REID HOFFMAN: Here's When And How A Founder Should Step Down

More recently, those examples have been overshadowed by phenomenally successful founder-CEOs, like Jeff Bezos, Steve Jobs, and Larry Ellison.

In a blog post yesterday, LinkedIn founder Reid Hoffman gave a detailed account of his own experience of relinquishing power, his mistakes, and how he thinks the transition should go.

Hoffman loved the early stages:

"The small team, building a brand-new product, out-innovating complacent incumbents … not only is the experience fresh and exciting, it also focuses on the things most founders love — especially technical ones: solving interesting problems, developing new technologies, devising a unique strategy."

But should you succeed and enter a growth stage, you have to love business process and management just as much.

That wasn't the case for Hoffman.

"... as we scaled from a handful of people in my living room to dozens of people at an office, I saw the job of the CEO shifting. At 50 people and beyond, a CEO increasingly has to focus on process and organization, and that wasn’t what I was passionate about. For example, I didn’t like running a weekly staff meeting. I could do it, but I did so reluctantly, not enthusiastically."

He wanted to step back and focus on strategy instead of salaries and timelines. So he hired David Nye, a "gray haired" CEO with an impeccable organizational record to do the ground work.

It didn't work. Product cycles are too short now to separate organization, strategy and product. If you wait for someone else to execute your vision, it's too late, even if they're great.

If it’s ideal for a CEO to have the knowledge, moral authority, and commitment of a founder, the answer is simple: Your transition process should bring the new CEO in as a co-founder of the company, not as an "adult supervisor."

A co-founder is very different from a manager. For Hoffman, that was Jeff Weiner.

Hoffman's point is that if a founder's not the right person to be a long-term CEO, they'll know pretty early on. They're better off swallowing their pride and stepping down on their own terms. When it's not forced, they can take the time to find someone whom they trust with both day-to-day operations and long-term strategy, and with whom they actually get along.

And when it's done early, companies are less likely to stall out during the transition.

Read the full post here

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