Founder to CEO Transition: Why Do You Want a CEO and Are You Really Ready for One?

Ori Eisen | Leadership

Editor’s note: This is the first post in a series aimed at founders who are considering hiring a professional CEO to run their company. The author, Ori Eisen, is a member of Georgian Partners’ Advisory Board. As the founder of 41st Parameter, the leader in online fraud intervention, he underwent the founder to CEO transition himself, prior to selling the business in 2013.

If you’re the founder of a company, you’re probably used to doing lots of different things at the same time. For example, in addition to your duties as founder, you might be responsible for leading your company’s creative spark or driving its product vision. Yet as your company grows and your responsibilities expand with them, at some point the demands of your role are likely to exceed your business acumen and professional skills.

It’s usually around this time that most founders start getting hints from their board of directors that they need to hire a professional CEO to help run and grow their business. Sometimes, if the hinting and nudging doesn’t work, founders may be flat out told that they need to hire a CEO. Other times, if a board has tried unsuccessfully to get a founder to hire a CEO and is left with no other option, it may even oust the person for preventing the company from achieving its goals.

There are two other less common scenarios as well. The first is when founders realize on their own that getting help is the best way to maximize the venture for everyone involved. The second is when a founder just happens to have the makings of a great CEO.

The reality is that last scenario is pretty rare. The skillsets that founders and CEOs need to have are just too different. Most founders like new challenges to solve, but aren’t very good at building processes and growing a business. By contrast, although CEOs may not be the ones coming up with the next big idea, they can take the raw materials that a founder created and make them commercially available on at scale. To put it another way, founders are typically focused on the “what,” while CEOs tend to focus on the “how.”

Realizing these differences, respecting them and seeing their potential to become a complementary force-multiplier is one of the best reasons why you should consider adding a CEO.

Ultimately, however, your reasons for wanting a CEO are more important than mine, your board’s or anyone else’s. That’s because unless you think hiring a professional CEO is the right decision, no one’s ever going to measure up to the task.

If you’re not sure, ask for advice from those around you, including any mentors you may have, board members, your spouse, your management team, or other founders and CEOs you know. But be prepared to have at least some of them tell you that they think someone else may be able to do the job better than you can.

Hearing those words will do one of two things to your psyche: It will either undermine you and your ability to lead, or it will help strengthen your resolve to find help. There’s really no in between.

So after all the trials and tribulations of making this critical decision, how will you know when actually you’re ready to hire a CEO?

If you’re a parent, a good analogy is to think about the first time you let someone babysit your child. Not your parents, your brother or sister, or a close family friend. Someone who’s new to you and wasn’t previously a part of your day-to-day life. Think about what had to happen before you were comfortable letting that person look after your child.

Deciding to hire a CEO is a very similar decision. Many founders, especially first-timers, tie their entire being into their venture. They live it, breathe it and see their reflection in it. In fact, it can be hard to tell where the founder ends and the venture begins.

Founders are also people on a mission. They’re true entrepreneurs who have a vision. As Jonathan Swift once said, “Vision is the art of seeing things invisible to others.” Since people aren’t founders, bringing someone else to watch over your “baby” can be really hard and feel counterintuitive.

You’ll be ready when you realize that most CEOs aren’t ex-founders. Most come to the game as professionally hired guns who are driven by a desire to achieve a good financial outcome for shareholders so that they can get their next job. They’re here to help you and your company, even if in some cases that means removing you from the equation.

You’ll also be ready when you realize that there can only be one CEO. Once you’ve hired someone to fill that role, you need to give that person the room necessary to succeed.

This is a natural transition for most founders, it’s not an easy one but it’s something that most of us have to work through. In the next few posts I will share my own journey with the company I founded, the 41st Parameter, which we successful sold to Experian in October 2013.

Like what you’re reading? Check out the next post in this series around your board and management team’s responsibility in the founder to CEO transition