Should the Founder be the CEO?

Feb 17, 2025 | Uncategorized

By Brian Mitchell, Managing Partner & CEO.

The roles of a Founder and a CEO evolve at different inflection points as a company scales. Some first-time Founders can naturally assume the broader operational scope of CEO, however, the vital transitional skills involved aren’t typically inherent nor organically generated. Most first-time Founders need to grow into the role of CEO, being intentional about personal/professional development along the way. Some first-time Founders will eventually discover they’re better suited for their core area of “founder expertise” such as tech or product or finance or sales, and the business is in better hands hiring a professional operating General Manager as CEO. And of course, some Founders find that they have no choice in a new role if the board has controlling interest and determines a different CEO is necessary at the current stage of the company. Here’s how Founder vs. CEO responsibilities and leadership styles often compare at various stages of growth:

1. Early-Stage (0–$1M ARR / Pre-Seed to Seed)

  • Founder:
    • The visionary who identifies a problem or opportunity and builds the initial solution.
    • Hands-on in product development, customer discovery, and fundraising.
    • Focuses on survival: raising capital, hiring first employees, and iterating product-market fit.
    • Works in the trenches—selling, coding, designing, and recruiting.
  • CEO (if different from Founder):
    • At this stage, most startups don’t have an external CEO; the founder typically plays both roles.
    • If a non-founding CEO is present, they may be a co-founder or an early executive or investor focused on execution.

2. Early Growth (Scaling to $10M ARR / Series A–B)

  • Founder:
    • Still deeply involved in product, culture, and vision.
    • Begins delegating key functions like sales, marketing, tech/engineering, and operations.
    • Focuses on hiring strong leadership (COO, CTO, VP Sales).
    • Might start considering whether they want to remain CEO or transition to a product/strategy or alternative role.
  • CEO:
    • If a CEO is brought in, they focus on building scalable systems, fundraising, and growth.
    • Ensures company vision aligns with execution.
    • Implements MBO (Management By Objectives) and KPI metrics across the business and departments.
    • More structured approach to scaling go-to-market, finance, and operations.
    • The CEO is a significant expense so growth will become urgent with board expectations.

3. Growth-Stage ($10M–$100M ARR / Series B–D)

  • Founder:
    • Less involved in day-to-day execution but still critical for vision and culture.
    • Potentially transitions to a Chairman, President, or Chief Product or Strategy Officer role.
    • Focuses on long-term strategy, partnerships, innovation, and market evangelism.
  • CEO:
    • Primarily responsible for scaling operations, hitting revenue targets, and investor relations.
    • Manages executive leadership and ensures accountability at all levels.
    • Optimizes organizational structure, efficiency, and profitability.

4. Late-Stage / Pre-IPO ($100M+ ARR)

  • Founder:
    • If still CEO, must fully embrace scale leadership (which many founders struggle with).
    • If they step down, they often become Chairman or move into an advisory role.
    • Focuses on new ventures, innovation, or personal investment.
  • CEO:
    • Usually a professional executive brought in to prepare for expansion, IPO, or acquisition.
    • Prioritizes financial discipline, operational excellence, and public market positioning.
    • Deals with board dynamics, legal compliance, and shareholder relations.

Key Inflection Points for Role Transitions

  1. Product-Market Fit (~$1M ARR): Founder shifts from building to scaling.
  2. Go-To-Market Scaling (~$10M ARR): Founder may bring in a growth-focused CEO.
  3. Operational Maturity (~$100M ARR): Founder often steps back or transitions leadership.

Although there are too many nuances and unique circumstances to quantify company by company and industry by industry, this outline is accurate. Some Founders go on to be exceptional operating CEOs, some don’t do so on their initial venture, and some are best suited to hand over the management keys when the timing makes sense. Separating ego from effectiveness is sometimes easier said than done, and sometimes what is obvious to some might not be so obvious to others (especially passionate Founders dedicated to having their idea and company succeed). Blending the influence of the founder(s), select managers, investors/board members, and potential 3rd party advisors, towards conclusions best suited for the success of the company isn’t always effective nor linear. However, if the focus remains on the best interests of the business proceeding forward, whether for mere survival or for massive success, alignment can conclude without a giant power struggle. The key question for the Founder with controlling interest: am I the best choice to operate the day-to-day business, am I most happy in that role, or am I best suited in a specific area of focus while allowing a professionally seasoned operator to take the CEO reins? Deep breaths while looking in the mirror might help too.