Bringing on a Full-Time CEO
There are the pros and cons to being a teenage CEO. On the one hand, the "kid factor" can get you in the door; having the title CEO is always cool; and, well, you're a CEO and you're not even out of college! There are disadvantages, however--which you might not even recognize until your business starts growing. When your business starts to outgrow your limited work day, it's time to start the search for an experienced, full-time CEO.
When Is the Right
Time?
This is the hardest question to answer. And it's probably going
to be a decision you, assuming you're the current CEO, will
have to make. Not always (for example, if you're not getting
the job done so your board ousts you), but usually. So when is the
right time? Your company could be growing enormously, your clients
may be so satisfied that they want more, and your competitors may
keep you awake all night. As a result, say hasta la vista to the
basketball team and the Saturday night party, and start saying
hello to poor grades. This is when you need to give up the reins.
Your company can't wait for you to get out of school.
So you need a CEO...now what? The first step is to create a spec sheet outlining the issues the CEO will tackle. Sit down with advisors and business partners to determine what the CEO should be expected to do. Whether it's new sales calls, writing a business plan or doing administrative work, write it all down.
The
Challenges
There are a few challenges you face when retaining a full-time CEO.
Perhaps most notable is the financial outlay. You likely can't
afford to pay $200,000 a year to a top-notch candidate to take your
company to the next level. So does that mean you can't get a
top-notch candidate? Not necessarily. First, decide whether you
look to retain a permanent or interim CEO. If you go the route of
an interim CEO (to come on board for four to six months), he or she
will be cheaper. Second, put together a creative compensation
package. Maybe 50 percent of the CEO's salary is upfront, and
50 percent is deferred until a later point. You may want to throw
in stock options or convertible debentures as well.
The Search
If you read my column "Getting Help From the
Experts," you should hopefully already have an advisory
board in place. Now is the time to turn to your advisory board and
leverage their contacts. Assuming an official headhunter/executive
search is out of the question due to the cost, you will need to
work your contact database. Anyone who may know a potential
candidate, send 'em the spec.
Making the
Choice
If you're lucky, a few worthy candidates will come out of your
search. And if you're really lucky, they will fall within your
budget. Set up an interview with the candidate, and invite your
entire advisory board. Get a sense for his or her personality,
character and vision. You'll be handing over most of the
control to another person, so make sure you're comfortable with
that person. Ask tough questions; review the candidate's resume
carefully. If none of them seems worthwhile, don't force
yourself to pick. There should be plenty of good ones in the
current market environment!
This is just a brief overview of the general process; before you embark on a search, confer and consult with your advisors. They've probably done it a hundred times and will be able to light the way for you.
Fourteen-year-old Ben Casnocha is founder, CEO and chairman of Comcate Inc., a San Francisco firm focused on providing technology solutions for local governments. His work has been profiled in over 50 magazines, newspapers, radio stations, TV outlets and Web sites nationwide. Got something to squawk about? Write to Casnocha at ben@comcate.com.