This is perhaps the hardest question any founder of a startup faces: When is it time to hand the wheel to someone else?
On one hand, it’s a benchmark of success, a sign your company has grown larger than your ability to effectively manage it. On the other hand, you’re entrusting the keys to the car you built to a driver who wasn’t there from the start -- hasn’t lubricated every part with his or her own sweat equity. Will they drive your car across the checkered flag or crash and burn?
When we found the person who is replacing me as COO of our personal-finance startup, NerdWallet, co-founder Tim Chen and I knew we found someone who could take our company to the winner’s circle. His name is Dan Yoo and his track record as vice president at LinkedIn speaks for itself: As head of business operations and business analytics, he helped rocket LinkedIn’s annual revenues from $120 million in 2009 to more than $1.5 billion today, and its membership from less than 50 million to more than 275 million. Not too shabby.
I knew after we found him, the time was right for me to slide out of the day-to-day and into an advisory role with NerdWallet.
For those looking to take a step back from the daily rigor, here are the steps founders should follow to find their own replacement:
Make yourself obsolete. If you successfully build a company, you should grow to the point where it outgrows you and your experience level. That’s when you should pass the torch. As founder, you want people to manage your investment who are much better than you are. In other words, your job as a startup founder is to make yourself obsolete. If your firm can’t run without you around, you risk running it -- and yourself -- into the ground.
Be honest with your shortcomings. CEO Tim Chen and myself both recognized the need for more management experience and more operations experience at the company. We’re great at novel solutions for problems people think they have already solved, like how to find the best credit card or most affordable health care. One of the areas where we weren’t performing at capacity was taking all those ideas and scaling into a much bigger organization. We needed help.
Know what your successor looks like. You can’t know how to find it if you don’t know what you’re looking for. We began meeting with HR heads, marketing heads, CEOs, CMOs and CFOs -- pretty much any senior executive we could meet to get a better idea of what good management looked like. It was during these meetings that we met both Dan, and it was clear he would be a good fit for us. Just as important, he understood our business strategy and his excitement for our mission was infectious. What began as a fact-finding mission turned into a recruitment drive.
Get them on board – and let go. Before handing over the reins to Dan, I met individually with our management staff and asked about teamwork at the top level -- an assessment of communication, accountability and how well we’re working together -- and presented that to Dan. Tim and I met with him several times before he started and discussed areas we thought we were doing well and areas where we saw a need for improvement. And then I stepped away.
The letting go part has been surprisingly easy for me -- the arrival of the twins in December has given me plenty to do at home. I’m still involved in projects like our office relocation to remedy the physical growing pains of expansion, but the day-to-day is now Dan’s domain.
The fact that people the caliber of Dan want to help lead our company shows a hiring pull we could never leverage in the past and makes me believe the next phase of NerdWallet will be one of phenomenal growth.
To be honest, I’m envious of people joining the company now. They are riding a rocketship and will be an instrumental part of the growth, yet they won’t have to suffer the learning curve of nascent managers.
Copyright © 2013 Entrepreneur.com, Inc.