Bro, Do You Even CEO? Assume The Role Or Hire?

 

Wait. . . Can’t I Be The Founder AND The CEO?

The short answer is no. By the time your company is ready for a CEO, it has outgrown its need for a founder.

Most founders are highly creative. They’ve brought a business to life with just an idea and their own willingness to work and work and work. They are accountable only to themselves, and they like it that way.

They’re fantastic at growing things… but most of them are horrible at running things.

They’re great at scrappy, tactical work that leads to a tangible outcome. They’re not so good at high-level, strategic planning or long-term forecasting and iteration.

But CEOs should be great at the iterative and strategic side of things. They’re able to focus in on what truly matters to the company. They are able to delegate technical and operational responsibility to capable employees.

They can’t resist ‘tinkering’ themselves.

They’re also willing to be accountable. to external parties, like board members, shareholders, owners, and to the company itself.

It’s a rare founder who is able to make the transition between those two states.

Unfortunately, many founders are like a kid with a fun toy. They’re willing to share as long as the other kids play his way. But as soon as someone takes a different direction, he has a tantrum and takes the ball home.

Not all founders are that way. Some are able to reconfigure their habits, mindset and behaviour. They can change their way of working within the company, according to what the company needs.

But those people are the exceptions that prove the rule.

If you want to grow your company, you can’t treat it like a plaything that’s subject to your whims and moods.

Recognizing whether you can make that transition requires a great deal of self-awareness. You need to work out if you’ll take your ball home too often for your company to achieve the heights of success.

 

What Makes A Great CEO?

All CEOs are different. Some will be charismatic powerhouses, while others will be efficient workhorses. But regardless of their style, there are 2 key areas where the CEO and company must be aligned.

Their personality traits need to sync with the company’s objectives.

What’s the goal of your company for, say, the next 5 years?

Want to go from $5 million annual revenue to $25 million revenue?

You’ll need a CEO who is a great communicator.

They will need to be engaging and focused. This ensures that employees are motivated to become brand evangelists in their own right. They need to be visible to the team, and involved in the marketing and evangelism of the company.

But if your goal is to grow 10% year on year for the next 5 years?

You’ll need a CEO who is extremely focused. They will improve operational efficiency, product and service offerings, and direct the company’s iterations.

They will focus on removing bottlenecks and increasing your use of existing channels. This CEO will be more focused on operations and logistics than marketing or publicity.

The CEO of any company needs to be comfortable with who and what they are. The tactics they use need to be consistent with their personality and the goals of the business.

For example, you might have a CEO who is usually calm and friendly. If he comes out of his office screaming at people, people won’t take the outburst seriously.

On the flip side, you might have a hard-ass CEO who is tough on people. If he comes along being friendly and chatty, people will think the CEO is manipulating them.

Employees don’t need to like the CEO.

They do need to follow them, and someone who is inconsistent will lose followers quickly. Self-confidence (founded in reality, not empty ego) is a must for successful CEOs.

Their experience and career trajectory must also line up with the goals.

When you start looking at CEO candidates, you want someone who has done something like what you want to do. The exact amount of experience is not that important. You don’t want someone whose experience is too advanced.

Here’s why:

Let’s say you hire someone who used to be the CEO of a Fortune 500 company. You’re aiming to grow from $5 million to $25 million.

That person will not make appropriate decisions. They’re used to having thousands of employees to carry out every initiative. They’re used to gigantic budgets that can absorb mistakes. They can stomach trial-and-error campaigns that eat up resources.

Your company at its current stage cannot function like that. Employees will quit en masse and the company will go bankrupt.

It’s not to say that the CEO wouldn’t do their best for the company. But changing their mindset and behavior will be extremely difficult. They just won’t have the right frameworks to grow your business where it’s at.

That’s why you want someone who has done something like what you’re trying to do.

You’ll be able to see that their career trajectory is taking them that way, with or without you.

Henry Ward mentioned this recently, talking about the hiring philosophy at eShares:

“Interviewing for experience is easy because you are discovering what someone has done. Interviewing for Trajectory is hard because you are predicting what they will do. The best indicator that someone will have high Trajectory is if they value Trajectory over Experience. The tell? They get excited talking about what they could do rather than what they have done.”

Maybe the candidate was an important part of growing a business to $20 million. They might not have been the CEO, but maybe one of the top executives. That person will do a great job, because they know what’s required. They’ll also have the hindsight to see what they could have done even better.

How To Make Your Choice

It’s time to work out whether you should hire a CEO, or try to become one yourself. You’ll have to do some focused analysis of your situation:

  • Are you holding the company back by staying in founder mode
  • Does the company have a leader?
    (Remember: Being a founder and being a leader are not the same thing. Founders build the business from the ground up. Leaders take it into the future with relentless focus.)
  • What does the business need? Should you maintain it, streamline it, or scale it?
  • Does it need a visionary to set the goals for the future?
  • Have you got an operations person? The CEO will be more effective if they don’t have to handle those details.
  • If you hire a CEO and decide to stay working within the business, will you be able to work with them?
  • Will you be able to trust them to make good decisions for the business? Can you accept that their decisions will override yours?
  • Should you stay involved in the business at all? Should you take a seat on the board with a good paycheck and just set the vision or direction for the company at each quarterly meeting?

If you do decide to hire a CEO, these last two points are critical. You must let them do the job without interfering. If you undermine them or try to override their authority, you will destroy the company… So make sure you hire someone you can trust and then leave them to it.

Regardless of your decision, it must be an honest one. The health of the business depends on it.

Can you make that transition to CEO? Can you remove yourself from the daily operations? Can you become a professional manager, and focus only on the critical objectives?

Do everything in your power to become the leader your business needs. Get leadership coaching. Take communication classes. Learn the other parts of the business you will need to handle.

But if you cannot commit to that process, hire someone.

It’s not a bad thing if this is your decision. You now have an opportunity to become a visionary and return to creativity.

Do the right thing for your business, your team, and yourself. Put yourself in a position you will love and thrive in. Let the CEO get on with grinding forward into the next phase.

Have you got questions about this process? Do you have a story to share about your founder-CEO transition or hire? I’d love to hear from you. Hit reply on this email and I’ll get back to you.

Tim.