CEO Transitions

http://www.avc.com/a_vc/2011/01/ceo-transitions.html

by DanielH • 16 years ago

71 5 16 years ago

avc.com

erikstarck• 16 years ago

There are three kinds of CEOs:

The leader who inspires.

The manager who administers and nurtures.

The entrepreneur who creates and innovates.

Some CEOs have all three of these characters in them but most lean towards one of them. A company needs a different leader type at different phases of its life.

What kind are you?

TomOfTTB• 16 years ago

On Google he mentions Etsy as an example but there are also quite a few famous examples.

Microsoft was essentially run by Jon Shirley in its early days. People forget Steve Jobs was never CEO of Apple before he returned (most seem to think he was CEO before hiring Sculley but that just isn't true). I even remember Jim Barksdale commenting on how he expected Marc Andreessen to eventually take the reins at Netscape.

So there's a long tradition of founders stepping aside at first only to take over the company at a later date.

netcan• 16 years ago

If you think of what a company does to explore & exploit, you might characterize CEOs as being stronger in one or another.

I don't think you can say that Google under Schimdt has been weak in the explore department. Operating systems, web based office, video maps. BTW, I think every one of them can eventually be tied profitably to their core business.

Exploit, on the other hand, has been very effective but not really all that creative. If I was a google shareholder I would want to see them try to focus on the glue that ties these new services to their main business.

Google's customers are a massive asset. One that I think is hard for technical people to understand unless they spend some time working with them. Salt of the earth businesses. Electricians, cleaners, removalists, doctors, lawyers. These guys pay sums that would have been thought impossible to extract from small businesses. They pay, and they are hungry for more stock. Then, they have a massive ecosystem of consultants who can sell Google services to them and make them work for them.

All they have to do is find ways to grow the stock. That's why I think the Groupon interest is a step in the right direction. They don't need to go out and hussle to find businesses for it. They have them in bulk.

fingerprinter• 16 years ago

In one VC funded company I saw three CEO transitions: Founder CEO -> Outside CEO #1 -> Outside CEO #2.

The first transition, Founder CEO -> Outside CEO #1 was very smooth. The outside CEO has a three time CEO who had run both very small and very large companies. He had experience, passion, compassion and understood what it took to connect with people and customers. He could sell most anything.

The company took off under him. He was able to reign in finances and inspired people to work hard and get things done. We started to dominate our market and our tech was the best in the industry. In about 2.5 years we had near zero voluntary attrition and we built a great team.

Outside CEO #1 left for personal reasons and everyone thought Founder CEO might step up and become the CEO again. He didn't and we hired Outside CEO #2 instead (Full disclosure, I was involved in the process of hiring outside CEO #2. I preferred another candidate but didn't have senior voice in the matter).

Outside CEO #2 was a disaster. We had become accustomed to transparency at the highest level in the company and we got less and less until we got none from OCEO#2. He also hired people he knew for senior positions in the company without having those people interview for their positions (He actually had two people hired before he even started....he had two people displaced from their current roles for these two individuals). Those people started to hire people they knew without interview process and the cycle perpetuated.

Voluntary attrition of old/founding employees skyrocketed from 0% over 2.5 years to 60% in 10 months. Sales slowed, current customers were not happy with latest revisions of product and changes in customer engagements. We started to bleed money and needed to take a down round and then a D round of funding at a much lower evaluation. Our competitors started to fly by us as they started to do things we needed to do, knew we needed to do and had tried to do but were shot down for not being "strategic" by OCEO#2 and his new executive team.

18 months later the company is still in business but has lost all employees that were pre OCEO#2. Market has passed company by. Board is investigating what has happened and why attrition is so high but I fear it is too late (I say fear b/c I still have stock).

So many lessons learned from this experience. I feel I know so much more for having gone through this experience, both the highs and the lows. I feel for the Founding CEO, but he could take it back at any moment, and I hope he does. He will have a much harder time rebuilding the company, but he will also have lower expectations as OCEO#2 is such a disaster nearly anyone would be better.

alain94040• 16 years ago

I can't share the details but your story is spot on.

CEO Transitions

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