“Founders’ Dilemmas” Course: Founder-CEO Succession Cases

In prior posts about my “Founders’ Dilemmas” MBA course, I provided an overview of the course, details about the Introductory case and the cases in the “When to Found” module, details about four cases in the “Building the Team” module, and descriptions of the core new-venture hiring cases.

This post covers the course’s founder-CEO succession cases. The first case (“Founder-CEO Succession at Wily Technology“) examines the antecedents of succession: What are the events and conditions that lead to the founder’s being replaced as CEO? Should the replaced founder be involved in the search for the successor, and how? Should the founder remain deeply involved in the venture after the successor takes over? The second case (“Les is More, Times Four“) examines the challenges of taking over as the first non-founding CEO when the replaced founder is still working as an executive in the venture and serving on the board. The third case (“The Tale of the Lynx,” a three-part case series that covers pre-founding through exit) explores in part the concept of a “bridge CEO,” and looks at the coalitions that can form between investors and the other (i.e., non-CEO) founders during the founder-CEO succession process.

For each case, this post provides the official case description, a list of the case’s core issues, and a link to its full HBS Publishing entry.

As mentioned before, case studies are often valuable for helping founders, employees, and investors understand the difficult issues they are facing or will be facing in the future (or even help them gain insights into their past experiences!), so if you want to see any of the full cases, you can get them from the HBS Publishing site via the HBSP links below.

FOUNDER-CEO SUCCESSION:What causes it, Best practices and mistakes, Hiring the successor-CEO, Taking charge as the successor

  • Case #1: “Founder-CEO Succession at Wily Technology” (HBSP link)Case description: “Before he accepts the new CEO position, Richard Williams wants founder Lew Cirne to step down as chairman. While considering Williams’ incredible demand, Cirne reflects on everything he has already given up to get Wily Technology to this point. He agreed to step down as CEO and take what could be a largely symbolic CTO title. He also agreed to give Williams roughly as much equity as he himself owned and far more in salary. As the founder, CEO, and chairman of Wily Technology, Cirne had worked hard to build the skills necessary to lead his start-up. He had developed Wily’s early technology single-handedly, had hired 50 employees to help him build his company, and had successfully spearheaded a strategic transformation of his company. He had led Wily to the point where several important customers bought its flagship product and had successfully raised two rounds of financing from top investors. Cirne wonders what he could have done to be pushed to the side like this. What should he do now?”

    Core issues: Antecedents of founder-CEO succession, Searching for the successor-CEO, Managing your board of directors, Venture growth, Raising venture capital, The founder’s post-succession role.

  • Case #2: “Les is More, Times Four” (HBSP link)Case description: “‘I’ve had enough! I’ve decided that I need to resign,’ read the email from the founder of Webpoint to the company’s board of directors. Les Trachtman, the CEO of Webpoint, has to figure out how to react to the founder’s ‘it’s Trachtman or me’ ultimatum. Webpoint was Trachtman’s fourth job as CEO, and in each case he had been hired as the first non-founding CEO, taking over from the founder-CEO of a tight-knit founding team. Trachtman had first taken over from a mother and son team, then from two brothers, then from a wife and husband team, and now from serial co-founders who were best friends. From these ventures, Trachtman had learned how to manage founders who had strong relationships, but those experiences had not prepared him for the current situation.”

    Core issues: Founder-CEO succession, Successor-CEO’s perspective, Organizational change, Managing the founder, Managing the board of directors, Doing due diligence on potential employers, Raising venture capital, Taking charge.

  • Case #3: “The Tale of the Lynx” (3-part series, covering pre-founding through exit) (HBSP link)Case description: “The founders of Lynx Solutions have survived tensions within the founding team, the firing of Lynx’s founder-CEO, and a crisis sparked by media allegations that it had been spying on its users. Now the founders are considering a proposal from one of their directors to make a dramatic shift in the venture’s strategy and have to decide how to react.”

    Core issues: Managing the board of directors, Bridge CEOs, Founding teams, Hiring challenges, Venture growth, Raising venture capital.

Up next: Founder exits, Franchising decisions, and Other Special Topics

5 Comments
  1. Wow , very nice topic. I like that. Your succession is very good.
    Thanks for nice and rich blog job.
    Have a nice time
    bye
    Dog Life Jackets

  2. private companies in the Technology and Life Sciences industries are good for every country.

  3. IAN is the largest business group with successful entrepreneurs as Indian angel investors. It has helped many aspiring individuals and organizations to set up successful business and make their dreams into a reality. Members at IAN look at companies with a strong management team, innovative ideas and the courage and enthusiasm to try out new ventures. IAN has always taken up challenges and is open to angel investment in India in diversified fields such as IT, healthcare, media and entertainment, retail, specialized BPO, agriculture/food processing, banking and financial services, education, travel tourism and hospitality, biotech, pharma and life sciences and such other area that excites the network members.

  4. I've seen this more than a few times and it's difficult every time it happens. It's often the case that founders are looked to be removed when new investors come in to the company and have a majority stake. Iv'e seen it happen in healthcare any number of times, from hostiptal startups, to surgery outpatient clincs, to medical spa and laser clinic franchises.

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