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When Should a Founder Say Goodbye to his/her Start-up?

"If the founder is not providing additional value by being in the business, it's time for him/her to let go of the 'CEO' title"

When Jules Ostin (played by Anne Hathaway) was asked to hang up her boots as a CEO in the movie The Intern, it broke many hearts. But, a logical move it was.

While Jules stayed put in reel life, in real life many entrepreneurs do actually give up their founder and CEO positions after a certain stage, making way for an experienced person to take over for the betterment of the company.

Be it RedBus or Zivame, Uber or TVF, from decisions made out of honest intentions to those forced by the management, we have seen multiple examples of founders letting go of their chairs in India, too.

The Conundrum of being a Founder

Being a founder is not an easy job, it takes passion coupled with patience. Sandeep Aggarwal, Founder of Droom and e-commerce website Shopclues, spoke about the various reasons why a founder often gives up his/her position.

“A founder is typically a visionary who has a long-term approach and is obsessed with bringing about a change to something in particular. A professional CEO comes into the picture when a founder wants to implement his vision. Often, even though a founder is product-driven, he/she has to look after many other things. From hiring to firing, there are lots of other things that need attention. So the product-focussed founder either hires a very efficient Chief Operating Officer (COO) or opts for a Chief Executive Officer (CEO) so that he has time to do what he does the best,” said Aggarwal.

As a company grows, the want of a professional CEO is more acutely felt. “From a single-person to a 50,000-employee company — as an organization grows, it becomes easier if a professional CEO is looking after the other things. You give your heart, blood, and sweat to an idea and then you might want to take it easy, so even then a CEO is hired. Another reason is founders like the first few years of the start-up, its nascent-stage challenges drive them. As things become organized and the compnay starts functioning smoothly, they get bored. After all, doing repetitive work is not in a founder’s DNA, for he/she is someone who’s constantly challenging the status quo,” added Aggarwal.

It’s Time to Share Your Vision

While entrepreneurs treat their start-ups as their own baby, caring and nurturing for it as it grows, it often comes to a point where an external viewpoint helps the venture grow better.

“I think we’ve seen enough evidence through the years that the passion, energy, and commitment with which a founder runs a company are second to none. Move over to companies away from media glare, and the figure only increases. That said, of course, it’s extremely useful in my opinion to have a partner who lives the same dream and believes in the same vision that you do. Sheryl Sandberg’s role at Facebook is the biggest example of this. She is undoubtedly the reason why Facebook is what it is today in its current form,” said Akshay Chaturvedi, Co-founder & CEO, Leverage Edu.

Many believe that entrepreneurs often wait for their start-ups to gain a certain amount of success or on the contrary, fall in trouble and only then they find a different person to clean up the mess.

However, another decision taken by most start-ups is to have a co-founder on board right from the start. “In my case, I reached out to my co-founder Rajiv when I wanted to do something in the education space since he knows the pulse of the space like no other. It really helps that we complement each other, in our skill-sets and our beliefs. So, we are able to bring a dynamic balance to everything we do at Leverage. The hustle and ambition are common, of course,” said Chaturvedi.

Investor Has a Say

Aggarwal also cited that investor pressure often leads to a founder quitting his/her job. For investors, the well being of the company becomes a top priority, with their stakes on it. So, this also becomes a point that investors note while investing in a late-stage company.

 With a portfolio of companies that are in advanced stages, Prasad Vanga, Founder and CEO of Anthill Ventures, maintained as a company reaches a certain stage, it needs to bring in a CEO who will expand it further.

“A Founder should always do a self-assessment of his/her key strengths. If your core is tech and you have built a product, but you need assistance on business development, you need to bring in a partner with specific experience or a professional CEO. Typically, post-Series A, and from series B and above, is usually when a founder will need to bring in a professional management team. If the founder is not providing additional value by being in the business, it’s time for him/her to let go of the ‘CEO’ title. An example of this are Google Founders (Larry Page & Sergey Brin) stepping down in favour of more professional management,” said Vanga.