Martopia works with a broad range of technology companies – many of which are privately held. During the course of our tenure, we have seen many founder CEOs at some point desire acquisition and we have helped companies to gain the visibility to achieve this goal.
We eventually end up seeing the CEO at a tradeshow wearing a badge with the title “founder” rather than CEO. For those of us sitting in the audience of their exit speech, we are envious of the fact that they have successfully “cashed out.” We envision their leisurely life on the golf course and the freedom to go off and do anything they want. Many are appointed as chairman or serve as an advisor on the company’s board.
A recent article in Harvard Business Review called The Founders Dilemma talks about how founder CEOs at some point have to make the decision between having total control of their company and getting investment capital to take it to the next level (a trade-off for control). The article reports that it is rare that a founder CEO end up both rich and in control. Some might start out getting some investment capital, but end up gradually relinquishing control to the investors.
So why do some founder CEOs hang on and remain in control while others cash out? It all ties to the emotional connection with the company and the desire for control. Martopia has a client that specializes in succession planning and ownership transition of closely-held private companies. In working with this client, we have had many discussions about how owners of companies have a powerful emotional connection to their company. It is more than a company – it is their identity and the source of their satisfaction and accomplishment.
The point of ownership transition is a tough time for both the founder CEO who is letting go of his “baby” and also for the employees and customers who depended on his leadership. For this reason, companies in ownership or leadership transition have to carefully craft their message strategy during the transition period in order to maintain stability. Clear and strong messaging is needed for both internal and external constituents to bridge the era of the founder CEO to the new CEO.
Clearly communicating the vision of the company in a manner that eases concerns of customers and employees is something to carefully consider. At that critical time, more than ever, the company needs to have a solid plan of action in place for its communications.
-Tami Hernandez
President
