In the high-stakes world of startups, founders face countless decisions that can make or break their companies. Perhaps none is more critical, or more personally challenging, than determining whether they should remain at the helm as CEO.

Ben Francis, Gymshark's founder, stepped aside as CEO in 2017, bringing in experienced retail executive Steve Hewitt. During this time, Francis focused on product development and brand building. In August 2021, having gained valuable experience and perspective, Francis resumed the CEO role, when Gymshark's valuation had already soared to over £1 billion. His rational choice to recognize his own capabilities and limitations is something every founder should admire.

The Founder-CEO

The startup ecosystem has long perpetuated the idea that founders should naturally transition into the role of CEO. This notion is reinforced by high-profile success stories like Mark Zuckerberg at Facebook or Jeff Bezos at Amazon. However, this one-size-fits-all approach often overlooks a crucial reality: the skills required to conceive and launch a startup are vastly different from those needed to scale and manage a growing company.

Founding a company requires vision, creativity and the ability to innovate rapidly. It often involves wearing multiple hats and making quick decisions with limited information. In contrast, leading a maturing company demands strategic thinking, operational excellence and the ability to build and manage teams effectively.

Taking Twitter as an example, while Jack Dorsey co-founded the platform, his initial tenure as CEO was short-lived. It wasn't until years later, after gaining more experience, that he returned to the role. This shows that even brilliant founders may not be ready for the CEO role immediately — and that's okay.

I have had countless conversations with brilliant founders who feel trapped when committing to scaling a singular project. Every person has different strengths. Many founders excel at ideation and creating groundbreaking products but find the day-to-day operations of running a growing company constraining. Recognizing this disconnect doesn't diminish the founder's crucial role; you would never ask a master chef to manage the restaurant's finances, would you?

The Hidden Costs of Founder-CEOs

When founders insist on remaining CEO despite lacking the necessary skills, the costs can be significant and far-reaching. One of the most detrimental effects is the limitation it places on talent acquisition and retention.

High-caliber executives are attracted to companies where they can learn from experienced leaders and see a path for their own growth. If a company is led by a founder who's learning on the job, it may struggle to attract top-tier talent. This creates a ceiling effect, where the company can never hire anyone more qualified than the founder-CEO.

Moreover, this dynamic can lead to a dangerous echo chamber. Without experienced voices in the C-suite willing to challenge the founder's ideas, companies risk making costly strategic mistakes.

A relevant case of this is WeWork where Adam Neumann's unchecked control as founder-CEO led to questionable decisions and eventually derailed the company's IPO plans, destroying billions in value.

Knowing When to Step Aside

Recognizing when to transition out of the CEO role is a sign of maturity and true commitment to the company's success. Here are key indicators that it might be time:

1. If you're constantly feeling overwhelmed or unprepared for the challenges you're facing, it might be time to bring in more experienced leadership.
2. If the company's growth has stalled despite a strong market position, fresh leadership could provide new perspectives and strategies.
3. If you're more passionate about product than management, or if you find yourself longing to return to the creative or technical aspects of the business, it might be time to transition to a role like Chief Product Officer or Chief Technology Officer.
4. If the company is consistently struggling in key areas like financial management, operational efficiency or scaling, it may benefit from more experienced executive leadership.

When founders do decide to step aside, it doesn't mean abandoning the company. Many find success in alternative roles that leverage their strengths. A good example is Chief Innovation Officer where the founder focuses on driving new product development and keeping the company at the cutting edge.

Alternatively, the founder could become the Executive Chairman or a Board Member to provide strategic guidance and maintain key relationships while leaving day-to-day operations to the CEO.

When Google's founders Larry Page and Sergey Brin brought in Eric Schmidt as CEO in 2001, it allowed them to focus on product innovation while Schmidt guided the company through tremendous growth and a successful IPO.

I would even argue, most startups don’t need a traditional CEO in the early stages. What they need is a founder but these two roles have become interchangeable in today’s startup landscape.

Remember, stepping aside isn't an admission of failure, it's a strategic move to ensure your company's long-term success. By putting ego aside and focusing on what's best for the business, founders can often achieve far more than they could by insisting on remaining CEO. The true measure of a founder's success isn't their title, but the enduring impact of the company they've created.

Ask yourselves, would you rather lead a mediocre startup or be the founder of an incredible company?