Big News: FounderDating is joining OneVest to build the largest community for entrepreneurs. Details here
Latest Notifications
You have no recent recommendations.
Name
Title
 
MiniBio
FOLLOW
Title
 Followers
FOLLOW TOPIC

Question goes here

1,300 Followers

  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur

At what point should I give up my CEO role to someone more experienced?

There seems to be a good amount of Venture Capital firms that past the Series B round, even if the CEO is doing a good job, they still want to bring onboard someone more experience and letting the founding CEO go. Not sure if you all have any words of wisdom here.

4 Replies

Jerry Mahabub
3
0
Jerry Mahabub Entrepreneur
Chairman of the Board and CEO at Astound Holdings, Inc.
If necessary, before agreeing to leave the helm, negotiate for setting up a preferred series class of stock (limited to the Founder only) which does one thing only - gives you the right to appoint one of two board members in perpetuity (making sure you always have a seat on the board or you and if possible you plus one other person, which you can appoint and de-appoint the seats whenever you want), and these shares convert to common 1:1. Also, big severance, and continue as part of the operating Sr. Management team with same or higher salary. A lot of warrants (10-year minimum) with a cashless exercise. If company owes you any money through loans, expenses, all debt owed you should be paid in full (or some settled amount). You could also ask for performance milestones, and if new CEO does not meet them, within a certain period of time, you take back the helm. Also, make sure indemnification sticks so you do not get blamed for something the new CEO did, especially when dealing with securities laws. Last, require that any new D&O policy or current policy continues to protect you in the event a shady shareholder or group of shady shareholders go running to the SEC with a bunch of nonsense and bull crap. (there needs to be an government organization that protects us Founders and CEO's from shady shareholders just same as the SEC (allegedly) protect shareholders from shady CEO's/Founders). Last, make sure you review your employment agreement and look at what it says regarding "termination without cause", did it have severance T&C's built-in, and get a good lawyer for this process so you don't get the shaft where the sun don't shine. Otherwise, hold your position at the helm, unless the board can outvote, and then it still falls under termination without cause.
Jake Diner
0
0
Jake Diner Advisor
Founder and CEO at Elafris
I have first hand experience in this. I can share, connect with me privately via [removed to protect privacy]
David Johnston
0
0
David Johnston Entrepreneur
16 Patent Claims Granted in Artificial Intelligence, NLP, IoT & Mobile SMS/Chat/Text Messaging
I have done this multiple times because I am more suited for the CTO role. The problems I faced were related to "domain knowledge" of the new CEO.

If they don't know your industry inside and out, there will be a tug of war between you and your team and the new leader. Problems especially arise if your team ends up circumventing the new CEO and going to you because they can't get their questions answered.

This can lead to that new CEO trying to permanentlyget rid of you. They can win investors over by giving them ammunition against you and increasing their % by revoking your shares, etc.

Focus on board control. Being "CTO" and also "President" can be a good option as long as "product" vision and the technology is under your direction and the new CEO's job description is clear and focused on other things like "Marketing," "Raising Capital," "Investor Relations," "Strategic Partnerships," etc. etc.

If you do step aside, make sure you give the new CEO 150% support and don't contribute to or cause any problems, especially between them and other team members. Put your heart into it or don't do it in the first place.
Rod Abbamonte
0
0
Rod Abbamonte Advisor
Co Founder at STARTREK / @startupHunter / @startupWay / @CoFounderFound / @GOcapital / @startupClub / @lastminute
When he fails to deliver results.
Join FounderDating to participate in the discussion
Nothing gets posted to LinkedIn and your information will not be shared.

Just a few more details please.

DO: Start a discussion, share a resource, or ask a question related to entrepreneurship.
DON'T: Post about prohibited topics such as recruiting, cofounder wanted, check out my product
or feedback on the FD site (you can send this to us directly info@founderdating.com).
See the Community Code of Conduct for more details.

Title

Give your question or discussion topic a great title, make it catchy and succinct.

Details

Make sure what you're about to say is specific and relevant - you'll get better responses.

Topics

Tag your discussion so you get more relevant responses.

Question goes here

1,300 Followers

  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
Know someone who should answer this question? Enter their email below
Stay current and follow these discussion topics?