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Why these founders passed on the role of CEO

Written by Zen Terrelonge on Thursday, 12 July 2018. Posted in Leadership, People

Admitting you need help as an entrepreneur is no easy thing, especially when the business is something you’ve put your heart into. But sometimes the decision is for the best

Why these founders passed on the role of CEO

It’s common for entrepreneurs to refer to their businesses as their babies. So like the process of handing your child over at nursery for the first time, it’s fair to expect the process of bringing in a new leader to helm your firm as uncomfortable or even upsetting. Surely they know the business better than anyone else since they created it from their imagination?  Why replace the founders at all then?

In some cases, like that of Apple co-founder Steve Jobs who was famously exiled by his business, because they were ousted by the board. “How can you get fired from a company you started?” Jobs said in a speech at Stanford University. “Well, as Apple grew we hired someone who I thought was very talented to run the company with me and for the first year or so things went well. But then our visions of the future began to diverge and eventually we had a falling out. So at 30, I was out. And very publicly out. What had been the focus of my entire adult life was gone and it was devastating.” Of course, we know that the ejection was short-lived and he took the tech firm to heights beyond anyone’s wildest dreams.

But leadership reshuffles don’t have to be this brutal. Google founders Larry Page and Sergey Brin promised investors in 1998 they would appoint a CEO and later seemed to regret the agreement, that is, until they met Eric Schmidt who took on the role in 2001 to great success. Brin said at the time that the search for a Google CEO was to provide “parental supervision”.

However, it’s not just Silicon Valley top dogs who’ve taken on other jobs in the pack. Justin Broadbent, the founder of isoenergy, the sustainable energy installer, has been there and done it when it comes to bringing in external leadership. “Initially, I was involved in importing and installing systems with the help of a couple of plumbers,” he says of his early duties when he launched the company in 2006. “I was actually installing the systems – and installed one in my own house at the time – so my role was both practical and managerial.”

By 2011 when the business had grown to 15 members of staff, Broadbent knew it was time to bring a in CEO. Although he wanted to retain control, partly to keep costs down, he admitted he was preventing further growth by holding too tightly. “Having been in business for a while, I understand that most companies will eventually get to the point where they simply cannot be run by just one person,” he says. “Plus I’m rubbish at organisation and administration of any kind.

There came a point where I had to accept the business needed more than I could offer on my own.” The key attributes he sought in a leader were stability and maturity as well as solid business and technical knowledge, which resulted in him hiring someone he knew outside of the business – from their children being friends at school. “I knew him in a way that can’t be achieved through a standard interview process and I can confidently say he is one of the better hires I have made over the years,” Broadbent declares.

These days, he’s still hands-on but has more freedom, likening himself to someone we’re all familiar with. “Nowadays, I concentrate my efforts on selling to clients and acting as a figurehead for the company – a bit like the Queen really,” he laughs. “Most business decisions can be made without me sticking my oar in but the CEO knows to come to me and the board if there is a particularly significant strategic decision to make. Know your limitations and don’t be too proud to bring in others to fill the gaps.”

Elsewhere, Harvey Bowden founded Harvey Water Softeners back in 1978 as a man-in-a-van outfit. Selling water softeners from the US prompted him to build a better British-made alternative. As founder and CEO, Bowden was juggling accounting with new businesses and installations with HR and management. These days he is non-executive chairman but his first step to stand down was by handing the keys over to his son who worked alongside him, rather than someone from outside the business. “The second part was three years later when we appointed our first external MD – that was made easier because the handover process had already begun,” he says.

Bowden was aware the situation wasn’t necessarily going to be easy had he been too stiff to the changing dynamics of the business. “I believe that once you’ve handed over it’s important to get out of the way quickly to let the next leader make their mark,” he opines. “That’s what I’ve tried to do.”

Interestingly though, unlike Broadbent, Bowden didn’t actually realise there was a need to appoint a new leader because they were so engaged in the day-to-day. He explains: “We’d brought in Martin Hurworth as technical director and he made such an impact to that department that we realised ‘here is someone who will be able to run the business better than we can.’ Two years later we’d made him MD.” Bowden says that he and his son are both more hands-on entrepreneurs, not built for running what is now such a large enterprise. With the addition of Hurworth, staff count has trebled to over 300 and turnover rose from £11.5m in 2012 to £26.5m in 2017. “We’re on course to hit over £30m this year,” he adds. “None of this would’ve happened without us bringing in external expertise.”

While Bowden’s decision to step aside came from a desire to see the business scale, other leaders do it out of boredom. That was the case for Julian Hearn, founder of Huel, the nutrition brand. Coming from a marketing background meant he was happy acting as CMO, brand designer, copywriter and all things associated with his past realm. However, he found the duties of being the head honcho mundane. “A CEO has to get involved in finance, ops, systems, etc,” he says. “All important areas but ones that don’t excite me. For me. brand and marketing drive the success of a business and I felt that I wasn’t giving it due care and attention.”

Two years after launching and, still unexcited by CEO duties but finding more stacking up on his plate, he knew it was time to recruit. Unsurprisingly, it wasn’t a hard decision to make.

“I don’t have a big ego so I’m not worried about handing the CEO title over to someone else,” he says. “I’m still heavily involved in Huel and being CMO suits me better, I can add the most value in that position. And I know the rest of the company is being looked after by someone with more knowledge of running a large organisation.” With awareness as a key component for the job, Hearn also sought an individual with experience in food and crucially, without a marketing background to avoid conflicts. He managed all the interviews personally and was confident when he saw James McMaster on LinkedIn. “I still interview everyone before they join Huel,” he reveals.

Hearn admits though that a relaxed sense of communication is needed on both sides to make the transition work out well with minimal issues. “James is very patient with me,” says Hearn. “Huel is my baby so I get very passionate sometimes but he keeps calm which in turn, calms me down.”

Closing with some advice, Hearn adds: “Only give up the CEO role because you want to not because someone else wants you to. [If that’s the case] stay on the board and give yourself a real and important job role so you are still involved in the direction of the company.” 

About the Author

Zen Terrelonge

Zen Terrelonge

As web editor, Terrelonge can be found combing the internet for all things startup – that's when he's not busy talking babies via DADult Life. Whether it's health or hospitality, food or philanthropy, tech or travel, he'll be seeking out the most interesting entrepreneurial developments to run online.

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