What happens if you are in the role of CEO of a startup you have founded and you wake up one day and things no longer feel right?
Perhaps the startup now has tens or hundreds of employees and its operational complexity is making you feel out of your depth.
Others wake up realizing the spark of excitement that drove them to launch the company has disappeared. Or it may be that an IPO or global expansion is looming and you fear you don't have the experience to see it through. You might start asking “Is it time to leave?”
For many scaleups, that may not be the best answer and stepping into a different role at the growing company may make more sense.
In recent years a number of founder/CEOs have shifted into new roles. This includes Spotnana founder Sarosh Waghmar moving to the chief product officer role last year and ceding the CEO position to Steve Singh; WeTravel founder and CEO Johannes Koeppel also shifted to chief product officer and handed the leadership baton to Ted Clements; and more recently James Dixon, CEO of Visit Group became chief operating officer as Richard Wiegmann takes the helm of the company.
Cara Whitehill, vice president at Thayer Investment Partners, said the skills required to grow a company from zero to one are "vastly different" than going from one to 100.
“Some CEOs can be effective across all these stages, while others find their sweet spot in one stage or another. Many ‘builder’ startup CEOs really like that 0 to 1 mode and once a company graduates to the next stage of scaling, they get itchy to move on to their next startup idea,” she said.
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Kevin Czok, a Dubai-based venture capitalist and strategic advisor said that while some founders thrive and evolve as their companies grow, others find their skills are put to better use elsewhere such as in "product innovation or long-term vision.”
This is what happened at RoomPriceGenie, co-founded in 2017 by Ari Andricopoulos, Marvin Speh and Jörg Siegel. Andricopoulos’ family ran an underperforming independent 15-room bed and breakfast at the time, and he realized his experience building trading algorithms for the financial markets could come in useful. His software boosted his father’s B&B revenue by $50,000 in the first year and RoomPriceGenie was born.
In 2019 the company, a PhocusWire Hot 25 Travel Startup for 2022, attracted $1 million in seed funding from Founderful followed by a $2.2 million Series A funding round in 2021.
In February the company secured a $75 million investment from Five Elms Capital. When the investment was announced, it was revealed that Andricopoulos would step aside to become chief strategy officer.
Five Elms operates a rare “CEO-in-waiting” program where it employs two or three people who can be dropped into portfolio companies, either taking over as CEO or in some other supporting role.
Charles Scarantino was part of that program. Before joining Five Elms in 2024 Scarantino had previously founded student health record management software company Magnus Health, which he grew to $6 million in revenue.
Scarantino and Andricopoulos first spoke in May 2024 and hit it off straight away.
Andricopoulos said that relinquishing the CEO role was not in the plan at first but that it became more obvious as discussions continued.
“I had a second call with him after the summer holidays and I thought ‘I really want this guy’. Personality-wise it just felt like we were really on the same page in terms of values and that was really important,” he said.
Scarantino was also positive. “We found this natural fit between my background and what I wanted to do from a scaling perspective and his experience and what he wanted to do next,” he said.
Andricopoulos said Scarantino’s experience was vital.
“From talking I could really sense his deep understanding of what a company looks like that's bigger than ours and how to get it to there because he'd done it before. That was really impressive,” he said.
Andricopoulos then had to sell the idea of Scarantino becoming CEO to the other two co-founders.
“I didn't worry about introducing him to Marvin and Jörg. I knew that when they met him, they would have the same feelings,” he said.
Andricopoulos said developing the algorithm is what he enjoys most and this is why he is staying on to focus on strategy.
Perhaps as a result of Five Elms’ CEO-in-waiting program, founders staying on but moving to a different role is common.
“About half the [Five Elms’] companies, maybe even a little more, are still being led by their founders. With the other half, the founders are still involved, but they wanted to take a different role in the business,” Scarantino said.
If CEO transitions are not well managed, they can be a massive distraction for the team, customers and vendors. When managed properly, it can unlock new momentum and fresh perspectives for the business and sometimes even the market more broadly.
Cara Whitehill, Thayer Investment Partners
Czok says that mutually agreed transitions like in the case of RoomPriceGenie are usually preferable.
“As a VC, I believe forced transitions should be avoided whenever possible. When done well, this allows for continuity in company culture and vision, preventing the pitfalls that can arise when a new CEO disrupts what made the company successful in the first place,” he said.
So when should a founder CEO move aside?
The right time is when a CEO or the board believes someone else "could be more effective," according to Whitehill.
"That is the right time for the transition. Whether that means the CEO slides into a different role in the company is a function of whether they are suited for it. The best person for the role should be the one to take it, regardless whether or not that person has previously held an exec role within the company,” she said.
Whitehill also said that in the case where a company has stagnated, the Board may decide that a fresh leader is called for.
“In still other cases, the market may have changed and a major pivot is needed, and a different type of CEO skillset is required; this may be a mutual decision between CEO and Board,” she said.
In the travel industry, success is often dependent on established relationships, a deep understanding of complicated and fragmented markets and technical knowledge.
“Scaling a travel startup requires more than just craftiness and efficiency: It demands trust from partners like airlines, hotels, and tourism boards, and an understanding of complex distribution systems. In such cases, a seasoned industry executive can be an invaluable addition to the startup leadership team, whether as CEO or in a supporting role,” Czok said.
“Founders should remain open to evolving their role. In some cases, that might mean eventually transitioning out of the CEO position, but in many cases, it simply means surrounding themselves with the right people to handle operational complexity while they continue leading the company.”
However, it is not just about who is right for the role but the need to ensure the transition is well managed, said Whitehill.
"If CEO transitions are not well managed, they can be a massive distraction for the team, customers and vendors. When managed properly, it can unlock new momentum and fresh perspectives for the business and sometimes even the market more broadly,” she said.