My co-founder has been with me since we operated out of a garage, but as we prep for an exit, it is clear they do not have the capability to run our upgraded operations department. How do I transition a loyal co-founder out of a key seat without destroying our relationship?

Question

Tyler Smith · Accepted Answer

This is one of the hardest challenges an owner faces, but you must realize that keeping a legacy co-founder in a seat they can no longer handle is actually disloyal to the rest of the company and to your exit goals. As your company scales, the demands of every seat on your Accountability Chart change. A person who was perfect for the startup phase may not have the capacity or skill to manage a complex, multi-million-dollar operation.

You need to address this with absolute honesty and respect. Sit down with your co-founder outside of your regular meetings and use the GWC™ tool to evaluate their current seat. Do they truly get it, want it, and have the capacity to do it at this next level?

In many cases, the legacy leader is actually miserable and overwhelmed, but they are holding onto the seat out of pride or fear. Open up a conversation about their true passions and conative strengths. Look at your Accountability Chart to see if there is another seat where they can add massive value without holding back the operational scaling of the business.

If there is no fitting seat, you must design a dignified transition plan that honors their historical contribution while bringing in the professional talent required for your upcoming exit.