How to Tell if a Founder Isn’t CEO Material

March 18th, 2013 / Comments Off on How to Tell if a Founder Isn’t CEO Material

GUEST MENTOR, Maynard Webb, founder of Webb Investment NetworkIt used to be that founders had an idea for a company, worked day and night to get it off the ground, and then when it gained enough traction, the investors replaced the visionary with an experienced operator.

This is what happened two-thirds of the time. It was how Silicon Valley worked. Metaphorically speaking, founders built the Ferraris, but they didn’t get to drive them. Case in point: Pierre Omidyar was the chairman and CEO of eBay EBAY -0.68%, but stepped out of the CEO role three years after creating eBay and brought in Meg Whitman to take the company public.

I am much more in favor of this model when the founder is wholeheartedly engaged because they are more likely to continue to take the long-term view (think Jobs over Sculley at Apple). But, if a founder isn’t up for the challenges that come with running a larger business, or isn’t willing to try to learn how to handle these complexities, then by necessity, it is time for a change.Today, it is much more acceptable to keep founders on as CEO as long as possible to help them scale as much as possible. We’ve seen some incredible CEOs who are capable of building businesses and growing them: Apple’s Steve Jobs CRM -0.65%’s Marc Benioff, Amazon’s Jeff Bezos, Workday’s Dave Duffield and Aneel Bhusri.

So, how you do know when its time for a founder to go? There are telltale signs a founding CEO needs to be replaced. A startup should look to hire a more experienced CEO if he or she is…

Unable to Handle Varied Responsibilities. Maybe the CEO is a great engineer and only wants to build great products without all the headaches that come from managing a company culture, customers, and ecosystem and he or she refuses to get sucked into doing so. That might be okay if there is a great No. 2 who can deftly handle these essentials, but if not, it is a big problem.

Not making Aggressive Commitments. Statistically, most startups fail to be successful. A CEO has to aim high and deliver great results in order to keep running a company. He or she needs to be brave and be bold.

Not Searching for the Answer to “Now What?” Maybe the original product launched and was successful, but the CEO doesn’t have the insight to know where it goes from here or maybe the idea wasn’t successful and the CEO hasn’t been able to come up with a compelling pivot.

Unable to Attract and Keep Retain Talent. A company is only as strong as the talent it attracts and retains.

Unable to Quell Board, Staff and Customer Mutinies. A corollary to high turnover is the inability to retain the loyalty of the board AND the customers. It is hard to keep the job if there isn’t long-term support from these communities.

Avoiding problems. Problems are good things, particularly in a startup. A CEO wants to surface them early and fix them fast. Failure is a recipe for disaster.

Not Communicating. Keeping all of the constituencies informed of where they’re headed, how they’re doing on the journey — celebrating the wins and acknowledging the challenges and pitfalls encountered — is essential. Hiding is a sign of weakness.

In the best of all possible worlds, a startup will have a Jobsian founder/CEO who has a vision for how his or her company will achieve and maintain success. When that isn’t the case — either because the company is not successful or because the CEO isn’t willing to go the distance — a change must be made. But hiring a new CEO is no panacea, so make sure you choose well.

Comments are closed.

Leave a Comment