How to Navigate the Founder vs CEO Roles

The distinction between a founder vs CEO is often blurred—especially in the early stages of a company. 

Many founders naturally assume the CEO role at launch, driving vision and growth. But as a company scales, the skills required for leadership evolve. A strong founder CEO can guide a startup through rapid growth, but at a certain point, professional management might be needed.

Over the last decade, many of the world’s most high-profile founder CEOs have stepped down in favor of successors with operational expertise, signaling a broader trend in leadership evolution. Whether due to shifting company needs, investor pressure, or personal aspirations, the transition from founder to CEO is a critical inflection point.

This article explores the founder vs CEO dynamic, why some founders step down, when it's time for leadership succession, and how to ensure a smooth transition.

Founder vs CEO – What’s the Difference?

Before diving into why founders transition out of the CEO role, we should clarify what makes a founder different from a CEO.

A founder is the visionary—the person who identifies a market need, builds the business idea, and takes the initial risk to get it off the ground. Founders often wear multiple hats, from product development to fundraising, and they establish the company culture.

A CEO, on the other hand, is responsible for running the company in a structured, scalable way. While a founder may naturally step into the CEO role at first, over time, a growing company may require leadership that prioritizes execution, financial management, and operational efficiency.

Key differences between the two roles:

• Visionary vs Operator – Founders are idea-driven; CEOs are focused on execution and operational efficiency.
• Risk-Taker vs Risk Manager – Founders often take bold risks to grow; CEOs balance risk with stability.
• Builder vs Scaler – Founders focus on innovation; CEOs focus on structure, process, and long-term sustainability.
• Personal vs Institutional Perspective – Founders have an emotional attachment to the company; CEOs act on behalf of shareholders and employees.

Once a business reaches a certain maturity, leadership needs evolve. This is when many founder CEOs consider stepping aside for a professional CEO.

Why Founders Step Down as CEO

Founders step down as CEO for a variety of reasons, often driven by the evolving needs of the company and their own personal or professional aspirations. In many cases, the company has simply outgrown the founder’s skillset. 

While some founders thrive in the fast-paced, high-growth startup environment, the demands of a larger, more complex organization—such as financial management, regulatory compliance, and operational efficiency—may require a different leadership style. Investors or the board may also push for a leadership transition, particularly as businesses mature and require a CEO with experience in scaling, driving profitability, or taking the company public. 

Additionally, some founders step down because they seek a different role, choosing to remain engaged as an Executive Chairman, Board Member, or advisor rather than managing the day-to-day operations. Others decide to leave entirely to pursue new ventures or personal passions. 

Finally, market conditions can also drive CEO transitions, especially in times of economic uncertainty, regulatory shifts, or increased competition, when a fresh leadership perspective is needed to navigate complex challenges. Regardless of the reason, stepping down as CEO is a pivotal moment that, when managed effectively, can set both the founder and the company up for long-term success.

When Should a Founder Transition to a CEO?

The decision to transition from founder to CEO is one of the most pivotal moments in a company’s journey. Founders often begin as the company’s driving force, setting the vision, securing early funding, and building a team. 

However, as the business grows, so do its needs. What worked during the early startup phase may not be enough to sustain long-term success.

For some founders, staying on as CEO is the right move—they possess the leadership skills, operational expertise, and willingness to evolve alongside the company. Others may recognize that the business has reached a point where a different CEO is better suited to take the reins. 

The challenge is determining the right time to make that transition.

5 Signs It’s Time for a CEO Transition

While there is no universal formula for when a founder should step down as CEO, there are common indicators that signal it may be time to bring in new leadership. These include:

1. The Company Is Moving from High Growth to Operational Efficiency

Startups thrive on innovation, disruption, and rapid growth. Many founders are exceptional at driving this momentum but may struggle with the structured processes, financial discipline, and operational rigor required to scale efficiently.

As companies mature, the focus shifts from expansion to operational excellence, sustainable profitability, and long-term strategy. A professional CEO with expertise in scaling businesses can bring the necessary structure, systems, and governance to ensure long-term stability.

2. Investors or the Board Are Pushing for Leadership Changes

In venture-backed or public companies, investors and board members have a vested interest in long-term success. As a company reaches new levels of complexity, boards may prefer an experienced executive to lead the next phase of growth.

If investors begin to push for changes in leadership—whether due to market conditions, financial concerns, or a belief that the founder lacks the necessary skills to scale—the founder must assess whether they are truly the best fit for the role.

3. The Founder Is Feeling Burnt Out or Disengaged

Many founders dedicate years—if not decades—to building their businesses. While this commitment is admirable, burnout is real. As companies expand, founders often find themselves pulled away from the aspects of the business they love (innovation, product development, or customer engagement) and into areas they may not enjoy, such as financial oversight, regulatory compliance, and HR management.

When passion fades or daily responsibilities become a drain rather than a source of energy, it may be time to step into a different role, such as an Executive Chairman or Board Advisor, and allow a CEO to manage day-to-day operations.

4. Scaling the Company Requires Expertise Beyond the Founder’s Capabilities

Many founders are visionaries, but scaling a business requires a different skill set. Managing a 50-person startup is vastly different from leading a 5,000-person organization.

As the company reaches new levels of complexity, it often requires expertise in:

• Global expansion
• Regulatory compliance
• Mergers and acquisitions
• Financial structuring
• Talent management at scale

If the founder lacks experience in these areas and struggles to adapt, it may be in the company’s best interest to bring in a CEO with the operational and strategic know-how to lead at the next level.

5. Leadership Challenges Are Hindering Business Growth

A founder’s leadership style may be well-suited to an early-stage startup but less effective in a mature business. Signs that leadership challenges are limiting growth include:

• High employee turnover due to poor leadership alignment
• Difficulty attracting senior executive talent
• Struggles in making long-term strategic decisions
• Internal conflicts with investors, the board, or key stakeholders

If leadership is becoming a roadblock rather than an enabler of success, founders should consider whether a new CEO could be the catalyst for stronger performance, growth, and stability.

Keep this list handy by downloading it here. 
 

Case Study: Experiencing Founder vs CEO Change with 52 Founder CEOs

Nearly two decades of easy access to abundant capital has spawned a new generation of founder-led startups. Many of these startups went public during the IPO and SPAC booms, setting the stage for the founder Succession Wave that we predicted earlier this year.

With interest rates soaring to levels not witnessed since 2007 and only just over 100 IPOs reported for the year to date (around one-tenth of 2021’s total tally), the funding environment has not eased. 

What has this meant for Founder CEOs?

We delved into the stories of 52 founder CEOs who stepped down in the first half of 2023 to uncover the reasons behind their transitions and their next moves. Here’s what we discovered: 

Sometimes it’s Just Time 

Emmett Shear, Co-Founder and former CEO of Twitch, shared his heartfelt decision: “With my first child just born, I’ve been reflecting on my future with Twitch. Twitch often feels to me like a child I’ve been raising as well. And while I will always want to be there if Twitch needs me, at 16 years old it feels to me like Twitch is ready to move out of the house and venture alone. So it is with great poignancy that I share my decision to resign from Twitch as CEO.”

Twitch, the biggest name in e-sports streaming, was founded as Justin.tv in 2007 and acquired by Amazon for $970 million in 2014. The company employs over 1,000 people and has close to 150 million monthly active users. A beneficiary of the creativity and growth of the easy money era, Twitch is undeniably able to stand on its own two feet.

Notably, Shear was following in the footsteps of another well-known digitally native founder CEO who stepped down late last year. Eric Wu, Founder of Opendoor, handed the reins over to his CFO, Carrie Wheeler, sharing that: “I often say startups are like babies: they all look about the same when they’re born and they’re a little awkward in the beginning, but with nurturing, love and commitment, they have the chance to grow up to be unique adults. Opendoor has been my baby for the last nine years.” 

Sometimes it’s Not a Fit Anymore

Although several of the companies mentioned thus far have been publicly traded and have reached meaningful scale, founder CEOs have also been stepping down pre-IPO, recognizing that they have neither the skillset nor the passion to drive their company to the next stage. In our sample, 10 founder Successions were at unicorn status (i.e., $1B+ valuation), eight were at companies that had achieved a valuation of between $100 million and $1 billion and another six were at companies that did not share valuation data but that had attracted significant funding from PE growth investors.

Clearco’s outgoing CEO Michele Romanow did not mince words when she stepped away from the $2 billion Toronto-based company pointing out that: “This is not about me having an ego and needing a certain role. I’m a growth CEO, and now we need a CEO that is very financially driven and is going to get us to the next period of break-even business.” 

Shipmonk’s Jan Bednar was similarly honest when he announced his departure from the #1 spot in June: “As we entered 2022, I began reflecting on my journey with ShipMonk and pondering my true passions within the business. I realized that for both my personal fulfillment and ShipMonk's continued success, it was necessary for me to seek a new CEO who could take the company to the next level while allowing me to focus on what I love most within ShipMonk. I'm a builder and a creator.” 

Sometimes You Just Can’t Refuse 

Mergers and acquisitions or private equity buyouts – whether as a result of stagnation or a larger player protecting themselves from a hot up-and-comer – can be too enticing for shareholders to decline. These transactions often result in a refresh of the entire leadership team. Our research found that four founder CEOs departed from companies that had been acquired by strategic players and another four from companies that had been acquired by PE. 

Underperformance and unhappy boards or investors also contributed to founder successions. Several private companies replaced their founder CEOs following layoffs or stalled growth. Public companies also forced out founder CEOs for poor performance with 10 of the 18 public companies in our set, having undergone a period of weak financials prior to their founder CEO’s departure, sometimes driven by activists.

Notably, 70% of these underperformers were taken public via SPAC, while 100% of the public companies in our sample with planned CEO successions had gone public through traditional IPOs. 

It’s Hard to Leave a Role You’ve Loved or a Company You’ve Built

For founders, stepping down as CEO is more than a business decision—it’s deeply personal. Many founders struggle with handing over control because the company is a direct extension of their vision and identity.

However, transitioning out of the CEO role does not mean losing influence. In fact, 75% of founder CEOs remain involved in some capacity—whether as Board Chair, advisor, or investor.

A well-planned transition allows the founder to:

• Preserve their legacy while enabling the company to thrive.
• Shift into a strategic role that focuses on vision rather than execution.
• Support leadership continuity while ensuring company culture remains intact.

Which leads us to…

Navigating the Founder vs CEO Transition

Ultimately, founder vs CEO successions are intricate and emotionally charged processes. 

The culture, emotions and structure built over many years often mirror the vision of the founding CEO. However, whether you are leaving as a result of a transaction because you recognize that you are not the right person for the next stage or simply because it’s time your baby grew up, “Have the courage to follow your heart and intuition. They somehow know what you truly want to become. (Credit: Steve Job)” 

And remember – you don’t have to do it alone. 

Work with a Skilled Succession Firm Like Egon Zehnder

The founder vs CEO transition is one of the most critical moments in a company’s journey. Whether a founder steps down due to market changes, personal evolution, or investor pressure, the transition must be carefully managed to ensure business continuity and cultural alignment.

At Egon Zehnder, we specialize in guiding founders and Boards through leadership transitions. Our team works closely with organizations to:

• Assess whether the founder CEO is still the right fit for the company’s next stage.
• Identify potential successors and evaluate leadership capabilities.
• Structure the transition process to protect both company performance and founder legacy.
• Support both the outgoing founder CEO and the incoming CEO to optimize their working relationship.

If you’re considering a founder vs CEO transition, our experts can help you navigate this pivotal moment with confidence. Contact us today to learn how we can support your leadership evolution