Guest blog: Professor Noah Wasserman: The 'When' and 'How' of Letting Go of your Company.

Seems appropriate that one of the first guest blog posts on our new look site will be from one of the first speakers we recorded back at Business of Software 2008.

Professor Noam Wasserman is professor of Business Administration at Harvard Business School and the author of the recently-published Amazon bestseller The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup.  He will be speaking at this year’s Business of Software conference in October about how some of the lessons from his research can be applied to more grown up organisations.

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We are touched and very grateful that he has taken some time out of a very busy schedule to tackle a question submitted by our readers. Noam considers some one of the biggest issues faced by founders – when is the right time to, ‘let go’.


“When is the right time to let go from having your fingers involved in everything about your company, and just focus on the vision and strategy and actually running the organization?  Also, HOW to let go?”

“Letting go” is one of the toughest challenges founders face, for very understandable reasons.  Founders’ strengths include their passion for the idea, their attachment to the early people who came aboard to help build the venture, and their love of working in the strong culture they created.  Along the way, they also become accustomed to their central positions and leadership roles.

“However, as the startup evolves, the demands on the founder often expand to include a lot of tasks and responsibilities they do not enjoy, or aren’t good at doing.  For instance, many founders love leading the charge during the early technical or scientific stage of product development, but later find themselves having to worry about sales and marketing or other functions they do not enjoy.  They also often find that they have little time for doing what they truly love.  The disconnect occurs at the levels of “can” and “want.”  To the extent that they do not have the skills to do those new functions well, they no longer “can” do the job as well.  To the extent that they no longer have an interest in those new functions, they no longer “want” to do the job as much.  At either of those points, you need to realize that it is time to find another role that is closer to your abilities and/or a better match for your interests.

“Founder-CEO succession can give us insights into the challenges and dynamics of letting go.  As I describe in Chapter 10 of The Founder’s Dilemmas, at the point where they have raised their C-round of financing, 52% of founder-CEOs have been replaced.  In only 27% of those replacements, the founder initiated the change, often understanding how the path would be a mismatch for his abilities or a mismatch for her preferences.  Two-thirds of those founders stayed as a lower-level executive in the venture, stepping into another, more-targeted executive position.  For example, one-quarter of the replaced CEOs – most often, those with a technical or scientific background – moved into the Chief Technology Officer or Chief Scientific Officer roles.  Many of the business-oriented founder-CEOs moved into the VP of Business Development role after being replaced.  Those specific roles were a better match for their abilities, and hopefully for their interests.

As hard as it is to do so, there are strong benefits to initiating such a change yourself.  For one, seizing the initiative enables you to gain more control over the transition process.  Founder‐CEOs who initiate their own replacement remain on the startup’s board of directors 96% of the time, and remain in an executive position 37% of the time. In contrast, when the board initiates the change, those percentages drop to 60% and 24%, respectively.

“For you, the key questions are twofold.

  • First, do you understand the road ahead of you and how it will change the demands on you?  (If you can’t answer yes, learn more about that roadmap, possibly by reading about it.)
  • Second, do you believe that those changes will still match your abilities and desires?

If you can concretely answer yes to both questions, then it’s not time for you to let go.  Otherwise, start looking for a more targeted role that fits your passions and talents, so you can rekindle the magic while handing the steering wheel to a new, later-stage driver.

“Such a transition is never easy for the founder.  As Les Trachtman observes in Ch. 10 of the book, the founder thinks that the change will simply be a “title change,” rather than the “tidal change” that it will truly be.  However, that tidal change becomes smoother when you can find a new magical role for yourself and find a successor to whom you feel comfortable handing the reins (another central issue in that chapter).  Good luck with finding both!”

Thanks for taking the time to guest blog Noam. We look forward to seeing you in October.

If you want to see Noam speaking about the ‘Rich or King’ dilemma at Business of Software 2008 here he is

The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup is an extraordinary book distilling the wisdom and hard learning of literally hundreds of founders across the world. A must read for entrepreneurs and we strongly recommend you read it. (Though a slight hint, if you are coming to Business of Software, you might not need to buy your own copy just now).