Marcos Dantus appeared to be living the entrepreneur’s dream. In 2003, as a chemistry professor at Michigan State University, he founded BioPhotonic Solutions, a laser technology startup. Over the next 10 years, he gradually turned it into a $1 million company, taking little outside investment along the way.
His next move as a successful CEO? Stepping down.
“I am an academic researcher and inventor without an MBA, and I realized I needed to bring someone in who knows how to take it from $1 million to $10 million,” says Dantus, now chairman and chief technology officer.
His self-demotion reflects a hard truth for entrepreneurs: No matter how much you love the company you started, you probably won’t get to run it for long. Almost half of founders are out of the CEO spot within four years of starting up, and fewer than 25 percent stay there until an initial public offering, according to research by Harvard Business School professor Noam Wasserman. Sometimes that’s purely your decision. But you’re also at risk if you’ve given a significant stake to outside investors, who frequently demand changes in how their portfolio companies are run. “Founder-CEO replacements often happen later than the investor wants, but almost always sooner than the founder wants,” says Wasserman, who has studied hundreds of such transitions.
So, realistically, what do you want to do next? There are a few options, depending on your industry and how involved you want to be with day-to-day operations.
Get back to basics
Many founders of tech and life-science companies take on the role of chief technology officer or chief scientific officer. (No surprise there.) If you are in the business of design, food, or other consumer goods, becoming chief product officer might make the most sense. Whatever you do in your new job, choose a title that will indicate your continuing authority, says Carter Weiss, a venture investor with consumer-brands-focused Silas Capital. “If the company’s fate is being decided–merger, IPO–the first call won’t be to the chief inspiration officer.”
For founders who want to remain involved in operations, leading the board of directors is a common move. Think Reid Hoffman of LinkedIn, for example (see sidebar below), or Jeremy Allaire of online video company Brightcove.
Jump before you’re pushed
Whatever new role you want, making the first move is important. Nearly 75 percent of the founder-CEO changes Wasserman studied were initiated by the board or other nonfounders. But when founders took the first step, they generally fared better. “Founders who take control of the process are more likely to be able to dictate the terms of the transition: They are more likely to stick around, and to have a C-level position,” says Wasserman.
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