

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

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

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erikstarck
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?

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TomOfTTB
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.

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netcan
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.

