Bringing on a Full-Time CEO How to know when it's time to hand over the reins to someone else
By Ben Casnocha
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There are the pros and cons to being a teenage CEO. On the onehand, the "kid factor" can get you in the door; havingthe title CEO is always cool; and, well, you're a CEO andyou're not even out of college! There are disadvantages,however--which you might not even recognize until your businessstarts growing. When your business starts to outgrow your limitedwork day, it's time to start the search for an experienced,full-time CEO.
When Is the RightTime?
This is the hardest question to answer. And it's probably goingto be a decision you, assuming you're the current CEO, willhave to make. Not always (for example, if you're not gettingthe job done so your board ousts you), but usually. So when is theright time? Your company could be growing enormously, your clientsmay be so satisfied that they want more, and your competitors maykeep you awake all night. As a result, say hasta la vista to thebasketball team and the Saturday night party, and start sayinghello 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 specsheet outlining the issues the CEO will tackle. Sit down withadvisors and business partners to determine what the CEO should beexpected to do. Whether it's new sales calls, writing abusiness plan or doing administrative work, write it all down.
TheChallenges
There are a few challenges you face when retaining a full-time CEO.Perhaps most notable is the financial outlay. You likely can'tafford to pay $200,000 a year to a top-notch candidate to take yourcompany to the next level. So does that mean you can't get atop-notch candidate? Not necessarily. First, decide whether youlook to retain a permanent or interim CEO. If you go the route ofan interim CEO (to come on board for four to six months), he or shewill be cheaper. Second, put together a creative compensationpackage. Maybe 50 percent of the CEO's salary is upfront, and50 percent is deferred until a later point. You may want to throwin stock options or convertible debentures as well.
The Search
If you read my column "Getting Help From theExperts," you should hopefully already have an advisoryboard in place. Now is the time to turn to your advisory board andleverage their contacts. Assuming an official headhunter/executivesearch is out of the question due to the cost, you will need towork your contact database. Anyone who may know a potentialcandidate, send 'em the spec.
Making theChoice
If you're lucky, a few worthy candidates will come out of yoursearch. And if you're really lucky, they will fall within yourbudget. Set up an interview with the candidate, and invite yourentire advisory board. Get a sense for his or her personality,character and vision. You'll be handing over most of thecontrol to another person, so make sure you're comfortable withthat person. Ask tough questions; review the candidate's resumecarefully. If none of them seems worthwhile, don't forceyourself to pick. There should be plenty of good ones in thecurrent market environment!
This is just a brief overview of the general process; before youembark on a search, confer and consult with your advisors.They've probably done it a hundred times and will be able tolight the way for you.
Fourteen-year-old Ben Casnocha is founder, CEO and chairmanof ComcateInc., a San Francisco firm focused on providing technologysolutions for local governments. His work has been profiled in over50 magazines, newspapers, radio stations, TV outlets and Web sitesnationwide. Got something to squawk about? Write to Casnocha atben@comcate.com.
