Unlike in most other industries, in tech, you can go from having a brilliant idea to suddenly leading a company. Just think of how many tech millionaires and billionaires started out working solo from their garages.

But having a brilliant idea and designing a great product takes a different set of skills from successfully leading and growing a company.

If you’re an accidental founder who’s suddenly in the position of leading a company after making something cool people want to pay money for, these are the 3 paths you can take:

  • Step aside
  • Step up
  • Systemize
  • Stepping aside means bringing in a professional CEO to grow the company and maximize financial valuation.
  • Stepping up means staying on as CEO and learning how to lead along the way.
  • Systemizing means putting systems in place to protect your core vision and manage authority, regardless of whether you stay on as CEO or not.
  • The most effective way to choose the path for you is based on your motivation, with the main choice being between getting rich or being in charge.
  • No path is better than the others — they depend entirely on your goals and motivations.

Step aside if you don’t want to lead

Stepping aside means bringing in a hired CEO to handle the day-to-day executive leadership instead of you. Do this if you realize (or decide) that you’re not leadership material that can scale the company, and you don’t want to struggle to become leadership material. Just because you’re the Founder, doesn’t mean you have to be the CEO as well. 

A great example of a founder who took this path is Pierre Omidyar, the Founder of eBay. He started the website AuctionWeb (which would later become eBay) as a hobby and a technical experiment, but it quickly grew so large that it generated more income than his salary. This was when he quit his job to dedicate himself to Auction Web.

Omidyar stayed as chairman and brought on Meg Whitman as CEO, a Harvard Business School graduate with actual corporate branding experience. She grew eBay from 30 employees to 15,000 employees and its yearly revenue from $4 million to $7.7 billion during her time as CEO. 

Even after Whitman left, Omidyar never took back executive control. In fact, he stepped down as Chairman of the Board in 2015 and left the board in 2020, while still being the company’s largest individual shareholder.

Omidyar stepped aside early, and he became a multi-billionaire because of it.

Step up if you want to lead

Stepping up means staying CEO and leading the company yourself. Do this if you’ve decided that you’re going to be Founder and CEO no matter what, even if you don’t have strong leadership qualities or any experience to begin with.

A good example of an accidental founder who took this path is Mark Zuckerberg, the Founder and CEO of Meta. In 2003, when he was a 19-year-old student at Harvard, Zuckerberg made Facemesh as a Harvard-exclusive hot or not prank website using scraped student images to rank them based on attractiveness. Facemesh was quickly shut down by the college administration, but the website got a lot of traffic, proving to Zuckerberg that his joke website had serious potential. 

From there on, despite having no leadership experience and being a socially awkward guy, Zuckerberg stepped up and turned himself into a leader in one of the most heavily documented transformations in corporate history, which included:

  • Shadowing Don Graham, the CEO of The Washington Post Company, to see how a capable CEO speaks and acts.
  • Asking Steve Jobs for advice on whether to sell the company when he was being offered billions for it, which prompted him to go on a month-long soul-searching trip to India where he realized he didn’t want to step aside.
  • Hiring Sheryl Sandberg to handle matters he didn’t want to do, like monetization, HR, and global policy, as well as teach him how to communicate empathically, defuse PR crises, and grow from a product creator into a true corporate executive.

Systemize if you want to protect their vision

Systemizing means creating systems that can protect your vision of how the company should be run, regardless of whether the CEO running it is you or someone else. 

A perfect example of this kind of leader is Larry Page, who co-founded Google with Sergey Brin. Page never set out to start a company — he just wanted to understand the mathematical properties of the World Wide Web and the link structure between pages. To this end, he designed the PageRank algorithm with Brin and built a web crawler to download and analyze the web’s structure, ending up with the most accurate search algorithm. They wanted to licence the technology but couldn’t, and that’s how Google got started.

Page had a deep distrust of management, so he immediately started creating systems that would take authority away from managers, such as taking away their unilateral authority to hire. Instead, he set up a system of hiring by committee so that no one could hire based on nepotism or personal preference, not even Page himself as the CEO. 

He didn’t stay CEO for long, though. After he famously fired all managers, the board brought in Eric Schmidt as CEO and adult supervision. But Schmidt still didn’t have the power to unilaterally hire who he wanted — the system Page had set up with hiring committees stayed in place, protecting Page’s vision.

During Schmidt’s tenure , Page used his co-founder influence to take away more and more of the carrot-and-stick authority from leadership and management. He systemized Google so that managers also couldn’t promote, raise salaries, or rate performance — everything went through committees and calibration. 

How do I choose my path as an accidental founder?

Your accidental creation is growing and you’re at a crossroads, but how do you decide whether to step aside, step up, or systemize?

Harvard Business School professor Noam Wasserman studied thousands of startups and discovered that the founder’s dilemma boils down to two competing motivations: Do you want to be rich, or do you want to be in charge?

Wasserman found that most founders who want both typically end up with neither, so you should reflect on what it is that drives you.

According to Wasserman, founders who drive their companies to the highest financial valuations tend to be those who stepped aside and brought in a professional CEO. They take outside capital to capitalize on the potential for growth that their company has, ultimately ending up with a smaller part of a much larger pie.

On the other hand, founders who maintain strict control over their company tend to bootstrap or get other non-dilutive funding, which typically limits growth, giving them a larger part of a much smaller pie.

Both paths are equally viable — it all comes down to what motivates you. Being rich and being in charge don’t map out perfectly to stepping away and stepping up, but it’s a good starting point. 

If you want to be in charge — step up.

If you want to be rich — step aside or step up. Investors won’t replace you as CEO if you’re doing a good job making them money.

Where does systemization fit into all of this?

As for systemization, that’s an option every founder can take in addition to stepping aside or stepping up if they want to protect their vision or limit the authority of management. The Larry Page Google example shows what this looks like in a publicly traded company, but there are examples of systemization in privately held companies as well. 

One such example is Valve, where co-founder and CEO Gabe Newell actually managed to make a flat organizational structure with exactly zero managers. To handle promotions and pay increases, Valve made an anonymous peer-review system and stack ranking system to handle feedback and compensation, respectively. It’s far from the only example of systemization within Valve that lets the company operate without managers and without Newell needing to handle day-to-day operational management. 

Can’t I be both rich and in charge?

It’s not impossible to be both rich and in charge — the Founder and CEO Epic Games, Tim Sweeney, is an example of an accidental founder who managed to achieve this.

Sweeney initially started Potomac Computer Systems, a computer consulting firm, in 1991. He also coded a text-based shareware game called ZZT as a hobby. The game sold well, prompting him to pivot the company, rebranding it to Epic MegaGames.

Sweeney bootstrapped the company for decades just off of game sales and the licensing of his homegrown game engine. He ran the company successfully like this without any external funding for 21 years, and held onto the majority vote even when he sold a 48.4% stake to Tencent in 2012 — effectively remaining both rich and in charge of a company worth billions.

An example like this doesn’t run contrary to Wasserman’s thesis — there are many founder-led unicorn companies like Epic Games out there. Data shows that 65% of startup unicorns in tech still have their founder as CEO. But he does point out that these companies are exceptional and this outcome is unlikely. Most founders who have attempted to get both ended up with neither. Specifically, 4 out of 5 entrepreneurs are forced to step down as CEOs by investors. 

Stay true to your core motivation

Figuring out your primary motivation early is key to knowing which path to take and getting what you want out of the company you founded.

Stepping aside is statistically the best option you’ve got if your primary motivation is to get rich. Stepping up and staying as CEO is the best option if what matters most to you is being in charge and running the company your way. And systemizing allows you to protect your core vision even if you step down, or manage authority and processes even if you step up.

By aligning your path with your motivation, you’ll have the best chance to transform your company from an accidental creation into the vehicle for delivering your long-term goal.

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