compared to directly creating authorization servers or OpenID providers, designing and implementing the Semi-Hosted Architecture is many times more challenging. This presents a competitive advantage as it is not easily replicable by rival companies.
Additionally, since the beginning of 2019, cases have been on the rise where Authlete is the first company in the world to implement new standard specifications. Today, Authlete is recognized as one of the leading products in the global market.
Compared to big American competitors, Authlete’s revenue scale is still fairly small. However, from a technical perspective, it not only holds its own but often excels in areas such as architecture and support for the latest standard specifications. Therefore, we believe that Authlete has a significant potential for rapid growth in the United States.
Your support is greatly appreciated. Thank you in advance.
— Takahiko Kawasaki, co-founder of Authlete, Inc.
