Last Thursday, I got an opportunity that few founders ever get: the chance to elevate a member of our senior leadership team to the role of CEO in the midst of record revenue, record revenue growth, the single best performing quarter in our company’s history, and the announcement of a $20M financing round that valued our company at over $100M and brought in marquee investors like Samsung and Microsoft.
For startup founders, there are two reasons to be thinking about succession: protecting from unforeseen events, and maximizing the upside. The first reason is commonly framed as a question: “What would the company do if the CEO was hit by a bus?” It’s the most common way succession is framed, but it’s also an unproductive way of looking at things. This framing tends to reduce the job of founding CEO to a series of simple tasks — turning a role that is the beating heart of a company’s identity into a series of facile questions about who can do X, Y, or Z. It also assumes that the founding CEO is out of the picture.
WHY I DID IT
My goal was the second reason: to make the most of the opportunity in front of us.
I believe that AI/Automation will transform every aspect of work and the workscape over the next twenty years. But automation is currently failing on the customer experience front, with struggling chatbots and virtual agents showing us again and again how hard it is to get human interaction right. Directly has solved that problem by taking the messy world of making virtual agents work and reducing it to five simple API calls to our expert platform. Our platform’s ability to deliver the promise of automation has positioned us as one of a small number of companies operating at the center of the AI economy.
Making the most of the opportunity means dispensing with ego and creating a lineup where everyone is in the best possible role. In Good to Great, Jim Collins refers to this as “Getting the right people on the bus,” and “getting the right people in the right seats.”
I’m a rower, so I prefer a rowing metaphor. In rowing, eight individual rowers subsume themselves into the greater good of the boat, and work towards the singular goal of going faster, acting as one with their fellow rowers. Often, simply by switching the order in the lineup – the seats that each rower is sitting in – the boat speed can pick up, with a rhythm that allows the crew to move faster. That idea, that it’s more important the boat goes faster than what seat you sit it, is an ethos I learned early and still moves me today.
While working on our 2020 plan, it became clear to me that we’d move further and faster if I focused my efforts full-time on helping deliver the next generation of our platform. At the same time, it also became clear that our venture would move further and faster with my colleague Mike de la Cruz at the helm.
I’ve known Mike since our freshman year at college. He’s a visionary with how software and AI can improve the customer experience: he was at Siebel during their ascent, was SVP of CRM at SAP, and led 15,000 people at Hewlett Packard. But it wasn’t just his background that made him the obvious choice. The more important thing was that I got to watch Mike in action for a year as our chief business officer, and had gained the conviction that his strategic thinking, his ability to simplify the complex, and his gift for getting teams working together made him the right person to lead the next chapter of the company.
WHAT I WAS CONCERNED ABOUT
It was a quick and straightforward decision but not an easy one. Appointing a new CEO and adding a fifth seat to the board would mean losing control of the company, or at least my perception of control. I’d also be letting go of my ability to define the day-to-day priorities and strategic direction of the company itself. For example, we use a decision-making framework called RAPID in a lot of our work, and part of giving up my position would be giving up ownership of the most important decisions the company would make.
There were also external factors to consider. Even under the best of circumstances, the media has a knack for turning CEO transitions into spectacles of drama and speculation. This can have the potential to erode investor confidence, and can be a source of confusion for team members at the company. This knowledge made the decision harder, but it didn’t change anything for me, just as I hope it won’t change anything for founding CEOs who find themselves in a similar position in the future.
For me, the decision to step down from my role as CEO was a difficult one, but also an exciting one. The bus is pulling out of the station. The boat is picking up speed. I can’t wait to get back to work, teaming with my co-founder Jeff to develop the next generation of our remarkable platform. Like the rest of the Directly crew, I am eager to make the most of the opportunity that stands before us.
Giving up this role is perhaps the most important decision I’ve ever made, or will ever make. It’s arguably the most important decision that any CEO can make, and as such, it’s one that deserves to be given time and serious contemplation.
If you’re a founder or CEO of a venture-backed company, and you’re wrestling with this thought process and want a point of view, please don’t hesitate to reach out. Hard decisions never stop being hard, but they do get easier when you have the right kind of help.