Gini Dietrich

Founder vs. CEO: How to Scale Your Business

By: Gini Dietrich | May 20, 2014 | 
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Founder vs. CEO- How to Scale Your BusinessBy Gini Dietrich

A few years ago, I was in a meeting with my mentor and coach and he said to me, “Do you want to be a really good communications professional or a really good business grower?”

I was reminded of this conversation recently when a friend asked for my advice on growing his PR firm.

He told me he spends the good majority of his days with clients, doing the work. He said he loves it and it’s the reason he started the business, but he never has time to do any business development.

I said, “Do you want to be a really good communications professional or a really good business grower?”

You can imagine he chose the latter.

Founder vs. CEO

It’s not an easy transition…going from founder to CEO, but it’s one that is necessary if you want to scale your business.

It requires you to work differently. It requires you to give up – in a sense – what you love and develop a new passion.

The difference between the two?

A founder builds a team. A founder goes out and finds customers. A founder rolls up their sleeves and does the work. A founder gets financing. A founder focuses on finding the right product or service to sell.

A CEO positions the business for scale. A CEO gets the heck out of the way of the talented people on the team. A CEO stops doing everything him or herself. A CEO delegates effectively. A CEO empowers their team to do really great work. A CEO spends most of his or her time coaching the team.

A CEO, to draw an analogy, becomes the head coach of a sports team. He or she builds the All-Star team and gets to work to bring out their very best.

The Transition

Going back to the conversation I had with my friend.

We talked about how upset clients will be when he begins to transition work to his team.

Yes, they will.

It’s not easy to transition. Even if your clients intuitively know you need to get out of the weeds, they’re going to think they’re the exception (multiplied by the number of clients you have).

It won’t take weeks. It won’t take months. It will take years.

In some cases, you’ll help existing clients feel special as you “grandfather” them into the new approach.

Eventually, they’ll either transition with you or they’ll find another firm.

Either way, the transition is painful for you. You’ll have to be prepared to lose some clients.

People don’t like change and, though they’ll understand this change is good, some won’t like it.

Keep the bigger picture in mind….and always remind yourself it’s about the journey.

This blog post was inspired by John Dineen as he wrote about his transition on Medium (my new most favorite site). 

About Gini Dietrich


Gini Dietrich is the founder and CEO of Arment Dietrich, an integrated marketing communications firm. She is the author of Spin Sucks, co-author of Marketing in the Round, and co-host of Inside PR. She also is the lead blogger at Spin Sucks and is the founder of Spin Sucks Pro.

  • This is like smart management writ large. I’ve been in too many organizations where people far too high up the chain are far too interested in dictating exactly how things are done, or, worse yet, in doing it themselves. It’s just inefficient. Because what often happens is that the person at the top creates bottlenecks, because he or she really doesn’t have time to be doing these things. And the only reason the people below can often give for why the CEO is doing these things instead of letting their staff handle it is that they don’t trust their staff. And if that’s the case, they need to hire better. 
    Phew. Rant over!

  • Most people can’t transition. It is why the VC’s bring in management pros and boot the founders to the side. Founders are visionaries (Larry Page) CEOs usually not (eric Schmidt). CEOs know how to scale. Founder know where the company needs to go non-operationally.

    The problem in the Ad/PR industry is when the founder (who often has special creative/insights on the client level) becomes CEO and stops doing the work that won them their noteriety and status….their business often loses quite a bit of that status.. When it isn’t Gini Dietrich doing my work will I view A-D as just another Agency? Maybe. Maybe not.

    My first tattoo was done at Fun City Tattoo in NYC. The owner Jonathan Shaw is credited with starting the tribal tattoo movement. He has personally tattooed Johnny Depp, Kate Moss, Tommy Lee and many others. Mine was done by Frankie. While Frankie has more prestige working for Jonathan, Fun City Tattoo is less prestige because Jonathan doesn’t do the work himself anymore. Yes his artists need to meet a certain level of ability. But really good ones would never work at someone else’s shop. Saying my tattoo was done at Fun City Tattoo is not the same as saying Jonathan Shaw did my tattoo. Not even close.

    So there is a give and a take. Scaling will mean more income/revenue potential which means you are trading your hourly rate for that larger potential (the wider profit off your employees client work.. Most founders accept that choice that is why so many let the VCs bring in pro managers.

    To be honest Gini go for the figurehead position. This way you can just jet set, blog and write books like Mitch Joel. Not a bad life! You can have the chairlady title and just count your gold bullion!

  • I will have to come back and comment in detail later, but: I love the graphic!!!!!

  • Transitioning can be tough and there is a good chance you will lose some customers. What I see in my industry is people that are really good on the sales side (rainmakers) get promoted up to management and then they are not so good. 

    Change is inevitable so sometimes you have to make that leap, but when you do, you definitely need to be ‘all in’ at that point.

  • As you know, I’m not a huge fan of change – even when I know it’s for the best – and spend time processing and working through that stress post-changes. The logical brain can tell you it’s good – but the emotional brain still holds sway. 😉 It’s definitely been a year of change for us here at AD, and I for one am so proud of what you’ve done, Gini, and the changes you’ve made as a leader and a CEO. My dad always said “A change is as good as a rest” – and he’s right. Staying in your comfort zone works for awhile, might work forever, but it’s stale and boring. And who wants to be stale and boring?

  • biggreenpen  LOL! I saw that and went to make sure I could use it. Very funny!

  • bdorman264  I think that happens a lot in service businesses. That whole Peter’s Principle thing.

  • Howie Goldfarb  I’m a looooong way from having the chairlady title and counting my bold bullion. But it is a transition I’ve been making for the last four years. It’s not easy. Some clients still want me. Some still get me…but they pay a pretty penny for it.

  • Eleanor Pierce  We’ve never experienced this with any of our clients… 

    It’s hard. Even when you trust your team, there are times where you feel like you have to jump in and get involved. When clients are angry, for instance. I rarely hear from clients (outside of the meetings *I* schedule with them) unless they’re angry. At that point, you have to do a balancing act. Trust your team to fix it, and make the client trust you’re doing so.

  • belllindsay  You? Not a huge fan of change? Who knew?

  • ginidietrich Howie Goldfarb Watching scale play out in the context of SV has been interesting – one thing I try to keep in mind is that scale is a matter of understanding where and how you want to be effective, and it’s not often about money so much as it’s about the volume, type of work, and culture. I’ve seen people quickly shift into amazing amounts of money but complete depression. 
    The other thing I really take to heart is that a good founder does know when to step aside for a COO or CEO to run the day to day, but as long as you are not beholden to serious VC money you get to decide what’s right for you, and as a founder it’s important to check in regularly to make sure that the day to day culture (and not tasks) reflects what you believe in and what you want the org to be. Clearly Gini you’re paying attention to that, which is something I respect. Not sure if you already read him, but Alex Turnbull over at Groove (SaaS, competitor to Zendesk,  Desk.com, etc…) has some good insights on a regular basis —>http://groovehq.com/blog

  • ginidietrich I know. I am an enigma.

  • ginidietrich Howie Goldfarb   “Madam Chair” does have a great ring to it. (my 2 cents)

  • KevinVandever

    “Develop a new passion”. Interesting. I think this is tougher than it sounds. I know it was difficult for me when I needed to make the transition. I failed to do so quickly enough because I loved doing the work more than I loved growing the business. Even as I was learning how to make the transition, I would often revert back to the work for a number of reasons (excuses). Really, I just missed software development and creating solutions for my client, and found that growing the business was not what charged me at that time. Trying to force that passion was only a temporary solution. I didn’t maintain the necessary drive. I know this about myself now and learned many lessons from my first attempt at running and growing a business. In my current endeavor, I have goals to grow the business, and will be involved in doing so, but the passions are still more about the actual work and the customers so I will need and seek help in some of the business growth areas, which is something that fits well with my particular business.

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  • Oh man, am I going through this right now. My mom recently apologized to me and said “I think your farm upbringing has hurt you. We’re so used to rolling up our sleeves and doing it ourselves. But, you have to let that go.”

    She’s right. Aren’t they always?! 😉

    But, it’s easier said than done. It’s not that I don’t trust my team, it’s that it takes a mindset shift on my part and figuring out how and where to peel things off. Any practical tips on making that transition with your clients?

  • It is impossible to grow your business when you’re up to your neck servicing clients. I know this all too well! We’re just coming out of a month where my business partner and I got back into the roll of client service thanks to a combination of staff maternity leave and someone leaving to take a full-time job that was impossible to resist. “No problem, we’ll jump in and cover the gaps” was probably, in hindsight, not the best move. :-/

  • lauraclick  They ARE always right! That is so infuriating! Dang it!

    The transition with clients is really, really hard. I visited every one of them late last year. I told them the direction I’m taking the company and what I’ve hired my team to do. In theory, it worked really well. And some clients have been ecstatic to work with Laura as the client services director (which was a key hire for us in Q3 last year). Others, well, they’re not super willing to let go. With those, I still spend time with the CEOs, but pretty much force everyone else on the client side to work with my team.

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  • The E-Myth should be required reading for anyone that owns a business. The single most important book I ever read.

  • JayBaer Totally agree, Jay!

  • Just wrapped up a 13-year run at Mantis where we struggled DAILY with making the transition from founders to C-levels willing to step back in order to scale.

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