Bringing on a Full-Time CEO
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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
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.
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.
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.
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 email@example.com.