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E02 — Getting Out of the Way with Adam Fudakowski

Adam Fudakowski, founder and ex-CEO of Switchee, reflects on the journey of handing over the CEO title to an external CEO.

(This episode has a description of suicide.)

Adam founded Switchee ten years ago, but he hasn’t been running it since 2020. Four years ago, he handed over the CEO role to Tom Robins, an external hire. The next episode will be with Tom, so we’ll see the same CEO succession from his perspective.

The business has been doubling in size every year for the last seven years, except for the covid year, so we can say with confidence that the CEO transition was a success: the company continued to grow from strength to strength under the new leadership, just like it did when Adam led it.

In this episode, Adam and I explore the reasons that led to him choosing to hire a new CEO, the transition process from him to Tom, the differences between the founder and CEO skill sets and the impact of taking three months off for a sabbatical during the CEO succession.

Self-awareness

What I love the most about this story is Adam’s self-awareness that helped him recognise that while he took the business from an idea to a functioning company, Switchee needed a different skill set to keep growing:

I would like to feel like I could have done the whole thing on my own, but the reality is that I couldn't, and I think I've got an important, but specific skill set, the sort of product-market fit person. Are you somebody who can make something out of nothing and find a few people to buy it?

And I'm not the person who's gonna design a great org chart or put all the kind of skills and resources in to scale up to 150 people.

In fact, Adam planned to stay as a CEO only for as long as he’s the best person from the start:

My feeling as an entrepreneur is that my job is to do myself out of a job. That's always been my notion that if I could kind of hire somebody to do what I was doing, that was great.

And so, I've always been sort of questioning, Am I adding value to this, to this business or should I go on and do the next thing?

I didn't feel like I was the right person for that next stage, but that's okay. Like, the business has done well. I think it's healthy to always be trying to do yourself out of a job. It's a healthy kind of mindset for, for an entrepreneur to have.

Two-stage appointment

Tom was first appointed as a Head of Strategy before being promoted to the CEO role. This is a common tactic, as I discuss in my book Startup CEO Succession.

It serves two purposes. First, it acts as an informal probation period, ensuring that the candidate is a great fit before the change is announced. Second, it allows the candidate to change their mind without having a very short stint as a CEO on their resume that might be hard to explain.

Sabbatical

Just before the formal appointment of Tom as the CEO, Adam went on a three-month sabbatical, which allowed him to rest, recover and reflect on how his role will change going forward. For Tom, it was an opportunity to lead the company without having the founder looking over his shoulder.

Looking back, it seems to be an amazing idea and I wonder if more CEOs in transition should be doing it.

Three marriages — with the same person?

Adam referenced this wonderful quote from a relationships therapist Esther Perel:

"Most people are going to have two or three marriages or committed relationships in their adult life. Some of us will have them with the same person."
— Esther Perel

It’s the same with startups: most will have two or three CEOs, and in some cases it will be the same person.

The job of a CEO changes massively as the company grows. Founder CEOs need to recognise this and either get out of the way or reinvent themselves completely.

Getting out of the way

A common mistake founders make when stepping down but staying involved in the business is not getting out of the way of the new CEO. Adam and Tom brilliantly navigated it, having renegotiated their roles and working relationship in a way that allowed them to keep working together in a new capacity.

If you've been Chief Exec for a while, there's your day-to-day, and you sort of need to drop it all and then reinvent yourself.

You need to come up with a different role. Even if you don't have the title, if you end up stepping back into the same roles as you had before, it's kind of a recipe for disaster, in my opinion.

If you're being recruited into a Chief Exec role, you're potentially entering a minefield, right? You don't necessarily know if the founder's actually going to step back. And the founder might not know themselves.

So as the incoming CEO, setting some boundaries and expectations about who's going to do what, I think is, has got to be really important.

Parting advice

Here are some of the key pieces of advice that stood out:

And at a certain point, like in the founder's journey, I think a lot of founders experience this sense of dread of coming into into work in the morning, which is kind of normal to a certain extent, but maybe once it sort of exceeds a certain limit, that's the time when you probably need to start thinking about stepping away and finding someone else.

That should be a standard part of a board discussion. It's probably what a good chairman does: to, to have that kind of regular and somewhat intimate discussion with a, with a founder, where they feel they can openly share thoughts and feelings about, about the situation to normalise discussing it and to... for it not to feel like it's anything of a failure.

If you have too much influence in your own company, you can end up sending the company in all sorts of different directions, just throwing grenades in.

The ex-CEO founder needs to make sure they don't throw in too many grenades into the scaling machine, right?

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Discussion about this podcast

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Startup CEO Succession
Real stories from founder CEOs who stepped down, professional CEOs who took over from them and VCs who saw the process from the inside.