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Take your seat as a CEO or step down?
Founders learn to take their seat as a CEO as their startups grow. For some, it becomes an opportunity to step down.
I didn’t plan to become a CEO.
I remember the moment when my co-founder Rob called me and said that he finds a long-distance relationship with his wife in Germany difficult. That wasn’t news to me, but at that moment I could feel that Rob wasn’t just struggling. Having the choice between a startup in London and family in Germany, Rob had to focus on the family, even though he probably hadn’t admitted it even to himself yet.
In the weeks that followed, Rob decided to step down as a CEO and we agreed that I’d take over from him. I didn’t plan to be a CEO, but the company needed a leader and I was the only remaining co-founder.
We formalised it at the next board meeting and told the team. Our startup, Makers, a tech training provider, was just over one year old and the team was under ten people. As far as CEO transitions go, that one was simple.
Not all CEO transitions are straightforward. Many years later, when Makers was a much more established business, I chose to step down as a CEO myself. This time the transition was more complex. First, I took a long time to make the decision to replace myself as a CEO. Second, there were more moving parts and only one shot at getting it right.
I made plenty of mistakes as a CEO, but I am particularly proud of how we, as the board, handled the transition from me to the new CEO. The company is in a better place under the leadership of Claudia Harris OBE, who took over from me as the CEO of Makers, and I am much happier with my new career as a founder coach.
Working with dozens of founders as their coach, I learned that I was far from the only person facing these two questions. First, how to make a decision to step down (or not) as a founder CEO? Second, how to get it right the first time?
Although every transition from the founder CEO to the new CEO is unique, they happen relatively frequently and there are similarities and lessons that can be drawn. In this and future essays we will be exploring different facets of the transition from the founder CEO of a startup to a new CEO: making the decision, choosing the successor, ensuring a smooth transition and charting next steps.
Founder and CEO skill set
When I assumed the title of the CEO, I wasn’t really the CEO. I was a founder. The job of a founder is to make sure the company doesn’t crash on takeoff and finds product-market fit. To do this, the founder focuses on three big things: talking to customers, hiring the early team and building the product. The founder is involved in every aspect of the business and makes sure that the product is solving a meaningful problem for the customer.
The job of a CEO is to build the company that builds the product that solves the customer’s problem. A CEO sets the vision, builds the team and makes sure that they have cash and clarity to succeed.
Jeff Lynn, founder and first CEO of Seedrs, an equity crowdfunding company in the UK, who hired his replacement a few years in, described the difference:
When you start a brand new business, particularly in an innovative space, you need to be a little bit crazy, a little bit willing to take a lot of chances to see what works, and a lot of flexibility and agility to tackle things as they are thrown at you. Whereas leading a business as it grows requires a much more planned, thoughtful disciplined approach to leadership. There are a few people out there who are able to do both, but in my mind, they are very different personality types and skills.
This shift from building the product to building the company that is building the product is gradual and subtle. This is the point when a founder must take the seat of the CEO and actually step into the job, even if they had the CEO title for years.
Three moments to step down
At the risk of oversimplifying too much, I think about founder CEOs choosing to step down as happening before, during or after the transition from founder to CEO.
Before the transition, the reasons for stepping down tend to be related either to pressure or to performance. After years of trying to find product market fit it’s easy to find oneself exhausted or start questioning if this particular opportunity is worth the effort. Performance may also be an issue. Sometimes despite the best efforts and the willingness to continue, it becomes clear to the board and the founder themselves that they don’t have what it takes to make this business successful.
During the transition to actually taking the seat as a CEO, an additional risk is that this is not what the founder is willing to do. One of my clients compared being a founder to riding a jet ski, making sharp turns and enjoying the speed. Being a CEO of a larger business, to him, felt like being a captain of a large boat, manned by dozens of people. There’s nothing wrong with either of these activities, but not every jet ski rider wants to be a captain. Some want to keep riding the jet ski.
Long after the transition, once the business is steady and successful, a founder may find themselves bored. Sure, they can grow the business and expand to yet another country, but what’s the point of it all, really? When was the last time they took a long vacation with their kids? What really matters in life? Asking big questions may well lead to reevaluation of priorities. Choosing a new CEO with the energy and vision to run the business for the next decade can be a wise move.
In reality, it’s rarely this simple. Founders can feel both burnt out and bored, productive and overwhelmed, clear and confused – often on the same day. However, once the idea of stepping down comes to mind, it rarely goes away. To prevent it from being an ongoing distraction, founders need a way to think about this question to be clear when they’re still committed and when it’s time to go. Constantly looking at the door without leaving doesn’t serve anyone.
If you’re in, you’re in. If you’re not, you don’t have to be. But don’t sit on the fence.
Everyone has their own story
“Tell your heart that the fear of suffering is worse than the suffering itself. And that no heart has ever suffered when it goes in search of its dreams, because every second of the search is a second's encounter with God and with eternity.”
― Paulo Coelho, The Alchemist
I know a founder of a successful, bootstrapped, international company who found himself looking out of the window during a meeting with his finance team, wondering if this is really what he should be doing with his life. Living a jetsetter lifestyle, he spent less time with his kids than he would have liked. “How much money is enough?” – he wondered.
Every founder CEO has a unique story, but there are patterns. Some are victims of their own success, realising that chasing more success won’t bring more fulfilment. Some struggle to handle the pressure, which might be coming not only from their business, but it’s certainly a factor. Others realise that they struggle to grow as fast as the business needs them to or they aren’t interested in building this business anymore. What was appealing and exciting five or ten years ago, isn’t of interest to them today. Yet others are asked to leave by their boards, or leave themselves, preferring to keep their head high instead of waiting to be fired. Sometimes, it’s the combination of all these factors.
However, for many founder CEOs the moment of realisation is preceded by a period of confusion. Given the magnitude of the decision, no one takes it lightly. It’s a one-way door: you can’t change your mind three months later once you have had a chance to chill in Bali, only to realise you still like your CEO job after all. So the first step is to understand why you want to step down in the first place.
Have you ever considered stepping down as a founder CEO? What were your reasons? What helped you make the decision to step down or stay? How long did you take to decide?
Understanding your reasons for leaving
When I talk to my coaching clients who are considering resigning, I often ask them to recall the story of why they started the business. We can’t jump straight to the reasons for leaving without understanding where it all started, often going back to the early career and the story of our family.
In my twenties, I thought I wouldn’t amount to anything in life unless I started a successful business. I wasn’t sure what success meant, or what exactly I was trying to amount to, but like many people at the early stages of their careers I was eager to prove myself and I thought that building a business would be “it”. Naively, my co-founder Rob and I thought that we’d build something to sell in 2-3 years – our idea was to “get an exit” rather than to build a successful business. One year in we realised it’s going to be a much longer journey. Building an unsuccessful startup often takes years before the founders run out of money and ideas, and a successful one can easily take a decade or more before there’s an exit.
However, once we started Makers to train complete beginners to be employable software developers, I realised that helping people change their careers – and their lives – was much more meaningful than our original plan to quickly flip the business. I remember talking to one developer we trained who shared, with tears, how much she loves working as a software developer for a leading financial publication in the UK. Until now, she explained, she believed that work has to suck, but must be done to pay the bills.
Seeing her tears of joy helped me realise that what we’re building is far more meaningful than a quick exit. Building a commercially viable business is a success, but building one where your customers regularly describe their experience as “life changing” is a privilege. I’m proud to have founded a business that counts Google, Deloitte, Microsoft, several branches of the UK government, Financial Times and hundreds of other amazing companies as its clients. I love seeing how our students go from writing their first line of code to getting their first job, to getting their first promotion, to running their first team, to getting their first CTO job or starting their own tech startup, as many have done.
Why did I step down as a CEO?
I had personal and professional reasons. On the personal side, I wasn’t looking forward to Monday mornings. Or Tuesday mornings, for that matter. Once my coach asked me to take a look at my calendar and tell which meetings I dread and which meetings I look forward to. I opened my calendar and realised I wasn’t looking forward to a single meeting that week.
That much was clear, but understanding why that was the case took some time. A few years into running the business I had my first depressive episode that I felt was somehow connected to my work, although I couldn’t put my finger on it. I could feel that something was off, and it was incredibly tempting to go and fix that something.
And so I started looking for things to fix. If I hated running the senior team meetings, I tried to change the format. I hired more experienced executives. I took holidays and exercised. I read management books. I meditated and practised yoga. I delegated aggressively to only focus on what only I could do. I worked with several different founder coaches over the years. I went to the Peruvian jungle to see if Ayahuasca, a powerful plant medicine with psychedelic effects used in shamanic ceremonies by indigenous people, would make it easier to understand what’s going on and why I really don’t like leading a successful, mission-driven business that’s changing customers lives. (Mother Ayahuasca clearly told me I should stay as a CEO, but two months later I was already doubting her opinion. After all, she never ran a startup).
Everything I did helped a bit and gave me a glimmer of hope that one day I’ll fall in love with my job. Yet, that day always felt a few months away. Given that our mission at Makers is to help people transition into a career they love, not being in love with my own job felt hypocritical.
Understanding the reasons behind how I felt was important because without that I would end up in another job I wouldn’t like. We are condemned to repeat the patterns we are not aware of. To change them, we need to bring them to light and understand what we are meant to be doing.
On the professional side, I recognised that for the next stage of Makers growth it needed a CEO with a deep understanding of our B2B enterprise clients. This was neither my skill set, nor something I wanted to spend the next decade of my career learning.
In the next newsletter we’ll continue exploring different aspects of startup CEO transitions, and in particular different tricks our psychology plays on us when we are trying to decide what the right thing to do is.
Startup CEOs in transition peer group
Nearly every startup CEO thinks about stepping down at some point. Yet, almost everyone faces these two questions in solitude, because admitting that you're considering leaving your business is still taboo:
How can I decide to step down?
How do I prepare the transition?
I'm building a peer group of startup CEOs where we'll explore these questions together.
This is for you if you are:
A startup CEO trying to decide whether to step down
A startup CEO preparing the transition to a new CEO
Here's how it works:
Meeting bi-weekly for 90 minutes
No advice giving, only sharing experience to see how others are navigating questions that torment us
Strict confidentiality expectations
No more than 5 founders and me as a coach and facilitator
Monthly fee invoiced discreetly (so that your finance team doesn't know you might be considering stepping down)
If you are interested in joining, drop me a line on firstname.lastname@example.org. And if you know someone who might need this, forward them this essay, they'll say thank you.