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The transition from founder to CEO is a delicate dance. On the one hand, founders have a vision, passion, and a deep understanding of their business—after all, they built it.
But the traits that make a successful founder don’t necessarily translate to the next phase. History is littered with examples of entrepreneurs who held on too tightly, unable or unwilling to relinquish control even when it became clear the time had come. Some particularly dramatic recent examples include Uber’s Travis Kalanick and WeWork’s Adam Neumann, who each clung to power with misguided ferocity and were ultimately ousted.
What separates a successful founder turned CEO from an unsuccessful one? As someone who stays the CEO of my company, Jotform, after founding it almost 20 years ago, I have some insight into what it takes to make the leap.
Benefits of bootstrapping
The data shows that founder-CEOs can achieve huge success. Of the unicorns founded in the last 15 years, 65% have retained their original founder as CEO, I’m writing Ali Tamaseb in his book Superfounders: What the Data Reveals About Billion-Dollar StartupsOf people who were acquired or had an IPO valuation of greater than $1 billion, 73% were managed by their founders at the time of acquisition.
But founders who suddenly find themselves beholden to VCs can struggle. Exponential growth and rapid scaling often don’t give founders the time they need to learn to be good CEOs—and trust me, becoming a good CEO doesn’t occur overnight. For evidence of this, look no further than the catastrophic failure of Groupon founder Andrew Mason, an admittedly smart guy whose product gained traction (and near-unprecedented levels of funding) faster than he could manage.
Bootstrapping founders have the advantage of growing slowly, which supplies them a lot more time to learn the CEO role. Bootstrapping could be seen in many ways as a masterclass in leadership. I used to be a software developer when I began Jotform and had no management skills, no marketing skills, no business skills, no accounting skills, no sales skills—the list goes on. But as my company grew, so did I. Having my hands in so many features of Jotform’s business, I understood my very own weaknesses and what I needed in a team to help it grow.
Stay in place versus retreat
Of course, every founder, bootstrapped or not, may not make a good CEO. In his book The hardest thing about hard thingsBen Horowitz he argues that effective CEOs must understand not only what to do but also how to make their firms do those things. The second part is often tougher, especially as a company grows and its operations turn out to be more complex. After all, tasks like streamlining operations, cutting costs, and balancing managing employees, products, and services have little to do with the skills required to launch a successful startup.
In the data evaluation for Harvard Business ReviewBradley Hendricks, Travis Howell and Christopher Bingham specified that while founder-CEO leadership is associated with nearly 10% higher firm valuations at IPO, the value of getting a founder at the helm deteriorates quickly. They also found that the value added by founder-CEOs “essentially declines to zero” three years after a company goes public; after that, they really reduce the value of the firm.
The authors note that these are just trends, and it’s not hard to conjure up a list of successful founder-CEOs. But I imagine there’s value in simply being aware of the differences between the two roles. A caterpillar that emerges from its cocoon as a butterfly can’t expect to proceed life as a caterpillar, crawling around plants and chewing leaves. Butterflies simply don’t do that. The first step is to acknowledge that your day-to-day as a CEO shall be fundamentally different from your day-to-day as a founder.
Whether you need to stay or go is a query that only you may answer. What features of the CEO role really appeal to you? Are you staying because you have the desire and dedication to be a great CEO, or are you convinced that no one else can effectively lead the company?
Set your priorities
Being CEO doesn’t mean you may handle every aspect of the operation. Nor must you want to — not only is it impractical and a waste of your time, but there’s undoubtedly another person who can do it higher.
Instead, evaluate which features of your online business interest you most and where you may add the most value. Once you’ve established your high-level priorities and determined what you—and only you—are best suited to do, it’s time to delegate.
I agree with Rich Barton, co-founder and CEO of Zillow Group, who he said that becoming a “leader of leaders” and not only a “team leader” requires a growth mindset, humility, and exertions. In a situation of rapid growth, responsibilities outweigh resources, and it’s the CEO’s job to recognize that—even if it’s the CEO role itself.
“Leaders will need to be elevated and supplemented with outside talent,” he says. “Founders/CEOs who can’t do that will eventually be elevated themselves.”
It’s also necessary to be open to advice and feedback. Of course, your resources should include other CEOs, books, and podcasts, but I think it’s also value talking to peers who can understand your challenges but also offer a different perspective to balance your personal.
There is no one-size-fits-all approach to becoming a great CEO. But you have to be honest with yourself about whether this is a job you actually need, and more importantly, whether you wish it for the right reasons. If so, you wish to be prepared to prioritize, adopt a growth mindset, and challenge yourself to do what’s best for your organization.