Download Why Startup Founders Are Often No longer the CEO When The

Why Startup Founders Are Often No longer the CEO When The Company IPO’s
There are only a few examples I can think of where the founder of a nationally well-known company was
still the CEO once the company did an initial public offering. After founding several of my own startups
and working with hundreds of young entrepreneurs over the years, I think I now know why. Successful
entrepreneurs are typically ambitious type-A personalities who move fast and get things done.
However, these once beneficial traits can start to work against us when it comes to the seemingly slow
and inefficient tasks of management, responsibility delegation and company culture building.
I’ve often said that you pretty much have to be a control freak to successfully wear all of those startup
hats required to get your company going. Entrepreneurs then have to learn how to take those hats off if
they want to grow their company beyond what they as one individual can achieve. It’s a real paradox.
The very personality traits that make us successful as entrepreneurs in the first place can cause us to fail
just a short time later as we begin to scale our business.
First time entrepreneurs view their company as their “baby” and as any parent will tell you, it is
extremely difficult to learn to trust others with your baby. Founders tend to hold on to all decision
making rather than systematically preparing others and truly assigning those hats to them. A founder
will often tell a team member that from this point on they are in charge of something, but then never
really give that new manager the authority needed to make decisions and act independently. Having
created a team of impotent managers, founders often become their company’s bottle neck, limiting
continued growth as every decision has to be brought back to them for approval.
Managers that have not been empowered are afraid to make decisions or to act decisively because they
are unsure of what authority they have to make decisions versus what must be taken back to the
founder to decide. At the same time, the founder, who once felt so efficient, is now drowning in a sea
of details and has an even greater level of stress than when the company was just starting. Founders
still trying to wear all of the hats can’t keep up with all of the details required to make good decisions in
an efficient manner. Their decisions aren’t timely and the teams implementing those decisions don’t
take ownership of them because they feel that they had no say in helping to make those plans. The
frustration level reaches a breaking point followed by staff turnover. At this point the venture either
fails or the company’s investors figure out a way to replace the CEO with one who can take the company
to the next level.
Failure to Transition to Manager Will Stunt a Startup’s Growth
A successful entrepreneur is going to be fairly capable of wearing all of the startup hats. The problem is
that those startup hats keep growing bigger and bigger as your ventures grows. When they were little,
you could work hard enough to wear them all but as they got bigger it became impossible to move
under their weight and you feel as if your neck might snap at any moment.
I spend a lot of time talking to my CEO’s and helping them with the various issues they are facing. I
have found it far easier mentoring them in how to put the hats on then in how to take them off. The
manager’s hat is so different from all of the other hats. The other hats are about doing stuff quickly and
efficiently and getting fast results. Management is not a sprint but rather a marathon. If the other
hats are about hunting then the management hat is more akin to farming. It requires patience and I
know very few successful entrepreneurs that I would call patient by nature. Being a great fighter pilot
does not prepare you to sit in the control tower and direct all of the new fighter pilots. It is a skill that
must be learned and it’s critical if you want to continue to grow and remain in control of your venture.
Management is the Most Difficult Startup Hat an Entrepreneur Must Master
Putting on the manager’s hat is especially difficult because it’s not a hat you can just put on all at once
like the other hats. Ventures grow gradually over time. You can’t just stop wearing the other hats one
day and say you are now only going to wear your manager’s hat. It is a slow transition that involves
finding or recruiting team members who can wear a particular hat for you and transitioning that hat to
them. It’s not so difficult to think like a manager or a hands-on doer, but it’s really tough to have to
think both ways at the same time depending on the category or task at hand. As entrepreneurs, we get
addicted to the individual successes we achieve each day. We see what we’ve accomplished and it feels
good like a drug. Imagine how difficult it would be for an alcoholic if, rather than going cold turkey, he
or she had to gradually reduce the number of drinks being consumed a little less each day over the
course of a couple of years! That’s what it’s like to transition from the star doer to the manager.
Of all the startup hats (banker, marketer, recruiter, sales person, etc.) my entrepreneurs tell me that the
manager/leader hat is the most difficult to master. I often ask my entrepreneurs struggling with this
transition to reread the Manager Hat chapter of my book, The StartUp Hats. They tell me that they
have read it before but I ask them to read it again now. When we talk again I usually hear something
like, “So that is what you were talking about!” or “OK, now I get it”. Some solutions can’t be
appreciated until you understand the problem. Sometimes the situation has to get pretty dire before
the entrepreneur is ready to make the time necessary to define stewardships, the authority each team
member will have, the resources they will govern and the metrics by which they will be evaluated. It
feels very slow and “left handed” to them at first, but I am fortunate to work with some very bright
founders who are eager to master whatever skill they need to take their venture to the next level.