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From Google to Microsoft — What Made These Founders Hire a CEO?

April 1, 2020    |     4-minute read (705 words)

In 1987, Intel cofounder Robert Noyce handed the reins of the company he co-founded to Andy Grove, who led Intel through a period of exponential growth — from 1991 through 1996, Intel’s revenues grew by 336 percent, with a profit margin of nearly 25 percent.

Last year, when Google cofounders Larry Page and Sergey Brin announced that they would step down from leadership positions as Alphabet CEO and president, respectively, Google CEO Sundar Pichai stepped into the CEO role at the parent company in addition to his existing role as Google CEO prompting Alphabet's stock to rise.

Microsoft's share price grew four-fold under Satya Nadella after less than five years of his taking charge. And under Nadella’s control, Microsoft continues to be one of the biggest and most important companies in the industry.

In January 2019, Sasha Orloff took the plunge and announced he was stepping down as CEO of LendUp, the company that he had cofounded with his stepbrother and scaled over seven years.

What Prompted These Decisions?

There are many such examples of founders/cofounders who stepped down as CEO or hired a new CEO. This begs the question: What made these successful entrepreneurs decide to hand off the reins?

According to Orloff, LendUp had reached the point where what it needed and what he was good at had become very different things.

Co-founder of Seedrs, Jeff L’s decision to hire a CEO was due to the “increasing difficulty managing both organic growth and strategic big best opportunities.” By constantly switching between two mindsets and rhythms, Jeff L felt he could no longer be as effective as he wanted to be.

To be a successful growth-stage CEO, an entrepreneur needs to be ready to manage a massive organization and devote considerable time to tasks such as running meetings and other business processes, according to LinkedIn’s co-founder Reid Hoffman. A CEO progressively needs to focus on process and organization, and that was not what Hoffman was passionate about, so he relinquished control, he noted.

Earlier this year, Fastly founder Artur Bergman announced he would be stepping down as CEO, less than a year after his internet infrastructure company went public. In a letter to his employees, he said, “At my core, I am a developer. My true strengths and passions lie in building the architecture and innovation, including our compute platform.” He has since moved into the role of chief architect and executive chairperson.

After founding Chipotle in 1993 in Denver, Steve Ells served as CEO through November 2017, when he bowed out in the wake of food-borne illness scandals that sent the company revenues plummeting. He issued a statement that read, “Bringing in a new CEO is the right thing to do for all our stakeholders. It will allow me to focus on my strengths, which include bringing innovation to the way we source and prepare our food.”

A Business Can Be Like a Child

In a joint open letter announcing their decision to step down last year, Page and Brin likened Google to their child. They wrote, “Today, in 2019, if the company was a person, it would be a young adult of 21 and it would be time to leave the roost. While it has been a tremendous privilege to be deeply involved in the day-to-day management of the company for so long, we believe it’s time to assume the role of proud parents — offering advice and love, but not daily nagging!”

Chris Costello, who co-founded Blooom with Kevin Conard and Randy AufDerHeide in 2013, shared the sentiment. He explained, “When you start a company, it becomes almost like a child. It’s a very emotional decision to think about not having the reins to that company.” In 2016, Blooom hired Matt Burgener as chief marketing officer and later promoted him to CEO. “I get to do what I do best — evangelizing the Blooom mission — and Blooom gets a better CEO to lead it on a day-to-day basis,” Costello added.

There is no one-size-fits-all approach for when and how a founder/CEO should step back. However, a well-timed transition from the founder/leader to a judicious successor can take an already successful company to even greater heights.

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