(Photo by Flickr user OFFICIAL LEWEB PHOTOS, used under a Creative Commons license)
As I watched Uber founder Travis Kalanick’s saga unfold, it made me wonder: Is a founder always best fit to lead a company as it grows? If not, when should they step back? I interviewed four people who have experience with the issue and here’s what they said. (As for Kalanick, he resigned as CEO late Tuesday.)
Some founders are more interested in the product or creative side of building a company, said Cloudamize CEO Bob Moul. However, they may not be interested in the other facets that come along as the company starts to scale. This could be everything from people management to raising money. For others, it may be a case of not wanting to let go. (Editor’s note: Our Tomorrow Toolkit ebook has a chapter discussing this very issue, titled “How to transition gracefully from founder to CEO.”)
“Founders are very passionate about their original ideas,” Moul said. The problem, he said, is that this passion and focus may be a hindrance when the company begins to scale. Founders may soon realize that they need to delegate tasks they once did themselves. (Moul is an expert on the topic, as he’s perhaps the region’s most prominent example of a CEO who comes into an existing company and scales it up. He has done this with companies like Artisan Mobile and Cloudamize.)
So what happens once the decision has been made to hire a CEO? It will require the founder to let go and allow the new CEO room to grow. “You will not agree with everything the CEO decides, but you have to let them execute in the role, and respect those decisions,” said Guru CEO Rick Nucci, who cofounded Boomi, another company where Moul was hired as CEO.
This is not to say that founders cannot make the successful transition to CEO. Some examples of this in our region are Curalate cofounder and CEO Apu Gupta and Bob Moore from RJMetrics, which was acquired by Magento.
“Many founders grow into their role as the company grows,” said Robin Hood Ventures Director Ellen Weber. “Those who succeed are the ones who are excellent at staying current in their domain, staying focused on strategy, finding the right management team to support them and are able to delegate.”
Founders who also have experience in launching and scaling companies are also good fits, said Dwight Carey, Entrepreneurship Professor at Temple’s Fox School of Business. “When you have done it enough times, you’ve got the process,” Carey said.
Ultimately, it’s a personal decision. It’s also a decision in which the founder should be self-aware. As Moul puts it, “You have to ask yourself, ‘Am I becoming the rate-limiting factor for this company?’”