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Transitioning from a founder to CEO is a delicate dance. On the one hand, founders have vision, passion and a deep understanding of their business — after all, they did create it.
But the qualities that make a successful founder don't necessarily translate to the next phase. History is littered with examples of entrepreneurs who held on too tight, unable or unwilling to relinquish control even after it became clear it was time. Some especially dramatic examples from recent years include Uber's Travis Kalanick and WeWork's Adam Neumann, both of whom clung to power with misguided ferocity and were eventually ousted.
What separates a successful founder-turned-CEO from a failed one? As someone who remains the head of my company, Jotform, after founding it nearly 20 years ago, I've got some insight into what it takes to make the leap.
Related: 8 CEO Mindset Quotes That Keep Me Honest and Inspired
The benefits of bootstrapping
The data shows that founder-CEOs can be wildly successful. Among the unicorns founded in the last 15 years, 65% have retained their original founder as CEO, writes Ali Tamaseb in his book Super Founders: What Data Reveals About Billion-Dollar Startups. Of those that were acquired or had an IPO valuation of more than $1 billion, 73% were founder-led at the time of acquisition.
But problems can arise for founders who find themselves suddenly beholden to VCs. Exponential growth and rapid scaling often don't leave founders with the time they need to learn to be good CEOs — and believe me, becoming a good CEO doesn't happen overnight. For evidence of this, look no further than the catastrophic meltdown of Groupon founder Andrew Mason, an undeniably smart guy whose product rocketed to popularity (and nearly unprecedented funding levels) faster than he was prepared to handle.
Bootstrapped founders have the advantage of growing slowly, which gives you much more time to learn the CEO ropes. In many ways, bootstrapping can be seen as a masterclass in leadership. I was a coder when I started Jotform and had zero skills in management, marketing, business, accounting, sales — the list goes on. But as my company grew, so did I. Having my hands in so many facets of Jotform's operations helped me understand my own weaknesses and what I needed in a team to help it flourish.
Related: How Mindset Plays a Role in Your Entrepreneurial Success
Staying on vs. stepping back
Of course, any founder, bootstrapped or not, can fail to become a good CEO. In his book The Hard Thing About Hard Things, Ben Horowitz argues that effective CEOs have to understand not only what to do, but how to get their companies to do those things. The second part tends to be more challenging, especially as a business grows and its operations become more complex. After all, tasks like streamlining operations, lowering costs and balancing the management of employees, products and services bear little in common with the skills required to launch a successful startup.
In a data analysis for Harvard Business Review, Bradley Hendricks, Travis Howell, and Christopher Bingham determined that while founder-CEO leadership is associated with nearly a 10% higher company valuation at IPO, the value of having a founder at the helm rapidly deteriorates afterward. Furthermore, they found that the value added by a founder-CEO "essentially dwindles to zero" three years from the time the firms go public; after that, they actually detract value from the company.
The authors note that these are only trends, and it's not hard to conjure a list of founder-CEOs who have excelled. But I believe there's value in simply being aware of the differences between the two roles. A caterpillar who emerges from a cocoon as a butterfly can't expect to continue living life as a caterpillar, crawling around plants and munching on leaves. That just isn't what butterflies do. Acknowledging that your day-to-day as a CEO will look fundamentally different from your day-to-day as a founder is step one.
Whether you should stay on or step back is a question only you can answer for yourself. What aspects of the CEO role actually appeal to you? Are you staying on because you have the desire and dedication to become a great CEO, or because you're convinced no one else can possibly lead the company successfully?
Related: 3 CEO-Level Mindsets That Create Freedom and Financial Independence
Establish your priorities
Being a CEO doesn't mean you can handle every aspect of operations. Nor should you want to — not only is it impractical and a poor use of your time, but undoubtedly, there's someone else who can do it better.
Instead, assess what aspects of your business interest you most, and where you can add the most value. Once you've established your high-level priorities and figured out what you — and you alone — are best suited to do, it's time to delegate.
I agree with the take of Rich Barton, co-founder and CEO of the Zillow Group, who said that becoming a "leader of leaders," rather than merely a "leader of a team," takes a growth mindset, humility and hard work. In a rapid growth situation, responsibilities outgrow capabilities, and it's a CEO's job to recognize this — even as it applies to the CEO role itself.
"Leaders will need to be up-leveled and supplemented with outside talent," he says. "Founder/CEOs who are not able to do this will ultimately be up-leveled themselves."
It's also essential to be open to advice and feedback. Of course, your stable of resources should include other CEOs, books and podcasts, but I think it's also valuable to talk to peers who can relate to your challenges but also offer you a different perspective to counterbalance your own.
There is no one-size-fits-all approach to becoming a great CEO. But you do have to be honest with yourself about whether it's a job you really want, and moreover, whether you want it for the right reasons. If you do, you have to prepare to establish your priorities, adopt a growth mindset and challenge yourself to do what's best for your business.
