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Co-CEO Structures Rarely Work. Away Is Unlikely to Be an Exception.

For luggage-maker Away, having two CEOs is probably not a long-term arrangement. Photo: Away

Steph Korey has changed her mind.

The founding CEO of the luggage company Away had announced last month that she would step back into a role as executive chairwoman and hand the company’s reins to new CEO Stuart Haselden, a former Lululemon executive. This announcement followed an exposé from the Verge about the company’s strange culture and Korey’s leadership style, which was viewed as abusive by some employees.

But last week, Korey announced that she and Haselden will instead be co-CEOs. She told the New York Times that she had always intended to retain an active management role and significant control over the company — “I have a very external-facing role working with new vendors, working with new partners, recruiting new candidates” — and thus a co-CEO title better reflects the actual management situation at Away and avoids confusing people inside and outside the firm.

“It doesn’t give you a lot of confidence that this was carefully thought out,” said Jeffrey Sonnenfeld, the senior associate dean for leadership studies at the Yale School of Management. Sonnenfeld argues that co-CEO arrangements usually fail — only a couple of dozen Fortune 500 firms have tried the structure in the last 30 years, and most have abandoned it after a short period.

Sonnenfeld identifies a few situations where a co-CEO structure can work, none of which apply to Away. Maybe you are co-founders with a long and deep relationship of trust (Dave Gilboa and Neil Blumenthal, Warby Parker); maybe you rose through the ranks together at a firm with a very well-defined management culture (John Whitehead and John Weinberg, Goldman Sachs); maybe you are a married couple who own a business together (Andrew and Peggy Cherng, Panda Express); or maybe you serve under the watchful eye of a legendary founder who retains a key role of influence in the company (co-CEOs at Oracle and Bridgewater Associates under Larry Ellison and Ray Dalio, respectively.)

The key in all these situations is that splitting the CEO role does not create a crisis of authority: Either the co-CEOs are so close and simpatico that there is no problem of mixed messages and power struggles, or there is a powerful founder or chairman above the CEOs who acts as the ultimate authority.

But there is another common situation that sometimes leads firms to name co-CEOs, less wisely: Two people want to be CEO, and the board wants to keep both of them around. A key problem with co-CEO structures driven by this issue is that both of these people tend to want to be the sole CEO, which may render the co-heads of the company more competitive than collaborative. After all, efforts to take out the co-CEO can work; just ask former Goldman Sachs co-CEO Hank Paulson, who is also former Goldman Sachs sole CEO Hank Paulson. But during the infighting, the company’s strategy can get muddied and employees and customers can grow confused about who is in charge and what they should be doing.

Away does not intend to keep the co-CEO structure indefinitely. The Times reports that Korey intends (and says she had already intended, before the Verge story) to eventually hand over the CEO role to Haselden when the company is getting ready to go public. The theory is that her founding leadership is needed now in the company’s growth stage, and that Haselden will be the right CEO at a future time when the company has different needs.

But Sonnenfeld notes that, if that’s the actual situation, there is a simpler and more accurate approach to titles than splitting the CEO role: Korey could be sole CEO now, and Haselden could have a lower title now and be made CEO later, reflecting the fact that she is still in charge, for now, and he may be in charge later.

“The myriad of titles of chairman, vice-chairman, president, CEO, COO could have been divided up in a way where you still don’t have to have the role ambiguity of the same title,” he said. “Why not just be straightforward about it instead of creating the cosmetic illusion that somehow they’re equal and they’re not?”

The choice not to be straightforward may have to do with Away’s public-relations concerns: The company has reasons to project that Korey is in charge, and also to project that she is not in charge. This dynamic puts Away in the company of much larger firms like Tesla and Uber, where the founder is simultaneously seen as a huge asset and a huge liability, and investors have to decide which hugeness is more important. That question has broken in opposite directions at Tesla and Uber; given the inherent instability of co-CEO relationships, we are likely to see how it works out at Away sooner rather than later.

Why Away Has Named Two CEOs — and Why It Won’t Work