I was asked that question yesterday by a serial entrepreneur who is wondering why founders get replaced, what makes the board decide to hire a new CEO.
This is one of the most touchy subject a VC can discuss with an entrepreneur. Now, having been a serial entrepreneur, and now a VC, I can safely ask myself that question and answer myself with candor. Here it goes:
- entrepreneur-me: why do you guys insist so much on hiring a new CEO to replace the founder?
- vc-me: first, let me list all the things that we do NOT intend to do: 1) founder replacement is not our favorite sport; 2) replacing a CEO is always a traumatic event, so we do not like doing it; 3) there is no nefarious take-over-the-company intent - if we wanted to be CEO, we would start companies ourselves.
- e-me: don't you understand that if you take me out, the company will die?
- vc-me: as they say, cemeteries are full of irreplaceable people. That being said, please understand that starting a company is a team sport, nobody can play all positions on the field. As are most founders, you are an extraordinary technical innovator, but all startups get to a point where other skills are as important. If you have the right skills for the next stage of the company, great, this is my favorite case, you keep running the ship. But if you are not the top player for the skills needed at this time, doesn't it make sense to bring in the superstar that we all need?
- e-me: yes, provided you get the superstar. But most of the time, you guys will hire the candidate who interviews well, and who will follow your every whim. And that guy will kill my company!
- vc-me: all right, good point, the hit rate of CEO hiring is actually quite poor. So you'll need to help me pick the right person - but I need to trust you that you are committed to this change and will not just block every candidate that shows up at the door!
And here, dear reader, several endings to the story are possible. We will explore the possible developments in my next postings.
Until then, just keep your job!
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