Time to replace yourself (cont.)
Find a CEO who can do what you can't
Bolo Systems had hit A wall. CEOs Robin Gregory and Michael Williamson, who had quit their accounting jobs in 1991 to start their financial software firm, built a staff of 17 and a collection of loyal customers in the oil and gas industry. But Denver-based Bolo (bolosystems.com) could not seem to reach the next level. Worried they would start losing their employees, the two founders knew it was time for a change.
That change, they admitted, would have to start at the top. The partners recognized that as co-CEOs, keeping the books and acting as the company's technologists, they were doing too much. Worse, they were slowing things down. "We were the bottleneck in everything," says Gregory. "We were like a couple of lieutenants managing a platoon. We needed a general to take on the whole army - and free us up to do what we did best, which was technology and software."
They started a search for that general, canvassing customers, consultants, clients and others familiar with the company. After months of looking, the CEOs met a stellar candidate, Rick Slack (another candidate referred him). The duo liked that he was an industry veteran with a track record of taking a company from $5 million to $20 million and that "he didn't ask for the moon," says Gregory, when negotiating a salary.
Even so, it took the founders many months to make the decision to hire him. ("You're afraid to acknowledge to the world that you need to make a change and to say I'm deficient or not good," explains Gregory.)
Since coming on as CEO in June 2004, Slack, 50, has built a new management team, set clear goals for the future, and instituted a culture of accountability. "It was a small group of all-rounders before," says Slack, describing the previous approach as "responsible for everything and accountable for nothing."
Freed from day-to-day management, the founders now have more time to focus on product development, which has resulted in the launch of one of its most innovative products, Bolo's Executive Dashboard (a Web-based back-office application for oil and gas executives). With the changes, Bolo saw revenue jump 150 percent, from $2.2 million in 2004 to $5.7 million in 2005. Last year the company, which management says is profitable, did $12.3 million in revenue.
The founders credit Slack with changing their organization - and their lives. "I now enjoy my job more than I ever did, and I had loved it for the last 15 years," says Gregory. "But today the company is more valuable, and I'm in a role where I'm more efficient."
Beware of flashy résumés
After running his management consultancy, based in the Southeast, for four years, founder Nick Danger (not his real name) decided to hire a CEO to help it go national. In mid-2006, after nine months, multiple meetings and more than $150,000 in search-firm fees, he was certain he had the right candidate. The 27-page profile provided by the search firm highlighted the potential hire's years at IBM, experience growing a $5-million-a-year company, and rave reviews from references. "She looked perfect on paper," says Danger.
Perfect on paper, though, doesn't always mean perfect in practice. Within six months of hiring the CEO, Danger watched some of his clients walk away, including two marquee accounts - together valued at $1 million. Two key employees also quit.
It wasn't that the new CEO was incompetent - she was highly organized; it was that her passion for processes and systems fit poorly with Danger's small company. The firm prides itself on its family-centric culture, where employees' spouses know one another and Danger's clients have his home phone number.
Through meetings with employees and suppliers, Danger learned that they were turned off by the new CEO's attitude, which they found "pompous," and her style, which they felt was "dictatorial." They said that they missed the energy of the past and felt that under the new regime they were "just a number." "We lost our entrepreneurial spirit - the self-motivating, self-correcting attitude that was in our DNA," says Danger.
By the end of 2006, Danger fired the CEO. Now he's back as CEO again, and the company is set to collect $3.5 million in sales in 2007. While Danger says the experience was very difficult (he says he lost both sleep and more of his hairline), he learned a valuable lesson in terms of cultural fit and chemistry. "I picked the wrong person. I was sold on her blue-chip background, and I was blinded by her track record."
He calls the hiring mistake a painful and expensive lesson, but says he's not giving up on hiring a CEO. "I still think there's the right person out there for us," he says. That person is not someone with a big-company background, however - it is another entrepreneur.
Danger, who came to the U.S. from the Middle East with a suitcase and $100, says the new job qualifications include experience such as having run a lemonade stand as a kid, having parents who are entrepreneurs, or not thinking of the workday in terms of 9 to 5. "I'm looking for people who borrowed against their credit cards to make payroll," he says. "These people get it."
Would you feel comfortable leaving your business in the hands of someone else? Did you have to hire a CEO to run your business? Post your thoughts on the FSB blog.
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From the May 1, 2007 issue