In the previous episode I spoke to Adam Fudakowski, a founder of Switchee, about his decision to step down as CEO and hire Tom Robins as his successor.
In this episode, I speak with his successor Tom about the same CEO succession, but seen from the vantage point of the incoming CEO, rather than a founder.
Getting your first CEO job
As Tom describes, he had the skills and believed he could be a great CEO, but getting the first job competing against candidates with previous CEO experience was hard.
And then [Adam] dropped me an email and he was like:
— Look, I've been doing some thinking. I'm thinking about moving on as CEO. Would you be interested?
You're like… I like… so… Yeah! Right? Absolutely! It's sort of a phone call you're sitting there waiting for it at some point. And you're like, Yeah, that would be great. I'm pretty, I'm pretty keen for that.
Having said that, that moment in company’s history wasn’t without its challenges:
— Have you sold a lot?
— Yeah, not really…
— You know, any big customers, the pipeline?
— Yeah, not really…
— You got any cash?
— Yeah, not really...
—What's your burn rate? Ooh, okay...
Founders vs operators
Tom goes deep into how he sees the difference between founders and operators.
I think entrepreneurship is a psychosis, because in order to do it, you have to a point suspend reality
If you look at it as a set of requirements, it's very similar to madness, right? Because you have to look at something and you firstly say, right, so 99 percent of small businesses fail. So I'll start one. Okay, cool. Right. Strong. Interesting. Just looking at the stats alone, right?
I'm the test pilot, right? I'm the guy that goes, Okay, we've got a few bits here. You know, you've been working in your drawing room and smashing this out. We can make this fly. We can do this.
Winning the trust of the senior team
Tom initially joined as Head of Strategy.
You don't want to come in as the CEO elect because then people actually come on, come across relatively negative to start with, you're sort of on the defensive. The thing about the chief strategy role is, it sort of means everything and nothing. So it can largely be whatever you want it to be.
I'm probably giving away all the secrets here, but it's a nice title and it gets you where you need to go and that gave me then the time to spend with the team to build up those relationships and to make the transition to Chief Exec in my mind obvious.
As we’ll see in other episodes, it’s a common strategy to make the transition less abrupt. (A hint to startup employees: if a new person joins the senior team with a broad remit in an “optional” role, that’s a sign a CEO succession might be happening.)
A three-month sabbatical
Tom suggested Adam takes a three-month sabbatical at the succession point. In retrospect, it was a brilliant idea. I wish more outgoing CEOs did that during succession.
Look, Adam, you've done your five years. Why don't you take a sabbatical, right? We can afford it.
You're not particularly useful anyway, because you are cooked and it works out really nicely, because then I would have done six months as Chief Strategy Officer with no one reporting into me, but just on authority based on my relationships and ability to curry favor.
But then if you go away for three months, I can take interim or line management responsibility for everybody for the three months when you're away, and then, when you come back, we can sort of have a beer and work out where we're going to go with this.
Renegotiating the relationship
After stepping down as CEO, Adam moved into the Executive Chairman role. Tom and Adam had to renegotiate their working relationship, making sure they complement each other.
I don't think I've done anything that would be wildly different or offensive from what Adam wanted to go and the direction we wanted to go with it. And, actually, once it started taking off, he really sat back very respectfully: “I couldn't have done this; this is amazing. And to a point, this is more than I expected it would be.”
And we have problems in the business that are Adam shaped, right? And it's a real privilege to be able to apply Adam to those problems.
It is quite a unique relationship that we've, that we've built over time. It's constantly evolving, but it is, yeah, it works.
A mistake outgoing founder CEOs who stay in the business often make is undermining the new CEO, often unwittingly. It takes real work and a willingness to have hard conversations to build a working relationship between a founder ex-CEO and the new CEO. Adam and Tom have brilliantly navigated this.
Key takeaways
There are many great lessons in this episode, but these few stand out.
If you want to get a CEO job, find a founder who’s clearly ready to step down.
If in the first day of first round and the first conversation, they're not talking about stepping back, you're probably a year away from having that conversation. And then you're a year away from them actually doing it.
If you’re a founder CEO feeling like no one could ever replace you (I felt like that at times when I was CEO), you might be asking a wrong question.
Where do I find another entrepreneur to run this business? And that actually is the wrong question.
You won't find another entrepreneur that wants to run your business, because by their very nature, they are an entrepreneur and they want to run their own business.
You're not going to find another you. What you do need to find is the right skills for the next stage of the journey.
Boards tend to respond with relief when a CEO realises they need an experienced operator for the next stage. Experienced investors have seen this before:
I think every board goes, Aaaaah! You know, I think they all breathe a big sigh of relief and go, Great, we've got to that stage. That's really exciting. That's really exciting. We've got to that level of maturity.
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