Stop being a founder, and start being a CEO

toughmudder-1

Are you tough enough to be a startup CEO? Photo of Tough Mudder race via Flickr page of The 621st Contingency Response Wing.

A lot of founders don’t make it as a CEO. Not that they can’t, but they don’t. None more glorious that Andrew Mason and his middle finger salute to the capital markets.

“Just kidding – I was fired today.” ~ Andrew Mason (Former CEO of Groupon)

So why don’t they make it?

Well, it’s complicated. Based on the flood of recent posts from founders, CEO’s, and investors, it’s clear that every situation is different.

Venture capitalist Ben Horowitz believes in teaching founders to become CEOs. LinkedIn’s Reid Hoffman and awe.sm co-founder Jonathan Strauss made the decision that replacing themselves as CEO was the right move. Mark Suster, both a VC and a CEO, is asking the question if you should replace yourself. There are professors like Noam Wasswerman studying the founder dilemma to understand if founder CEOs are more successful than hired CEOs.

As a former first-time founder and CEO, I didn’t make it.

I didn’t understand, until it was over, just how hard the transition is from a founder to a CEO. A completely different role from getting a company off the ground, I learned that becoming a CEO is even lonelier than being the CEO. Few people know how to teach it, even less think about developing you, and even worse the people that saw you as a founder aren’t always ready to see you as a CEO.

I have come to believe that you will always be a founder. You can be a founder and a CEO. But you can’t be a CEO while you are trying to be a founder.

What it Means To Be A Founder

Being a founder is incredibly hard in its own right. The Internet is littered with these stories, especially details about the spectrum you are expected to cover from visionary to janitor. These horror stories of personal struggle are true. Willing everyone to help, buy, join, support, and invest in your company takes every ounce of energy you have. Surviving really is your only solace.

A founder, especially in the early days, is the soul of the company. The initial spirit and visionary who sees an opportunity in the market that few people around them can see, until you turn it into a cash generating machine. And even though your card says CEO, the organization really needs your founder magic to get off the ground.

Of everything you do, I think there are a few areas that are the most important.

evangelizing

Startup CEOs need to be able to evangelize their brands.

Evangelizing: The job that never stops, you have to constantly convince everyone to be a part of your vision. No easy task, you use energy, charm, will, tenacity and anything you have to convince people that what you are building is special. Most tiring of all, you are the emotional leader for the entire team, willing them not to quit, even when things look most bleak.

Driving to Product Market Fit: Marc Andreessen is right, getting to product fit is all that matters and your job is to do anything it takes to get there. Changing the team, the product, direction, to the point that people think you’re crazy just may be part of the game. The product is all that you have, which means it takes a significant majority of your magic, until it clicks.

Hiring Carefully: As a founder you aren’t yet building a company. That sounds crazy but until you reach product market fit, hiring any roles that don’t actually make your product better, are forcing you to manage an organization you aren’t yet ready to manage. Yes, it’s incredibly important to lay the foundation with values and a simple definition about your culture, but just as important is hiring carefully, piece by piece.

Finding Capital: This role never goes away, even when you are a CEO. The job you probably hate the most, it is incredibly important. Spending before you have the money is a path to bankruptcy or investor terms that no longer make it your company.

What It Means to Be a CEO

Being a CEO is a very different role. Still the visionary and champion of culture, they are the ultimate leader. Yes a founder is a leader, but this type of leadership is not the same thing. What works as a founder to lead by example, has the opposite effect when you are the CEO. Leading not by doing, but by inspiring, enabling, and holding people accountable. Everyone has a slightly different definition, but I have found the following to be key areas of focus.

T-shirt photo via Zazzle

T-shirt photo via Zazzle

Leading: Doing the work yourself is easy. Enabling your team to do better work than you is painstakingly hard. Giving direct, consistent feedback is important to getting the most out of your team. No longer a hub and spoke model, the best CEOs are objective, critical, and people focused.

Thinking: Different from being a founder, thinking is valued over doing. No longer in the weeds, you should be designating significant time to understanding and thinking about the businesses. Because the larger your company becomes, the more disruptive pivoting is on the culture.

Evangelizing: Still important, this role shifts from one-on-one belief building to evangelizing at scale. While your personal touch still matters, the quality over the quantity is the biggest change you have to make.

Prioritizing Relationships: The people you spend time with are completely different. Being a real CEO means your leadership team and your board members take the majority of your time. Rob Bailey demonstrates just how much time should be spent on your board.

Capitalizing: A never-ending proposition, ensuring the business has enough capital is one of your sole jobs. Spending time with investors and potential acquirers, lays the ground work for future transactions.

Deciding You Want Out As CEO

“This is your last chance. After this, there is no turning back. You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland and I show you how deep the rabbit-hole goes.” ~ Morpheus, The Matrix

morpheusIt’s perfectly acceptable to decide that becoming the CEO is not what you want to do. It is a completely different role and taking the red pill is agreeing to learn a whole new set of skills you don’t possess today. The journey to find the right path is long, unforgiving, and lonely.

Unfortunately a lot of founders are fired without any opportunity to “decide” they want out. Not every investor is as thoughtful as Brad Feld and Mark Suster, who clearly understand the emotional impact on the founder as well as the delicate position it puts the company in.

I didn’t have this at Contour. Instead I experienced a stomach-jarring, soul-crushing end realizing I had one choice. Stepping out. An emotional good bye, I could barely read my speech without tearing up. It still hurts.

If you are considering whether to step down or continue, I would suggest thinking about these topics.

Passionate About Building A Company: Your love for product and customer has to shift to a love for building the best company in the world. You have to be passionate about leading and managing people, process, and organizational structure.

Willing To Re-Learn: It takes a lot of energy and a continued commitment to being vulnerable. You will be relearning how to communicate, setting expectations, and holding people accountable. Skills that will feel incredibly awkward for a very long time.

Supportive Board Members: You can’t fire your investors, which means if they can’t help you make this transition or don’t have the patience to watch you learn, bringing in an experienced CEO isn’t a bad decision.

Quality Leadership Team: A lot of the team you built will not make it in the next phase of the company. Strong doers may not be great managers so you need to be ready to constantly reevaluate your leadership team. The stronger your team is now, the easier the transition will be.

Making the Transition to Being the CEO

“It generally takes years for a founder to develop the CEO skill set and it is usually extremely difficult for me to tell whether or not she will make it.”  ~ Ben Horowitz

A lot founders never actually make the decision they want to be the CEO, at least I know I didn’t. Like a lot of founders I just assumed it was my calling. A misunderstanding that doesn’t enable you or your team to begin seeing your role in a new light.

Assuming you consciously make the decision to continue the journey the first step is recognizing when to make this transition. Not always clear, I have found two points to consider.

1. Product Market Fit

2. Raising Institutional Money

(Flickr photo via JMRosenfeld)

(Flickr photo via JMRosenfeld)

Whether you are ready or not, as soon as you bring in venture or private equity dollars they expect you to act like a CEO. Even if they invest early, they will be comparing you to the experienced CEOs in their other portfolio companies.

The good news is that when it’s time to make this transition, the founder magic you harnessed to reach product market fit is the same magic you need to create a great company. Yes, there are process focused leaders you may not have on board today, but I do believe you can learn to be a great CEO.

The bad news is that few people can teach you how to make this transition. Unfortunately, most investors have never been a CEO, which means the common answer to the learning curve dilemma is to replace you. Right or wrong, it’s the only option they know how to do.

As you make the transition, here are a few things that can help.

Define Your Role: Make it clear to your team and the organization that your role needs to change. An outside consultant can help to facilitate the discussion, but you will need to define your role, the role of the leadership team, and ask for everyone’s support as you do your best to switch from a doer to a leader. Recognizing you are no longer a peer with your co-founders, your job is to be the CEO, a change that can be hard for everyone involved to accept.

Find Mentors: Ideally, find a few CEO’s that you like, who have extra cycles, and who are great at teaching. Hiring a CEO coach is highly recommended to provide both mentorship and an emotional outlet. The best sports players in the world have coaches, being a CEO is no different.

Stop Doing: You have to complete your leadership team and hand over the reins. As hard as this is, and believe me I struggled big time with this, you have to stop doing roles that make you a peer with your leadership team. It’s their job to run the business, not yours. Yes you will have influence and you will  have the final say when needed, but if you don’t complete your team you can’t even begin to really lead. If there is a role you just love too much to give up, then maybe you should step down as CEO and just do that role. A filter that can help you in the decision process.

Get Feedback: Create ways for your organization and board members to constantly give you feedback. Being direct is not a common communication style, so expect to ask for the feedback. Listening and being vulnerable are essential for internalizing and applying the feedback you receive.

Conclusion

Not everyone will agree, but I believe you can learn to become a CEO. The qualities you need to successfully found a company, against all odds, are relevant to being a great CEO. I also agree with Ben Horowitz that founders have a distinct advantage in knowledge, moral authority, and total commitment to the long term. Advantages you can’t just replace with an executive search.

Marc Barros

Marc Barros

The decision to grow into this role is critical for you to make and for everyone to support. Deciding it’s not for you is perfectly acceptable and hopefully your board enables you to make this decision.

Your development is an incredibly important conversation you should be having with your investors from the minute they invest, even if it’s on you to force the conversation. Mapping out what everyone expects and what happens if you don’t successfully make this transition is equally important. Firing the founder is never a positive experience.

Just remember that if you do choose to make this transition, recognize your job is no longer the founder. It’s to be the CEO.

Marc Barros is the former CEO of Contour, a Seattle maker of helmet-mounted cameras. Follow on Twitter @marcbarrosYou can read Marc’s blog — One Entrepreneur’s Perspective — here.

Previously: Founder dating: Tips on how to pick your partner

  • Paul Uhlir

    Marc, I hope you don’t take a job any time soon so you can keep cranking out these great pieces. I am on this journey right now. So much good stuff in here for me to digest. Thanks.

    • http://marcbarros.com/ Marc Barros

      Hey Paul,

      I am realizing that entrepreneurs are unemployable. We have to make our own jobs! ;-)

      Taking time off between companies I definitely recommend. The time is helping to think through everything I learned along the way.

  • Brant Williams

    Thoughtful, detailed, accurate, useful. Hopefully written from a sailboat off of Santorini on way around the world.

    • Aaron Evans

      Mmm. The hike up the hill from Amoudi to Ia and a lunch of kalamari and rocket salad with bread and tzatziki at Scala with and honey yogurt for dessert.

  • Bob Crimmins

    Insightful piece, Marc. Thanks for sharing some of the wisdom you accumulated along the way. So helpful to have entrepreneurs who have been-there-done-that and are willing to be frank about what they learned.

  • tgonser

    Great post – honest and true! I’ve both been a founding CEO in the past, and in my current gig, decided at the start NOT to be CEO so I could focus on making sure we built the right stuff, and continued to morph our product and strategy to reach our vision – something that takes 100% focus. There probably isn’t a ‘right way’ to do this, but that is why it is so much fun.

  • neilroseman

    Really good, honest piece Marc. Hope you are enjoying your well-deserved voyage, and looking forward to what you do next.

    • http://marcbarros.com/ Marc Barros

      Thanks Neil. Definitely enjoying the time.

  • Dan Price

    Awesome post, Marc!

  • John A

    Great article!

    One major problem with taking institutional money is that they love ‘professional managers’. The other problem is you took their money and they have a big say in what that means. I think you are greatly downplaying the X factor that founders bring to a business. Not uncommon for institutional money to require the need for buttoned up C-level execs to bring their expertise and resume to ‘help the business scale’. More often than not this results in swinging the pendulum like a wrecking ball. The business then loses its heart and soul, the professional CEO’s and other big resume execs are dumbfounded when the product-market fit passes them by. Reminds me of an article I read recently: http://bhorowitz.com/2010/04/28/why-we-prefer-founding-ceos/

    More often than not ‘professional managers’ and institutional money literally sucks the heart and soul from companies. They do this with compelling arguments, nice pitch decks and an overall apprehension to taking risks and being wrong. The alignment that founders have with the heart and soul of the business should never be underestimated. The most successful business are able to preserve this as they scale and grow.

  • Janis Machala

    As someone who has mentored/coached a LOT of founders I applaud you for sharing this perspective. I do believe that too many investors cut founders loose versus figuring out the ability of a founder to transform and scale. Being a CEO is not for everyone-it is a lonely job in so many ways and it also requires process and policy and fundraising and allowing leadership teams to take the helm over their area. Letting go is probably the hardest thing a founder has to learn. There is a huge price that a start-up pays in cutting loose a founder because the soul of a company is extremely hard to transition or rebuild (no, not everything the founder did was wrong and should be changed yet often that is the message that the people who followed the founder hear which causes morale issues and unnecessary turnover of valuable people. There’s an art to taking over from a founder as a seasoned CEO and many Type A replacements miss that art class. I wish there was a program for CEOs following a founder and founders considering their strengths and how to build on these. Congrats on an awesome piece!

    • http://marcbarros.com/ Marc Barros

      I couldn’t agree more. Few people are thinking about how to develop the founder into becoming a CEO or helping them be a better founder by finding the right CEO they can work with.

      Talent in sports is developed. Founder talent should be the same way.

  • Bill Messing

    This is such a nice, peaceful, coherent view compared to when you’re in it, thank you. Absent a common framework like this it’s tough to reconcile all the different expectations folks might have, especially since half the time you won’t know what they are.

    • http://marcbarros.com/ Marc Barros

      Thank you. Yeah, few talk about it and it’s not an easy subject to even approach, let alone teach. I spent a lot of time guessing at what people were really thinking or expecting.

  • anne weiler

    When I saw the first picture without the caption, first thought was “omg they found a perfect depiction of being ‘in the weeds’” ;)

  • Serenabydesign

    I really enjoyed this! This is definitely
    a struggle!!

  • Aaron Evans

    Groupon never had a chance. Someone had to take the fall.

  • http://stevenchu.com/ Steven Chu

    This was an amazing and insightful post to read. Thank you for writing!