When should a founder bring in a professional CEO

Sometime in 2010, the Indiaplaza board felt the company necessaryed a professional CEO. This suggestion was a shock to me. All founders, almost without exception, strongly believe their relationship with their startup is a bond for life and no one can handle the operations better than themselves. However, soon I not only built peace with the suggestion but also realised there was merit in it. In reality, there’s a time when founders must step back and let trained specialists step in.

Uber is a classic example. Travis Kalanick, co-founder and CEO, led Uber with a bold vision, incredible speed and never-before-seen global scaling from 2009 onwards, raising and burning unheard of amounts of capital. The insane scale-up resulted in regulatory issues worldwide, a toxic work environment and instability, putting large investments at grave risk. In 2016, the board forcefully replaced Kalanick with Dara Khosrowshahi, who quickly disbanded the huge bets, brought in operational stability and fiscal discipline; today, Uber is growing profitably. It necessaryed the founder’s energy and vision to fuel its explosive initial growth, but to focus on profitability, its board brought in a professional with a different skillset.

Closer home, Sachin and Binny Bansal set a scorching pace of growth for Flipkart from 2007, raising huge money. However, investors worried about the massive burn rate and rapid scale-up of competitor Amazon India since 2013, brought in Kalyan Krishnamurthy as CEO to focus on profits. This transition, especially after Walmart’s acquisition of Flipkart, led to higher financial discipline, but the innovative founder culture was perhaps diluted.