As advisors, we’ve all come across clients who are the founder and leader of their companies, and felt like it was never the right time to let go.
Last week I was listening to a great story on NPR about whether Founder CEOs have a shelf life.
It focused on the concept of transition as the Co-Founder of Peloton John Foley stepped down as CEO, and moved into the role of Executive Chairman. Foley led Peloton through its entire ten year existence and will be replaced by former Spotify CFO Barry McCarthy.
The story points out other cautionary tales of massively successful retail brands, like FitBit and GoPro, that both turned down opportunities to sell, because their founder wasn’t ready to let go. Eventually, FitBit sold to Google, but only after it lost market share to competitors like Apple, while GoPro went public only to see its share price become a third of what it was.
It made me think about what so many of our clients face when the founder hangs on too long, trying to keep leading when they should let go.
One client I worked with struggled to let go, even after having fallen ill and spending several months in a coma. While to outsiders it looked obvious that the interim leadership had successfully filled the gap left by his illness and there was no longer a role for him in the company, he struggled with the challenges of letting go when it wasn’t how he had imagined it would happen.
The very real question of “How do I let go?” isn’t one that is resolved in a single moment. Like many significant questions in our lives, it is a process. He moved forward and then stepped back, again and again.
Listening to the NPR segment last week made me wonder and reflect about what that process had looked and felt like for Foley and for Peloton.
While the story that is presently being told about Foley’s transition makes it look like a smooth and seamless event, just a single moment of transition, it’s never quite as cut and dried as it seems. One has to wonder how much back and forth Foley did behind the scenes that no one gets to see. Like most founders, I wonder how he made the time to just slow down to even think about letting go, amidst all of the other responsibilities that come with running a company every day, and who his helpers were in coming to this decision.
On the surface, a founder’s reluctance to let go may seem that it’s about control, but sometimes control is what masks the bigger questions like “Who am I if I’m not the leader of this company?” “What if the company does better after I leave?” “What if the company struggles after I leave, will I be blamed?”
There are many public examples that affirm these founders’ fears. Bill Gates stepped down as CEO of Microsoft, only for co-founder Steve Ballmer to take the reigns. Unfortunately, Microsoft took a deep dive during Ballmer’s tenure as CEO, and it makes me wonder if another co-founder was the best person to take on the job of CEO. On paper, he sure seemed like the right fit, but it’s possible he was too close to the company to help provide the vision that it takes to grow. Being able to bring empathy to the unspoken fears founders struggle with as they contemplate letting go is what distinguishes you as a trusted advisor, instead of just another technician executing a transaction.
Bringing in somebody new to run a company can provide a unique advantage with a fresh influx of ideas. As companies grow, innovation is frequently what keeps the company afloat. When Microsoft was growing, their innovation was faltering, and the company took a great set back. Founders that created the company might think that they have the best ideas for the company-since the company was their idea in the first place-but we can remind our clients that sometimes innovation can also come from somebody else’s voice, with a different background and set of experiences.
Then there’s Jack Dorsey, the former CEO of Twitter who at one time was trying to be the CEO of Twitter and Square at the same time. How can we expect a founder to serve everyone well if they’re trying to do everything? As advisors, we can help our clients realize when they have spread themselves too thin. It’s common for owners to think they’re superheroes. However, it takes a trusted advisor to help them pull back when they’re overextending themselves.
It’s one thing to be a founder of a company, but it can be an entirely different thing to be a CEO and leader of a company. Our owners find out, sometimes the hard way, that they are not the ones best equipped to be in this position and it’s on us as advisors to recognize that there are a lot of feelings tied to that.
When you’re the best at one part of the job and you become CEO and then suddenly, you’re not the best at the job, how do you help them with the one identity that they have built? Sometimes they’re stuck finding that out themselves. How is it realistic to think that these people are going to come to these realizations on their own account?
Steve Jobs had to leave Apple the first time to be ready to be the leader it needed when he returned. He was a founder that found out the hard way at the time, he didn’t have the skillset the company needed to thrive. When he left, he gained more perspective and returned with a fresh vision for Apple that made it the global icon it is today.
Meanwhile, there are some leaders that have successfully managed the transition from founder to CEO. Examples like Mark Zuckerberg and Jeff Bezos come to mind, but, like NPR noted, these leaders are a rare exception.
Another client I’ve worked with has been in the process of an orderly multi-year transition out of the role of leading his company and, even with that well-thought-out and structured leaving (he, too, like the founder of Peloton, has moved into Executive Chairman role) it’s been an emotional journey.
Founders really do struggle with these questions of “When should I leave?” and “How do I let go?” They deserve the careful guidance of advisors who recognize that stepping away from something you’ve given birth to – like Foley has done with Peloton and like many of our clients will do with their companies – isn’t a one-and-done decision … it’s a process. There are so many emotions involved when they are so entrenched in their business. Their companies are their babies, the people that work there are like families, and often they think that they’re the best equipped to handle what’s happening at the company.
As I wrote in my article about the similarities between business owners and parents of college freshmen, there is an art to letting go. Much like how we need to let our children grow up, we must do the same for our businesses. If we coddled our children like we sometimes coddle our businesses, they would never be successful. They need time to grow up on their own, without their parents, and make their own way forward. As advisors, we can help our clients realize when it’s time for them to let go, before it’s too late.
The Seller’s Journey is a great tool for you to use to help your clients find when it’s time to let go. I encourage you to share it with your clients to give them an example of an owner that’s going through much of the same emotional journey they are going through. Together, we can help our clients do what is best for them and their companies, treating the process like a transition, and not just a transaction.
