Startup Therapy Podcast

Episode #33


Ryan Rutan: Yeah, yeah. As founders, we know that startups fail and we end up moving on, but what happens when a startup is doing okay or even really well, but we want to move on anyways on. Today's episode of the startup therapy podcast will, and I will discuss the reasons you may be compelled to quit your own startup, how to backfill the role you leave empty and what life after quitting your startup might look like we're back for another episode of the startup therapy podcast. This is Ryan Rutan from startups dot com, joined by Wil Schroder Ceo of startups dot com. Today, we're gonna talk about quitting your own company stopping working at your own startup, which might sound strange, but will this is something that comes up more frequently than people might imagine, doesn't it?

Wil Schroter: Yeah, it does. I mean, now that I think about it in the past, maybe a week to two weeks, I've probably had more conversations, I talked to a lot of founders, I probably more conversations with founders talking about how do I quit my own startup, then founders talking about how do I grow my own stuff. So it's uh, you know, probably a lot of folks listening to this. If they even decided to queue up this episode, they've at least had the thought in their mind, right? You know, they're like, well, if I did want to do something else, what would that look like? And the truth is it's not a topic that comes up very much like a lot of things we cover on this on this episode on this podcast and it's not something that you can go to a lot of friends and talk about because frankly they've probably never done, but it can be done. It is, it is not without challenges and you know, certainly walk through those today. It is not without huge obstacles that you will have to kind of overcome in order to even make an attempt at this because even if you attempted, it doesn't necessarily mean it's going to work. I mean, look at the end of the day, yes, you can just quit your startup. You know, you could replace that

Ryan Rutan: insured any sentence in startup, like you can try it, but there's no guarantee it's gonna work. Like that's

Wil Schroter: yes, yeah, not the way folks are thinking, but you know, in Right. I think you had mentioned that you were just talking to somebody not too recently about them wanting to quit their own service. Like between the two of us, even Tuesday, it's coming up a lot with us. Yeah, yeah, yeah,

Ryan Rutan: yeah. On Tuesday? Well, out of a room of of four founders, one of them was wrestling with this issue. Right? So yeah, it comes up a lot. Right. And and

Wil Schroter: what did it look like in your case? I want to give you some vignettes of what I just dealt with, but I'm curious to hear what it came, how it came up in

Ryan Rutan: your this one. This one was, I'd say one of the pretty standard reasons that we here for this and it was some combination of lack of challenge and and, and boredom. Alright, so he's about 2.5 years into this business. It's a food service company that mostly does food service in other establishments. He's got a product that he puts into other restaurants into other establishments, right? And so he figured out the formulation, he got all that going, he built an audience around it, you know, he had his own store that built the brand and then he started to distribute this stuff at the point at which it switched over to distribution. He was like, I'm not really innovating anymore, it's the same thing over and over again, I just have to go into another location, convinced them to drop their current supplier, pick up mine and then service that account. And he's like, it's not fun anymore, right? And and so he's a little bored, little little less interested in the challenge. And so he's trying to figure out can he step back from this business and just put somebody in, It's it's gotten to that operational state, then he's kind of like, well, I don't really want to do this part of it anymore.

Wil Schroter: Right. Right. Which is fair, and I think as entrepreneurs as founders, we often feel guilty when we had these feelings, he

Ryan Rutan: definitely has that,

Wil Schroter: right, right. We're somehow cheating are startups, this thing that we built, so spent so much time to build all of a sudden we're not doing right by this various startups as if our own feelings, our own emotions aren't even an option. And I think that's a dangerous place to be.

Ryan Rutan: Oh yeah, it can be right. I mean at that point when you become disinterested in the, in the thing that you're doing regardless of whether you feel guilty about it or not, there can be some some seriously Mallo outcomes from that.

Wil Schroter: Yeah. And so in my case, I had two conversations that I can recall both in the past week. So these are very top of mine. One comes to me from a founder who's 23 years old, smart founder, great business. Probably, you know, some of what you're talking about and he's been out a few years. He likes the company. It's not a problem of whether he likes the company, it's just not doing well enough That he's like, I'm going to put all my chips on this. I'm 23 years old. I got a lot of life ahead of me. I'm not sure that this is, this is what I want to push all my chips on two for the next 5, 10 plus

Ryan Rutan: years, but

Wil Schroter: I have enough of a business and I think this is going to ring true for a lot of folks listening. I have enough of a business that I also can't let it go. I'm not looking to shut the business down. Important part I think what we're talking about today, we're not talking about necessarily shutting businesses down. We're saying, how do I quit startups that are working just fine? How do I just leave the steering wheel, so to speak again? So he's thinking, look, I've got this business, it's not big enough for what I wanted to be, the total addressable market or the growth rate isn't big enough, but it's big enough that I can't just fold it either. You know, it's a viable business. What do I do? And I think that's really interesting because there's part of him that's saying, well maybe I'm just giving up on the business, you know, maybe maybe I'm just not really giving it, its due

Ryan Rutan: 23 years old, I'm guessing he hasn't put in seven years on this thing yet, has he?

Wil Schroter: Well, but he might be and I actually shouldn't say it might be, he is smart enough to know that there's a fairly high chance that it's not a time thing anymore. The business sometimes early on kind of plays its cards and you can see where the business is going to go. And you can also say, look for the amount of time and effort that it would take to maybe grow this a little bit. I'd rather transform that time and effort on something new where I can probably hopefully get a bigger return on it, which, which makes sense.

Ryan Rutan: It's a tricky situation.

Wil Schroter: It is and and and there's a whole bunch of kind of warnings that I gave him about that line of thinking one of them for what it's worth. So I don't just lose sight of it was, you know, how hard it is to get a single business to ever be viable, thinking that you're going to quit and just go do another one and have the same outcome. It's not very smart thinking the

Ryan Rutan: bird in the hand, right in the bush,

Wil Schroter: big time. The second one, the second entrepreneur Is 65, so on the very other end of the spectrum and he's saying, look, I'm looking at the next stage of my life toward retirement etc. My business is everything to me, it's all of my income, it's all of my retirement. But guess what? I want to go do something else and and frankly this is more of a startup to him. What do I do again? I'm not looking to fold the business. I'm not, I need the income, especially at this stage of my career And I can't afford to be wrong about this decision 23, you don't want to be wrong, but you can afford to be yeah, yeah, big difference at 65, you're sort of, you know, out of your highest income earning years in most cases. So it's a tough decision. However Whether in this case the founder is 23 or 65 they're both dealing with roughly some of the same challenges of trying to figure out how to quit backfill transform the business so that it makes sense for them. And so I think today we can start to walk through step by step, some challenges that are going through the minds of our anxiety, but also how do we actually do it? How do we actually put steps in place so we can walk away hopefully gracefully and bring somebody else in. If that's, if that's even possible, then who does it affect? And how do we deal with all this? Sure,

Ryan Rutan: Yeah, lot, lot to unpack there.

Wil Schroter: Yeah. And so let's talk about the reasons why people even start asking this question because I think it's worth perhaps bringing these reasons up to the folks that are listening to say you might be thinking one of these things and guess what? So was everybody, what are some that come to mind for you? I'm curious as to, you know, as you're kind of thinking to your conversations etcetera. Some of the top reasons folks are, are asking this when you're

Ryan Rutan: sure, right? I think there's the, one of the major ones is sort of financial viability and there's a there's a couple of facets to this, right? So the financial viability of the business isn't necessarily that the the business isn't making money. The business may be making money and the business may even make enough money to pay the founder, but the founder may look at themselves and go look based on my market rate, I shouldn't be spending my time here. It's making some money, but it's not paying me as much as I should write or maybe it's not paying them at all.

Wil Schroter: What I often see is I was willing to take a huge pay cut the market rates. Your point To come here because this is my startup though. So I was willing to go from making 100 and 50,000 to 70,000 and the delta in that camp was essentially looked at like an investment in my business. But it's been seven years. I'm long past the point where I can keep running at a fraction of my income and have that still makes sense.

Ryan Rutan: Right? It just, it no longer makes longer makes good financial sense to do that. Right? So that, that tends to be 11 of the reasons that I see is the financial aspect of things

Wil Schroter: And I think that can come in a few flavors, you know, like we talked about, we talked about one is, I'm just making far less than the market. The other is, I haven't gotten to market right? You know, my buddy who was 23 And let's say he's thinking, well if I just came out of college, maybe I'd be normally making say $60,000 depending on your market part of the world, etc. but I'm making 30 and if I stay on this track Over the next five years, if I go from 30 to 40 and I've burned up five prime income raising years of my life, I'll have myself at a point in the market where I am woefully behind where my peers, are.

Ryan Rutan: and that becomes almost impossible at that point,

Wil Schroter: man, it's tough, you know, it's not impossible, but it's it's tough and

Ryan Rutan: you multiply their probabilities together, it's close to zero,

Wil Schroter: Right? Right? But but I think the the facet of not being financially viable is also something that's hard for us as founders to come to grips with, not because we don't understand money and not because we don't understand how our bills aren't getting paid, it's because it's a reflection of our optimism. You know, when we say this business isn't making me enough money once we come to that conclusion, we're also saying it's not capable of making me more in the future. And how long do we run on that optimism before we have to come to that conclusion? Yeah, a long time.

Ryan Rutan: That can be yeah, that can be a and it shouldn't take us that long, right? I mean, like objectively, if you see that things aren't changing, you should be able to get to that conclusion. But I think that going back to that optimism paradox, right? We always believe that we'll be able to make changes that something can happen, that we can we can enforce that. And sometimes that is true, right? You know, and I'm sure this is what's going through, you know, the 23 year old's mind is if I just put in a little more time, can we turn the next corner on this thing, can we create some lift? Is there some scalability here that will will really change the way this looks right? But yeah, so I think that financial viability is a really important one. It's also one of the more tricky ones, because it can then be a barrier to being able to step out and we're going to talk about that later. But I think it's important to understand that there are strong ties between the reason you want to quit and your ability to do so, Right? So if the thing's not financially viable, there may not be an ability to replace yourself within the business from a cash standpoint, which makes it really hard to then step away for that reason.

Wil Schroter: Yeah, I agree, I agree. And another one that I often see, I saw this firsthand, so I'm actually gonna talk to it maybe is on board it happens. Look, man, you started this business, you were excited about the market challenge. You had a novel idea that you were working on, doesn't mean you're going to be excited about it for the rest of your life at some point, the the business just becomes a business customers just become customers? They're not that new thing. That novel item that's getting into the next level to validate what you built and you're just bored. I'll give you the most insane example I can think of is actually something I went through myself In 1999. I'm growing this agency business And maybe it's 2000 and it actually doesn't matter. And I remember that year We made $23 million 1999. It was a good year overall and I was 26 maybe. I don't, I can't even do the math probably 26 and get this board out of my mind, could not wait to get out of there, couldn't find enough ways to try to get out of there. I was bored with being in the agency business. I was bored running that business. I mean, idiotic is probably a better way to say it. I mean, it's insane now that I kind of look back on that, that, that, that was even an emotion I felt. But Ryan, I felt it so

Ryan Rutan: intense. You can't fight those things. You know, I would say, well, what if we were to expand this category from? I'm bored too. I don't want to, right, We did a podcast on this a couple weeks ago, we did a podcast a couple weeks ago where he said, like there are, you know, as founders, we build businesses to allow us to do things we want to do. But as founders, we also build businesses that keep us from having to do things that we don't ever want to do again. And you and I went through a laundry list of things like not working with jerks, not answering anybody else. And so I think that if you lump all those together, I think that when those things do enter the business, if you aren't able to stop them from entering the business, that categorically is is one of the major reasons that people end up wanting to quit their own business, right? Maybe your client base change. That turns out the only people that you are able to service his clients are lawyers and you just don't get along with lawyers. I might be losing a little bit right now. So and so yeah, I hope our corporate counsel is not listening or at least not billing us for it if

Wil Schroter: they're

Ryan Rutan: so Yeah. So I think that there's a lot of things that can enter in that make you want to do something else because you simply don't want to be doing this right. Whether it's boredom, which is fair angst,

Wil Schroter: Let's just whatever it does happen. Right? When I look back on 26 year old, will I look at as an entitled Jerk that should have been so thankful that he had what he had, that he wasn't allowed to be bored, right? And so I got to say like I kind of do this part of me that even looking back still feels like that's sort of true. That said my point is no matter how well things were going, sometimes people associated with how well things are going, you can still get bored. Yeah, doesn't matter,

Ryan Rutan: boredom is not related to outcomes, right? Boredom is related to the level of interest in what's happening.

Wil Schroter: Exactly. And I think sometimes you'll see something else like a life change. So my buddy that I was talking to that was 65, you know, life change, he's about to retire. He had a really interesting opportunity presented to him to go do the same job he's doing now at his company in Milan On the Mediterranean and like he's thinking dude, I'm 65 years old, right? Like I could probably be doing a cooler version of this job in Milan for the rest of my life than in cold as columbus Ohio. And so a perfectly reasonable reason to be able to say I'm not feeling this anymore.

Ryan Rutan: Yeah, so life changes. Other opportunities come along right? And and interestingly enough all these things kind of play together, right? So you may have this, you may have this ability to like have this opportunity comes along, I can now make a life change when I start to compare Milan to columbus Ohio, boredom may or may not sneak in right? It's 100% But like you may start to reevaluate some of the other criteria and say like, or maybe maybe the, the opportunity is also more money, right? So I was like, I can make sure in a location that's more so now I'm now I'm looking at what I'm doing now. I'm saying, oh well comparatively speaking to some future that I'm a little uncertain about, but like at least what I can understand about it, I'm relatively board. I'm not as financially viable. Um, and there's another life change that I want to make like moving somewhere, right, That sounds awesome. So these things tend to tend to play together as you as you start to drive towards this point where you want to quit

Wil Schroter: or sometimes you just burnt out. You know, I, I hear a lot of folks say and and I think this, they feel like this is some indictment against their own personality as a founder. Honestly, I'm just fried. I'm just looking for an easier way to spend my day. Of course you are, who wouldn't offered stuff is really hard. Of course you're burnt out. Like who wouldn't want to escape from that or at least take a long enough break from it, you know what I mean, yep,

Ryan Rutan: a furlough at least right at the minimum

Wil Schroter: at the very least. And so some people are just looking for, just give me a minute man and by a minute, I mean a year or two years, what have you, but just give me a break from this grind. And again, who wouldn't want that? Who wouldn't want to come off the ice as you know the term that I use or come off the field for a bit and just take a break, get a breather and just to determine when and if you're ready to play again,

Ryan Rutan: yep. Exactly,

Wil Schroter: Yeah, it's a big one. So what else do you see?

Ryan Rutan: So I think there's it's probably some combination of all of these things, right? But, you know, you can pull out some other specific ones that I've seen recently. This would fall into the life change category probably, which is just illness or health concerns either

Wil Schroter: first or in another

Ryan Rutan: episode we did. Right. And and so that that would be an issue for us, right? It's a big one because you may face a health crisis at some point, that it's just the solution to which is mutually exclusive to running your company, right? You may just not have the time and energy to do both or to do both well. And when it comes down to health, if that goes as far south as it can, you won't be running anything, right? So there are points where you kind of get pushed to this, you may not want to quit your own company, but you may need to and I think that's a big one, I've seen that happen a couple times in the last few years, luckily knocking on wood here, I don't see that one as often, but it has come up once fairly recently. And so I think, you know, that and some other versions of you just, you kind of can't do it anymore. Right. I would say like burnt out maybe falls into that same category, right? Uh, health related stuff. And then if we circle back to the 23 year old, right, he wasn't necessarily saying he was bored. I don't think he was saying, I'm not sure there's enough juice in this to make the squeeze worthwhile. Right. Is there enough upside? Is there a big enough future to make keeping at this worthwhile? I

Wil Schroter: see this all the time. I see this particularly with, with funded startups where they say we raise maybe our seed round or series and it doesn't even have to go that far, but just bear with me, we're not going to raise another round. That's kind of, you know, the investors when they were excited about what it could be, we figured out what it is and what it is, isn't as big as what we thought it would be right now that I know what it is. I'm not as excited about it and yeah, and I'm not, you know, looking to, to double down on something where I don't see an exponential outcome, but with all of this. Okay. So I think we've done a really good job of saying, look, if you're listening and one or all of these things applies to you don't feel bad because everyone else is thinking the same damn thing. So this is very common, but if you're listening, I'm guessing your next question is awesome. Now, what, what do I actually do about all this? And so the question being paraphrasing if I quit, then what? Like who runs this thing? And how do I actually, what is the the steps that I take in order to quit my own startup? And I don't just mean communication, we're talking about structurally, how do I make this happen? Because I want to at least consider it. Yeah, exactly, exactly. Um and so one of the things that I often present to folks and certainly white presented to a couple of founders that I was talking to in the past week is that we often think that as the founder slash ceo of the company that were the only person that can run the company now. Now we don't think that literally like we don't think anybody else can do it, but we forget that at the end of the day, it's still a job to us. It's more than that write to us. It's, it's probably all of our net worth to us. It's probably every moment of our day and everything else like that. But to someone else, what we do is just the job, which means it can do the company foreign backfield,

Ryan Rutan: It's a series of tasks and responsibilities that have to be completed. Right? And so from a company perspective, that's what it is. It is, it is kind of that simple. Right?

Wil Schroter: Right. And so when we talk about how to essentially backfill ourselves, we've got to consider a few things the first and I think is super important that we got the ceo job just by founding the company didn't have to interview for it. It wasn't a leg up for us. We spend $100 to incorporate the company and lo and behold where the CEO, eight minutes later on go, Daddy, I

Ryan Rutan: was ready to get

Wil Schroter: Exactly. But for everyone else that is an enviable position, try to remind founders that there are lots of people that would kill for a Ceo job now, while your job may not sound exciting to you, it's damned exciting to lots of other people, particularly most of the world, who doesn't have a Ceo title. And so I ask folks, just remember if you step back and you say I have a Ceo job to give somebody That's a big deal to a lot of people. And I think we tend to underplay that because we sort of got it for free, free being in our entire lives, our entire net worth in every waking hour, but we got it without the interview process. Uh, you know, we didn't have to go through 20 years of being promoted in order to get it. And I think that's something that's, that's really overlooked. What do you think?

Ryan Rutan: No, it is for sure. I mean when, when that opening occurs right, there's a strong vacuum. All right. There's a lot of allure to being the ceo of a company and it can come from a lot of different places, right? Like it may, it may be, you know, a a partner company. I've seen this happen before where you essentially do some sort of a merger that that ends up replacing one of the founders with the, with the other and they take over operation of both companies. Certainly hire from outside. Um, you can promote from within, which is, is another one that happens quite frequently. Although interestingly enough, that one doesn't seem to work out as well as often, which is a little counterintuitive. But there's somebody about just having watched it play out, having watched somebody transition from a VP or maybe like a a C 00 C M O C T O other position trying to step into the Ceo job under these circumstances where they're either replacing the CEO or he wants to leave. I'm trying to think of an example of this in startup land. Most of these were actually a little bit more like they were, they were further along kind of more mature companies. So this was more of a corporate level transition. But those internal promotions didn't ever seem to turn out quite as well, right? Is bringing somebody in from the outside. Sure for a lot of reasons, right. One of the things that happens if you promote somebody internally is there's political wrangling, right? Well I wanted that. Sure we've worked together for 10 years and I know what an idiot you are. So how the hell did you get that job?

Wil Schroter: Well, I think there's some considerations here. So if you're looking to backfill yourself and you're saying, well let's use the scenario, which I think is not uncommon. Hey, I don't necessarily know the company has an exponential future to it. So it's going to be really hard to hire another ceo. It's going to be hard to hire somebody who already has a ceo title because if I have a ceo title, I'm comparing this to my other ceo jobs.

Ryan Rutan: The

Wil Schroter: ceo title Yes. If I don't have a ceo title, If I have a V P E V P director level title at another company, this is likely the only Ceo job I am going to get offered in a very long time. Maybe ever

Ryan Rutan: ever write these opportunities aren't just falling off trees.

Wil Schroter: That's exactly it man. So often. What I'll say is what you're looking for is the next up and comer and this is their shot. But don't underplay the fact that bring somebody in as a Ceo could be a huge win for them going back to my agency days and even after that, after some of the startups that I did, I often worked to bring folks in to, to replace me because I was actually dealing with all of those, those issues we talked about and in each case they weren't Ceo previously, in each case they were coming from very different background and or a different title and they looked what I thought was this old tired job as the greatest opportunity they ever had.

Ryan Rutan: Sure sometimes sometimes it is right for them it might be. Um, and it might be for different reasons to write. Sometimes, you know, there's that fresh legs component you may have if you're leaving because you're burnt out, for example, bringing somebody else in might create different opportunities. It may be a very different job for that person than it was for you. Um and so yeah, and so it just depends, it goes back to that, you know, we said earlier, which is that this does map back to the reasons why you want out as to what the opportunities and options you have for replacing yourself, right? If the company is not making enough money to pay you the idea that you're going to find a rockstar replacement for yourself, not impossible, but certainly less likely right. If it's a boredom thing then the person that you're looking for is also different individual, you're looking for somebody who's more operationally focused, who's who's, you know satisfied with fine tuning something that's already working as opposed to going out, tearing up new space and trying to make new things happen, right? So a lot of this doesn't get back to where it came from.

Wil Schroter: They also probably don't own part of a company. You know, people will really take this for granted again for the same reasons we found it, we got 100% of the equity for free, so to speak. And we've kind of taken equity for granted. I don't mean that in a negative way, I just mean in a way where we've gotten used to having it. But the folks that we may be replacing ourselves with don't have that, they don't have a way to get involved in an existing company which heavily de risks that step and be able to take an ownership stake in the company. And I think the moment you give people a meaningful ownership stake in the company, it's a very different opportunity.

Ryan Rutan: Oh, for sure, and I think it ties them to the company in so many different ways, right? And you know, if if this is something that's pretty interesting too about having somebody who's in that non ceo role, if they're in a ceo role and they're in a ceo salary depending on how long they've been there, that maybe their plan, they may already have a financial trajectory that allows them the freedom that they want. Whereas somebody coming in who's who's not at that level, who doesn't have equity anywhere else. Looks at that and says, my destiny is now in my own hands in a very different way. I can grow this company, I can grow, you know, I have a salary, but I can grow a an asymmetric amount of value in this thing because I now own a meaningful portion of the company and that will completely change how they feel about what they're doing.

Wil Schroter: You said something earlier and I think we both touched on this also a fresh set of legs, right? So when we get to the point where we're burnt out, when you make a life change, et cetera, the last thing on our mind is coming in guns blazing to try to grow this thing and that's dangerous. It's unhealthy for the organization. It's certainly unhealthy for us. And it's unhealthy for any future prospects of growing anything. This new person comes on their ceo for the first time. They're a part owner for the first time. This is the greatest opportunity they've ever had. They're going to go guns blazing, which is exactly what you're trying to backfill now. All of this is all well and good. But it still leaves the next question, which is I still actually need to get paid. I don't necessarily want to work here, but I still need to get paid ergo, I can't afford to quit my own startup. So I think it's probably worth digging into that because there's some art and science to kind of how you approach that part of the problem too. Does that make

Ryan Rutan: sense? Yep. Absolutely, yeah, this will definitely tap into something we've talked about very recently, which is, can I go back to being an employee?

Wil Schroter: Sure, absolutely. And so let's just, let's set the stage going back to the two examples I was using the two vignettes, a 23 year old, 65 year old, both were in the same position. They said all the reasons that we listed, they applied at different levels, but hey, I'd like to get out of this thing, but I don't know that I can find someone to backfill me because they weren't thinking about the ceo the equity and all the different components that that would be attractive for somebody else. And even if I did, I don't know how I'd pay him because I'm just making this up, let's say that I'm pulling down $100,000 a year of income from this company, it's not like I've got an extra $100,000 that I don't know what to do with And by the way, I pay my bills with that $100,000, so how do I make that work? And so here's how it gets done. I've seen it done numerous times. Um let's say you've only got $100,000 to play with. And so again, we're not going to create monopoly money to pay people, We've got a couple options. One, the first thing you do and Ryan, I think that you're heading toward this as you're looking to kind of go on and figure out what you're going to do next is figure out how you're going to get paid next. Now. People don't do this. What they say is I want to quit and I want my full salary. Okay, that's just not going to happen. Just be clear. You only get to make the leap assuming that you need the cash if you first find a new way to make more money, which is antithetical to a lot of founders because they're like, no, this is the way I make my money. I want to go work on something new where I'm not going to get paid, but I can still draw a salary while I go work on this other thing. It's not going to happen

Ryan Rutan: unless you live in Denmark

Wil Schroter: and then it

Ryan Rutan: Does. But yeah, in den Denmark because in Denmark, if you leave your job, you have up to a year and I think it's 70% of your current salary to find a new job.

Wil Schroter: That's amazing. That's a real thing.

Ryan Rutan: It's a real thing. It's a real thing. That might be one of the reasons they're the happiest country in the world.

Wil Schroter: Oh, wow. Or the most employed. Apparently you sort of never cope unemployed if you're in Denmark hit pause right now while we see how the entire rest of the world you

Ryan Rutan: Can fast forward through the next three or 4 minutes here.

Wil Schroter: So, but here's how it does work to be fair. Typically what founders will do is they'll either find some other consulting type gig to try to supplement a little income and again, you have to be thinking in terms of how do I start making more money elsewhere? Not again, how do I magically somehow get paid without doing the very work that was that was incumbent on the job to begin with. But what you can also do is if you're promoting somebody within the company, you can start to hand over some of the responsibilities piecemeal. And by by way of that some of the comp, so that let's say you're taking $100,000 Year one, they take $10,000 of your comp In year two, they take 20,000 years three, they take 50,000. So as you're kind of ramping down, they're ramping up. It doesn't always have to be all or one and that mainly works when you already have folks that are on the payroll that can start to kind of juggle the additional responsibility while you take some of it off your off your plate. Another way to do it, which is very common is the person that's coming on, takes a portion of their comp in stock. So you're using some of your stock as a replacement for cash like startups do all the time and that can work as well. Yet another way that you do it is you actually go get another job by the way It happens all the time. My buddy who is 65, he was planning on getting another job. He had a perfectly functioning business by the way. In his case it wasn't a matter of the business not doing well. He just wanted to go do something else. He specifically wanted to go to another job that actually paid him more than he was making now. And he was just trying to figure out how to functionally backfill the organization. So he could quit his job and good. That's not unusual.

Ryan Rutan: Yeah. And one other thing I want to point out here is we talk about backfill and we talk about you know how to, how to replace ourselves and how to cover the cost of that. That it isn't always a binary replacement, right? It's not, I'm leaving and then bob is going to take my job or I'm leaving and carol is going to take my job. Sometimes this gets defrayed out across the organization, right? And then over time you can kind of, you know hand off certain responsibilities to other people who are either as or more capable or can become capable enough to do the job. Um and you could make a case that, you know, this might be harder, easier, depending on the stage of the company and there probably is something to that, but I could see this playing out at a large company or a small company in different ways.

Wil Schroter: What I love about that is often the ceo where's a handful of hats? Yeah, each of those has, you know, they have a particular affinity for some cases, they're they're the best that etcetera. And if you try to find one person to wear all of those hats, it's usually very difficult because we kind of organically got to that role. Yeah, you grew

Ryan Rutan: into the weirdest looking hat ever, that's what happened,

Wil Schroter: but if it's my head, yeah, I'll take my role for example, uh you know, as you know, I've got a lot of different facets to my role, I'm our CFO, I do product development, I do a ton of writing, I'm not going to find somebody that can do all of the things that I do, but I can find lots of people that do some of the things that I do and in fact only handing off each of those things individually may make this 100 times easier because there's so many cool ways I can do this, I can do it over time, I can say, look, the first thing I'm gonna do the first role I'm going to try to pick off is CFO, I'm going to continue to do the other things that I'm doing and this is part of a retirement plan, so to speak and I'm going to hand that off first now I at least have two thirds of the amount of work that I needed to do before. Incidentally, the other thing that might happen might just take some pressure off me for a while which solves some of those other problems, which is,

Ryan Rutan: it may eliminate the need to quit in the first place.

Wil Schroter: Exactly. The other thing would be okay. I'm going to take three of my roles and I'm going to hand them off to other people, give them some additional equity or profit sharing or even cash comp in order to support that. And I may find that once I've done that the remaining role of a Ceo, it's like a C 00. It's not it's a VP of something, it's not even that significant of a role. But when you packed all those pieces together it was a really complicated, expensive role. But when I decouple it and I start to look at all the pieces individually and maybe I'm really good at say business development, which is often the case for a ceo and maybe that's all I'm left with, right, maybe just day to day administration etcetera. Just once I got that off my shoulders I have 20% of the work and guess what? Maybe now I'm hiring a head of business development to back filming. Maybe again the role I'm looking for is completely different at that point I think.

Ryan Rutan: And then the criteria change, the economics change completely. Um, and even the necessity to completely back out might change. So there's definitely value in looking at that because in the same way that you said earlier when we found the company we take for granted, not, not, not in a negative way we take for granted all that equity is ours. As that ceo job, founder job grows over time we take for granted that all that stuff belongs inside that role. Um, to your point, if we start to unpack that, what we're probably looking at is the aggregate of several different roles Bastardized into one Franken roll. Right, right. So I think unpacking that and really being clear on on where you need to be focused and how that aligns with the objectives of the company may completely change the notion of how this discussion plays out.

Wil Schroter: Also easier to find your replacement. The other thing that I've that I've done myself and you actually do see this in public companies and other strategies is I basically go into a chairman role, which is often kind of like a Ceo in waiting or sometimes it's, it's how Ceos get fired. But Hospice for Ceo Hospice for CEOs, but the chairman role says, hey, I'm still around if you need me. But let's be clear, I'm trying to get out of this thing. And so whenever you see Ceo move onto a chairman role that's usually part of a transition strategy into the, I'm not going to be here anymore. But that can also be used to great effect, which is to say if ship hits the fan, I'm still around, I'll still jump back in. Uh it may turn out that let's say I've got four rolls that, that I'm part of as the Ceo, I hand off three of them and the fourth one, which could be something like sales vision, future strategy, whatever I hire a Ceo and she is specific to just that component but a year goes by and just things aren't quite working out well for I'm still chairman, I'm going to kind of roll back in if I have to in order to kind of back fill that role or at least help out etcetera, showing that I'm still around somewhat. Like I haven't totally left the farm.

Ryan Rutan: Yeah man, that makes tons of sense. And you know, we've, we've gone over, you know, how we get to this point? What what causes to have these feelings? What are the practical considerations in terms of handling this? Is there anything we haven't covered off on? Are there any other lingering concerns that we should throw out there for people?

Wil Schroter: Yeah, I'm just gonna put it this way, no matter how much we break this down. Ryan, you're still going to be super freaked out about it, right, that's a given, there's, there's no version I've ever seen where anybody has been like, I just decided to quit my company. It was all smooth sailing. No, it's a complete nightmare. But look at the end of the day, people quit their startups all the time. But what they do is they develop a plan for how they want to quit their startup. They execute it like any other plan that they have and they come to a conclusion where they're ready to move on to the next thing.

Ryan Rutan: That's a wrap for this episode of the startup therapy podcast. This is Ryan Rutan on behalf of my partner, Wil Schroder and all the startups dot com family thanking you for joining us and we hope you'll continue to join us. Be sure to subscribe rate and comment on itunes or wherever you love to listen to startup therapy. You can find all of our episodes at startups dot com

Wil Schroter: slash podcast.

Ryan Rutan: If you're looking for more, amazing resources to launch or grow your startup, be sure to head to startups dot com and check out startups unlimited. It's everything we have to offer from our online university to our amazing community of experts and founders and even all the tools we've built like biz plan, fungible and launch rock. It's everything a founder needs visit startups dot com slash begin that startups dot com slash B E G I N. You'll thank me later

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