The CEO Shift: The Changing Roles in Business

0:00I have not experienced in my world yet bringing in a found CEO who cares about the company and understands the company and understands the company and understands the company and understands the company and understands the company. Also would Juby if you had lunch once a week with insanely successful entrepreneurs who share their biggest secrets on how they think and achieve success? Grab your seat at the table because this is Business Lunch with Roland Frazier and Ryan Dice.

0:46Welcome to another episode of Business Lunch. And today's a snackable episode with Roland where he's going to get into some more tactical strategies that you can start using to live a rich and happy life. If this is the first snackable episode you're hearing, I'd encourage you to go back and listen to some of the other episodes that Roland has put out. And if you want to get notified every time we release a new episode, go to the new businesslunchpodcast.com website, and we'll send you detailed notes along with every episode. That's businesslunchpodcast.com, www.businesslunchpodcast.com, and you can sign up for the free email newsletter where you'll be able to get all the highlights and resources from the episodes.

1:21Hey, everybody. Ryan Dice and Roland Frazier here with the Business Lunch Podcast. And we were talking about... You never said my name first, by the way. Yeah, I've decided I'm going to mix it up. I'm going to mix it up. This way new listeners have no idea who's who. That's great. Yeah, that's great. Fantastic. I'm Roland. I'm waving my hand. If you're listening, you're just out of luck. No, this is Roland talking and Ryan can talk now. Excellent. Nailed it. You nailed it. So we were talking about CEOs and it came from, there's an article that's out today called The Dating Game, Bumble CEO Steps Down Amidst Company Evolution.

2:04And we thought that that was kind of interesting. It says that Whitney Wolfherd, who was the primary founder of that company, is going to step down from her role as CEO. And it came as part of the company's broader evolution, kind of vague, and could have significant implications for the future direction of the dating app business. I asked for some more details and it just said that there aren't extensive details. So the thing that was interesting is I was like, good news article. I asked you the details and it was like, uh-uh. Uh-uh, no. But the interesting thing is that she's stepping down and apparently somewhere it said she wanted to get back to her founder roots, which might mean that she's kind of bored with this.

2:46She's done her thing as a founder, grown it to an amazing company, built herself a billion dollar net worth. And now she's bored or she's looking for something else or the company's moved into the administrative stage and she doesn't feel like that's really her role. There are lots of reasons that you as a CEO might decide that you don't wanna continue to be a CEO. And we were talking about it because in one of our portfolio companies last night, I got a text from one of the CEOs of one of those companies saying, hey, I think I'm ready to step down and bring in a professional CEO. And we've been in the process of professionalizing that business for a little bit right now.

3:28And so that's kind of one of the two last positions in the C-suite that we might think about professionalizing. And I wanted to talk with you, Ryan, because my advice was, look, you founded this thing. You've been there. You've grown it. I have not experienced in my world yet bringing in a found CEO who cares about the company and understands the company and will be dedicated to the company like the founding CEO. I've seen many CEOs step down, do professional searches, bring in recruited CEOs and failures happen or mediocrity happens. And so my advice was, why don't we get a COO that is super, super professional and has been there, done that?

4:23Because the concerns when I was talking to this person, I said, you know, what, what is it about being a CEO that's, that's a challenge? It's like, well, there's just so many things, people that need to be held accountable, things that are slipping through the cracks. I don't have enough time to do what I'm really good at, uh, in terms of creating new business for the company. And all of that stuff was internal. And so I said that, that like all of that stuff is stuff that a COO would do. And, um, a couple of things, number one, that's really that job function that you're talking about is COO, not CEO to, I don't think you'll find anybody that cares about the company.

4:57Like you do this person is amazingly dedicated. and I think that you as the guiding visionary light of the company and primary finder of new opportunities shouldn't really change, especially because you love what you do and that really you're just trying to get rid of the things that you don't love, which is all the stuff that a COO would do. So my thinking is you get that person also, they have, you have the benefit of they're going to take less equity and they're going to cost less and they're probably going to be better at the job that you want than a CEO would, because all the CEO is going to do is come in and go, that's not really what I do.

5:33Let me get a good COO. So that's kind of giving you some context and thoughts. I'd love to see what you think, Ryan, and then kind of have the discussion for everybody here that might be thinking maybe the business would just be better off without me in the top seat. I think this is very personal for me. I mean, as you know, I've fired myself as CEO from companies twice. And it was, you know, one time in particular was one of the biggest mistakes I've ever made in my entrepreneurial business life. I mean, nearly bankrupted the company and me personally. So this is definitely very, very personal for me.

6:13And having worked, you know, as we do with a number of CEOs, this comes up all the time. And I think that there are good reasons for founders to step down as the CEO. a couple. I think there are scores of bad reasons for them to do it. And I think one of the questions, so I think a good, a good reason to step down is that your company has reached a level where you and your board all agree that you don't really have the skills to, to take the company from where it is to the next level. You don't have the skills and you're unlikely to acquire them fast enough in part, because you just don't want to.

6:50Right now, I would argue that's leading on a good day. Right. Because what you're basically saying is we're at a really, really, really good place where we want to go. I don't know how to take us there. And and I think that that can be a good reason to step down as CEO. Now, I don't think that you have to do that, by the way, but I think that is an OK reason to do it. In other words, leave on a good day. That's one thing I remember you interviewed Sarah Blakely at one of our events. And, you know, her dad was that was the advice her dad gave gave her was you can quit. you just can't quit on a bad day, right?

7:23You got to quit on a good day. So when it's a good day, let's have a conversation. If you want to leave then that's fine. I think far too many entrepreneurs, they will, they will quit on a bad day. So I think if it's truly a good day, like let's say your company goes public and you've taken it public and you've hung around for, you know, a year or two and you just are not enjoying running a public company, but things are going fine. You want to leave? I think that's fine because there's no doubt that running a public company is fundamentally different than running an entrepreneurial real private venture.

7:52I think another good reason to leave is, let's say the company makes a strategic pivot and it works. But now you realize that, whoa, I'm no longer the best person to lead this. The direction the company is going, I really can't follow. I have a friend of mine who they started a business in the marketing SaaS space that was very big in small business, small and medium-sized business. And it did really well. And they were able to raise about half a million dollars. And this particular company just in the last couple of weeks, he stepped down as CEO because it is now moving well upmarket. And he's saying like, I don't know how to run an upmarket company.

8:35I don't really want to run it. And what they had, and I think this is really important, they had a COO who had done that exact thing. right and so again leaving on a good day so i think that's the first question to ask is am i leaving on a good day or am i leaving on a bad day another way to look at this is am i running to something or am i running away from something right am i running away from this thing that i don't want um or is it this is good but there's something over here that i want even more so when you know whitney wolfard talks about how you know i want to be able to kind of flex my founder our muscles again.

9:12It's yeah. Running Bumble has been great. It's been really successful. I miss running a small business. I want to do another startup. Right. I think that's, I think those are good reasons for founders to leave at least for themselves, whether it's the best thing for the company, time will tell, but I think those are acceptable reasons to consider it. Um, what's not is, yeah, I'm just burned out and tired, you know, because to your point, the mistake that a lot of entrepreneurs make, and dude, I don't like to point fingers, but I'm literally pointing a finger right now. I think one of the worst things to happen to the entrepreneurial world was what I believe is the misunderstanding of the visionary integrator concept.

9:57Right. And I'll say it like, I get it. Like Gina Wickman's a friend. I think Traction is a great book. But the core concept from that book, which was telling entrepreneurs, look, you're the visionary. And what you need to do is you need to bring in an integrator who's going to do all the dirty work. So you just get to visionate all over the place. And then other people will do the actual work and clean up your mess. But that's not what the book actually says. No. Right. But that's what a lot of entrepreneurs take from that. They take from that that, oh, I just need to bring in somebody to do all the stuff that I don't want to do or that I'm not very good at.

10:32And I just don't think you really get to do that as a founder CEO. I mean, that's like a parent saying, I want to play with the kids, but I don't really want to like do any, clean up any dirty diapers or feed them or, you know, deal with any of that stuff. Like, no, that's, that's not the job. That's not what you signed up for. So I know when we're working with CEOs and you do the same thing when they're burned out, it's the first question is exactly what are you doing right now that you don't want to do? And almost always there's some functional business role. There's somebody at the company who should be doing a critical role and they're already in the job and they just aren't doing anymore and you're picking up their slack and you're burned out because you're doing your job and theirs.

11:15And that could be in marketing, it could be in sales, it could be in ops, it could be anywhere. But usually the solution and what I would always try first is do we need to make a functional executive, functional business hire at an executive level? I don't know. What do you, what do you think? Any of that resonate? Yeah, I think, I think it all does. It's, I think you and I are pretty aligned on that. It's, it's, the biggest thing for me is just, I haven't found, nobody cares about them. Like, you know, nobody cares about the company like you do, you know, a professional, a professional CEO is a bit of a mercenary and And they're coming in.

11:52And I don't mean that in the negative connotation that it might sound. And I definitely don't mean it derogatorily to people who do that. It's just that they're coming in for the money or the opportunity. They're not coming in for the passion. Almost never. And so the person that has the passion, I think, is going to be the most aligned with where the company wants to go and taking care of the company and doing the thing that maybe isn't the most profitable thing. But is probably the best thing in terms of an investment in the company, investment in the people, etc. And so I've seen that again and again.

12:28So my experience has generally been that you bring somebody in who's a mercenary and they run their bag of tricks. And sometimes it works and sometimes it doesn't. But very often it disconnects with the overall culture and mission of the company. And things don't go as well as they could have. Or they certainly slow down and take a different tact. and uh and very often it just becomes an extremely costly thing for the founder ceo and this they come back to a less strong company and um and that's hard and and i think that in terms of talking about gino's book that i don't know because i don't remember it's been a while since i read it excuse me but um the idea makes a lot of sense that like you are the visionary and the birther of the company.

13:20And so it is your baby. You're going to take good care of it. And you have an idea of where you want it to go. You just don't really know how to get there. So you hire this expert we call an integrator to come in and listen to what you have to say and translate that into, that means we need this many people. They need to do this. Here's the systems we need. Here's the software, et cetera. Not necessarily a CEO. not necessarily a CEO. So like my advice continues to be, look, as long as you want to be CEO, stay CEO. If there's a bunch of administrative stuff or operational stuff that is stopping you from doing what you feel is your full capacity and also not making you happy, then get somebody that's good at that because there's a whole bunch of those people and, um, and they're very good at it and it's a different skillset.

14:12And so I liked the concept of the, of the visionary integrator I definitely think though that like I think of that it's funny uh I haven't really asked anybody but I think of that when I hear that is oh visionary CEO integrator COO um but I guess a lot of people don't well I think what they see is um so I I just get I they I don't know that they necessarily equate CEO with pure with a purely visionary type role because again the CEO role is grossly misunderstood we've talked about that a lot but I still think that hiring firing yourself and replacing yourself is probably the last hire. Like that should probably be the last thing that you do.

14:51I think second to last right before that is hiring a COO or a president or a GM. Start with the functional roles. I mean, if you're burned out right now as a CEO, do yourself a favor, right? And this doesn't have to take very long, but just get some post-it notes and a whiteboard and just map out with your team, or you can do it by yourself. Map out, just ask the question, how do customers happen or how do clients happen or how do patients happen at this business and start from the initial point of awareness and go all the way through until the sale is closed. And what are all the steps and stages?

15:25If you will take the time to visualize that in a very simple flow chart, you'll be able to look at it and go, okay, who should be doing these things? And there's a really good chance that right now you look at it and you go, well, I'm doing that and I'm doing that. But we have somebody who does that. Now do the same thing for the fulfillment side. Map out, okay, the sale is made. Now what happens? These are the core value chains of a business, right? All business is going to have at least those two value chains. It's going to have a growth engine that dictates how customers and clients happen.

15:59It's going to have a fulfillment engine that dictates how they're served after the sale is made. If you will visually map that, and then you will say, okay, who does this one? Who does this one? Who does this one? You can now begin to create a hiring plan. And there's a really good chance that you're a hire or two away from burnout. And there's a really, really good chance that the hire you need isn't even an executive level person and definitely not a COO or a CEO. So I would encourage until you have visualized how your company captures and creates, creates and captures marketplace value. I don't think you're in a place you have to hire much of anybody.

16:33You probably shouldn't even hire an executive assistant yet. You don't know that that's what you need. So get really clear on the role based on where are you overburdened in the value creation process. Once you have that, then I'd look at making those functional hires. Get those functional hires in place, see if that doesn't solve the problem and then go away for a couple of weeks. Sometimes all we really need is a vacation. Yeah. I mean, the number of CEOs I know who are ready to quit, super burned out and they just took a vacation and they came back just renewed and energized. I see that happen all the time.

17:11The other thing that I see happen all the time is CEOs being super burned out. So they quit. They fire themselves. They hire somebody else. Now they're out of the game. And now they're bored out of their mind. And all they want to do is get back in. But when you bring somebody in like that, you just bought yourself probably a three minimum quarter test. Yeah. Right. You're going to hire in a CEO or a COO and not give them, you know, a couple of quarters, a few quarters to see if they can. Yeah. No. I mean, you're in that sucker for a year. Yeah. Like you said, it's expensive. so i don't know don't do it don't do it okay so so so we're obviously biased neither of us it would be better for you guys to have us having a discussion where we both disagreed um if we play devil's advocate with ourselves for a minute i think i think at the beginning is like like really if you don't have the skills to take it to the next step and you can't get the skills underneath you, then I guess that would be a good time.

18:11But particularly if you're just done, you know, if you're like, if - But wouldn't you say at that point, just sell the business? No, well, I mean, what if it was still very nascent in its growth? I mean, let's say it's doing a hundred million and you think it can go to 500 or a billion, you just haven't ever seen that and you're not interested in it and it's not fun for you anymore. I wouldn't sell it. I mean, because what am I going to do with the money that's going to make me as much as the growth from 100 to 500, right? It's - I don't know, man. I'd kind of call BS on any entrepreneur who's like, I know this thing can go to$500 million.

18:42I don't really know how to do it. I'm just not that interested in it. It's like, really? You're an entrepreneur and this thing can go that much and you're just not that interested in developing this? Yeah, absolutely. So I would disagree with you on that. There we go. We got something we can talk about, right? To me, absolutely that happens all the time. I'm out of my depth and I don't like this. I've become an administrator. Look at our buddy, John. right? John was the CEO of a company, co-CEO of a company,$2 billion valuation. And when he got like all of the corporateness in, when they got their big, you know, half a billion dollar cash influx in the company, he's like, man, I hate this job.

19:24I have no power. I'm all political correctness all the time. And I don't like it anymore. I don't want to be there, right? It's gone. It's I don't want to leave. I don't want to sell leave, because I still see, as does the company that came and put all that money in giant growth, and probably an IPO. But I just don't really like it anymore. It's changed the nature of the job. So I do think that happens. And I Just to me, that falls into the first category of leaving on a good day, right? He's leaving after the company has already achieved a level of scale that a lot of the entrepreneurs that we're, we're talking sometimes, man, to entrepreneurs who are doing like two, three,$4 million a year.

20:07And they're like, you know, I just, you know, I don't know if I can take it to the next level. I don't know. It's like, what are you talking about? Yeah, you can, like, you can do this. You might need some help. You might need some support around you. But this idea of like, I'm totally out of my depth. Like, come on. No, you're not. Oftentimes they just need a little bit of help. They need to make a couple of key hires. They need to sometimes fire some people that are occupying the org chart and get in some people who actually know what the heck they're doing. It's not like their cousin. That's more what I'm referring to.

20:37You're right. John, I mean, by all means, they had done a, you know, multi, multi, like half a billion dollar transaction. Sure. Like you decide that at that point it's gotten too corporate-y, you can. Yeah. Um, I think, but I think that could happen way earlier. I think like the, it's a, it's a lot different, you know, in a million to 10 million than it is when you get into 30 to 50, it really does become much more bureaucratic and, you know, red tapey and that kind of stuff. And it's, it goes from, I want to know all the people I'm working with by name and, you know, see how they're doing and know about their families and do barbecue.

21:13That's a different business than the other ones. And so I, I can see it. I think I can see it. I mean, you should never stay in something that you're not happy with no matter what. And there's always somebody that can run it. But ultimately, no one will run it like you care about it. That's, I think, the bottom line you and I both agree on 100%. And we do, I mean, with the five exits framework that you came up with, right? Exit number one is you're exiting the line, you're hiring some folks. Exit number two is you're exiting the staff. So you actually have an operating system in place and you can ascend to a true CEO role, not just a manager with a CEO title, but exit number three is exiting the org chart, right?

21:53Where you're bringing in a full-time operator and you're not on the org chart anymore. It is what you and I both want. So I'm not knocking it or saying that somebody shouldn't want it. I'm just suggesting do it intentionally, leave on a good day. Don't do it just because you're burned out. Okay. So let's, let's talk personal for a minute because you are the CEO, I believe still right of digital marketer. Yes. You are not particularly excited or focused on digital marketing anymore in terms of the button pushing details, that kind of stuff. Um, your interest has moved more over to scalable. How do I help companies have operating systems and grow?

22:38do you think it makes sense given your lack of interest and lack of time to continue to be the CEO of Digital Marketer? And I'm not saying that everybody, because we talk about this all the time. I want you guys to hear the discussion because I think it, and I don't know what Ryan's going to say, but I think it's, I think this is the kind of discussion you want to have. And because this is a very real situation, I think it's a great one for you to hear. Yeah. And the answer is no. I mean, I don't think that I'm the ideal person to be the CEO today and haven't for a while. Um, but with all the transitions and stuff that were taking place, I'm the one who still cares more than anybody else to be there to see it through that transition.

23:21I think to leave now would be to leave on a bad day. Yeah. Um, but it doesn't need a CEO or does it need a COO? in the interim yeah i mean what it i mean and we had a general manager that that is you know that is that is leaving us um and and so no i mean pretty pretty quickly we would look to to bring on a bring on a general manager but i want that person first and foremost to be able to occupy a functional role that's on the product side because where we need the most help right now is on the product side right and that when i look at what do i i have to spend way too much time doing. So I can, I can go out there and I can hire a GM or a COO or a CEO, or I can hire a head of product, which is less expensive than all of those things, more focused on what they would do.

24:07Then we can say, okay, great. We've got this in place. Now let's look at building up the marketing team a bit more. Okay. Now we've got a solid enough executive team. One question now, is it fun to run again? You know, maybe it is maybe now it's sort of got fun again. Now they've got easy. Probably not. It's probably time for somebody else. I don't like, you know, I still always would rather be work above the business and be off the org chart. That's always the goal. But maybe it gets fun again. Maybe one of those functional leaders can ascend into the CEO role. Right. I mean, I would love to see one of these functional leaders.

24:43It's the same thing that happens all the time there, though. I think you're promoting incompetence, not that not that the people are bad or generally incompetent people, but you're, you're taking from a job that is not the same job description as the operating officer. And I'm going to argue the opposite because you to me don't have the time or we would have already done it to find those people. If we hired the COO now, like a real COO now, they will go find those people. Somebody that's already been the operator of a company that is an educational products, business to business company. There's a ton of those around there, lots and lots of experience.

25:22You stay as the CEO, fine, because you care and you have great cultural acuity, but you don't have the time or the passion for the guts of that business. I think you bring in the COO first, let them find the product person, let them find the marketing people, let them that have already done this, you know, take that company to the next level. And then you're freer to do more of what you want. And you actually maybe enjoy becoming the CEO. Cause again, I, I'm not super big on letting go of the CEO. Although I do think it's difficult to be CEO of two companies, which is kind of where you find yourself right now.

26:01Yeah. Yeah. That's not good. And, and I mean, obviously that can work. I mean, I think both of those playbooks can work. And in terms of when, when I was like, maybe that person ascends, I meant that to be a comma, not a statement. because it was like, man, usually it doesn't work out that way. Okay. Okay. So, um, you, it, it almost never, it almost, but you know, most people who are COOs started out in some functional role at some point. So it's not like it's all that crazy. I get nervous and I wouldn't be opposed to the idea, but hiring a COO who could then hire the functional roles. Now you got to get, you got to get a bunch of those right.