LinkedIn Co-founder’s Way to Hire a CEO

“You always do want a Founder-CEO. But that person doesn’t always have to be the Founding CEO”

Photo Credit : Business Insider,

There comes a time in an entrepreneur’s life where he or she may have to consider hiring an outside CEO. While how gut wrenching it is to make this decision isn’t questioned, it may be a necessity at one point.

Reid Hoffman, co-founder of LinkedIn went through the same thought process in 2005. Here’s an edited excerpt on that pivotal point in LinkedIn’s (and his own) life from his website, in Reid’s own words:

20 years ago, the classic startup model was to have young founders start a breakthrough company, then bring in “grey hair” in the form of experienced executives once it was time to scale the business. Key examples included Cisco, Yahoo, eBay, Google, and many smaller companies.

In the last decade, however, that common wisdom has shifted, at least for consumer internet companies. The new received wisdom is that the best entrepreneurs can stay CEO through the entire growth cycle of the company. Think of Jeff Bezos, Larry Ellison, or the late Steve Jobs.

The question is, why has this shift occurred?

Last year, Ben Horowitz of Andreessen Horowitz articulated a well-thought-out philosophy on why he prefers to back Founder-CEOs … [and he] lays out three key ingredients that great founding CEOs tend to have, and that professional CEOs often lack:

1. Comprehensive knowledge
2. Moral Authority
3. Total commitment to the long term

Ben’s point is that without these three key ingredients, a CEO won’t be able to maintain the rapid product innovation that is a prerequisite for success in today’s startup world.

Once you decide to evaluate the option of bringing in a professional CEO for your start-up, the real questions are, “Should I replace myself?” If the answer is “yes,” then “How do we make the transition?” And once you make the transition successfully, “How can I play a constructive long term co-founder role at the company?”

How do I know when to replace myself?

I love the early stages of building a company. 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 if you’re successful, the job of being CEO shifts dramatically over time. All of a sudden, you need to focus on a different set of challenges and concerns like establishing standard procedures and managing a large number of employees.

To remain successful, you have to be passionate about that kind of work as well. Ask yourself, “What am I focused on? What am I world-class at? What am I really committed to?” The answers will help you determine if you should bring in a CEO.

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. I’d rather be solving intellectual challenges and figuring out key strategies, not debating which employees should get a promotion, or configuring project timelines.

I co-founded LinkedIn in 2003, and by 2005, after asking myself the key questions about my passion, focus, and commitment, I knew I wanted to bring in a CEO. When I brought this up with my main VC, David Sze at Greylock, he had the same reaction I suspect I would have had: “Are you sure? Couldn’t we just hire a COO and have you stay as CEO?”

I had thought about the COO option, but I knew that the company needed someone who felt like they “owned the ball.” And I was confident I could partner well with a CEO, given my experience partnering with the various CEOs of companies being on the board.

How do we make the transition?

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.”

You always do want a Founder-CEO. But that person doesn’t always have to be the Founding CEO. Being there at the start isn’t the only path to being a founder. “Founder” is a state of mind, not a job description, and if done right, even CEOs who join after day 1 can become Founders.

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