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When Should the Founder Hire a CEO?

T Paul ThomasIn the last 30 days, I have had four different CEO/founders come to me about a number of issues that all point to one thing. Is it time to hire an outside CEO/president/COO? I truly believe this one decision is the toughest for any founder/CEO to make. It involves coming to the realization that your “baby” may have outgrown you.

 

Are You Making These Observations?

 

As you go about the day-to-day of running your organization, are you wishing you had another you to help? Are you starting to think, “I wish I had someone that could help with accounting and finance (or sales, operations, marketing, HR, business development, etc.) so that I could just focus on growing the business (or sales, operations, marketing, HR, business development, etc.)?”

Has the business grown to the point where there aren’t enough hours in the day or days in the week? More importantly, has what started out as a passion and enjoyable life turned into an all-consuming job? And do you constantly think about all the opportunities you wish you could go after if only you had someone to help? Or worse yet, are you asking, “What is wrong with me? Why am I getting so far behind?”

 

There are Founders; There are Professional CEOs

 

If you find yourself in this situation, let me congratulate you on your success. You have done what you set out to do. You created a successful start-up and it is now moving onto the next stage of a business.

My oldest son, Matt, became interested in baseball at age 8 when I took him to a Boston Red Sox game. The entire game he questioned why batters were walking away and why the teams left the field and the basics of strikes, foul balls and balls. While never a big sports guy growing up, I could easily explain everything to Matt with my basic skills and knowledge.

Matt decided that he wanted to play baseball the next summer but needed throwing, batting and fielding help. Yes, I could have helped him with the simple things but I knew he was going to really learn, he needed to work with a coach who had experience and real skill.

This same concept applies to a start-up. At some point, you as the founder will hit a “ceiling.” You can push against it or decide to just keep the organization at a manageable size. But is that really why you started your company?

Yes, I could have told Matt that I knew all he ever needed to know and he would have never known, but that would be fair to Matt. The same thing applies to your organization (your employees, customers and partners).

 

It’s Difficult to Hand Your Baby to a Stranger

 

I believe that it is the absolutely toughest thing to do…handing the CEO reins to a stranger.

I’ve never really started an organization. All of my CEO roles were in situations where the founder had either decided, or was forced, to hire an outside CEO. I once had a venture capital firm bring me into the company and refer to me as the Adult Leadership. If I did start a company, I most likely couldn’t stick around if I was asked to bring in an outside CEO, so I completely understand why it is difficult.

I once interviewed with a company founder for the CEO job in which the investors had told him he needed to hire an outside CEO or they would not fund him. He told someone else would run the company and he just wanted to write code.

Forty-five days later, he went to the board (which was primarily the investors) and demanded they terminate me and put him back in as the CEO. The board asked for his resignation.

 

The Risk Goes Both Ways

 

Many times, the founders will tell me they are afraid of losing control of the company and not calling the shots if they hire an outside CEO. But the risk goes both ways. More than half the times that I went into a company as the outside CEO, the founder threatened to quit (or sue) if I wasn’t removed, demoted or quartered in the courtyard. At a minimum, there will be “discussions” where the founder will demand something.

If you are an outside CEO, make sure you have an experienced and mature group of investors. They will have your back and understand why they need to support you. But, that is a topic for later.

 

Is Matt a Professional Baseball Player?

 

No, Matt never went on to play professional baseball, but I did get out of the way when it was time for him to learn and grow. Your start-up or established organization may never become a Microsoft or Google, but the organization and all of its stakeholders deserve a chance to at least try.

I hope you have a Happy Thanksgiving. During the thanksgiving holiday, don’t forget to let your employees know they are valued and appreciated. FBN

 By T Paul Thomas

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