Podcast Summary: My First Million

Episode: A Masterclass On Hiring A CEO To Run Your Company ft. Andrew Wilkinson
Host: Sam Parr & Shaan Puri (Hubspot Media)
Guest: Andrew Wilkinson (Founder, Tiny)
Date: May 20, 2024

Overview

This episode is a masterclass on hiring a CEO to take over your business, featuring Andrew Wilkinson—an entrepreneur who’s owned 40+ companies and built a $500M+ portfolio by successfully hiring leaders to run his ventures. Sam and Shaan explore with Andrew the motivations, strategies, pitfalls, and practical steps for founders considering stepping back and bringing in a professional CEO. The conversation delivers hands-on, experience-backed advice, covering everything from identifying the right timing to the nuances of compensation and transition.

Key Discussion Points & Insights

1. Why Hire a CEO?

• Not Just Greener Pastures:
  Andrew clarifies that being a portfolio owner introduces new, different stressors—not necessarily less (01:43).

• The "Third Door":
  Most founders see only two exits: keep running the business or sell it. Hiring a CEO is a third path for those who lose passion but still want their company to thrive.
  "You're in a marathon... turns out that you can actually incentivize someone else to keep running the marathon on your behalf." (05:11, Andrew)

• Personality Fit:
  Not everyone should be a hands-off owner. Andrew emphasizes honest self-assessment before delegating full control; some founders are happiest as "Jiro from Jiro Dreams of Sushi," directly involved (01:43).

• Founder Burnout:
  Over time, the founder who once loved every hustle can hit a wall. Andrew shares how, after 10 years running Metalab, he wanted out but couldn't sell easily. Hiring a CEO was the solution (07:07).

2. Is Your Business Ready?

• Key Criteria:

  • Product-market fit: A business with steady, understood supply and demand (12:36).
  • Profit: At least $300,000 annual profit to make hiring a CEO viable (11:08).

• Can You Make Someone Rich?
  Attracting a capable CEO means offering meaningful upside—bonuses, or even potential for a life-changing payout (12:58).

• Mindset Check:
  Are you emotionally and practically ready to give up control and let someone else raise your "business baby"?
  "You need to be willing to walk away...or it won’t work." (14:20, Andrew)

3. Finding & Vetting Candidates

• Target Profile:

  • Someone who has run a "same or similar" business, preferably at 2x the scale you're at.
  • Not necessarily a CEO before; often the "number two" (COO, President) at another company is ideal (16:54).
  • Avoids "big company" execs unused to smaller company scrappiness (31:04).

• Recruiters:
  Andrew is now a convert to recruiters:

  • Save enormous amounts of founder time by filtering out "dingus" candidates (18:04).
  • Help widen the talent pool with off-radar candidates like Gerard Meyer (Aeropress) (18:04).

• DIY Tips (For Smaller Companies):

  • Reach out beyond LinkedIn; collect and nurture a long-term list of interesting executives (23:38).
  • Always check references not provided by the candidate; use "scuttlebutt."
    Recruiting tip: “Email people who used to work with them... ‘If you don’t respond, I’ll assume you didn’t have a good experience’—works great.” (44:07, Andrew)

4. Interviewing for Fit

• Key Questions:

  • What’s their “hammer”? Top candidates have a dominant way they like to win—marketing, product, sales, operations. Ensure their hammer fits your business challenges (22:10).
  • Values & Chemistry: Would you trust them to babysit your kids? Do you feel even a hint of the "creepy crawlies" after? Walk away if your gut says no (28:55).

• Culture Match:
  It’s critical that the candidate not only “talks the talk” but shares your company’s operational DNA, especially in smaller organizations (31:04).

5. Structuring Compensation

• Base + Bonus:

  • Offer a base salary within what the business can support (e.g., up to $150k on $300k profit).
  • Tie significant bonuses to real profit growth, using uncapped structures when possible (45:50).
  • Always pitch total compensation, not just base and “a bonus.”
    "I'm a big fan of uncapped bonuses. If they do $1.2M of EBITDA, I want them to get double or triple the bonus." (47:16, Andrew)

• Equity:

  • Avoid free options or “lotto tickets.” Require skin in the game—ideally writing a check, or at least trading comp for equity (48:54).
  • Most execs really value the cash; equity as pure upside rarely motivates unless real investment is required.

6. Transition: Handing Over the Keys

• Rip Off the Band-Aid:

  • Publicly anoint the CEO and immediately step back. Remove yourself from operational channels (email, Slack) to avoid undermining them (35:30).
  • Avoid "swoop and poop" (undercutting new CEO by giving feedback directly to team or staying involved in day-to-day).

• Gradual Check-Ins:
  Move from initial close monitoring (every two weeks) to less frequent (quarterly, annually)—unless real emergencies arise (36:43).

• Tolerance for Mistakes:
  Set boundaries for decisions requiring your input (e.g., expenses over $300k), but otherwise allow "flesh wounds, not mortal wounds"—mistakes that don’t kill the business are learning opportunities (39:11).

• Monitor with Metrics:
  Ultimately, the only ongoing oversight is periodic financial reports to the holding company. Strategy reviews are usually annual or less frequent (54:32).

7. Diligence: Avoiding Catastrophic Hires

• Trust but Verify:

  • Use real background checks—Andrew employs ex-CIA professionals (Business Intelligence Advisors) to verify candidate backstories, legal histories, and references (41:06).
  • For smaller companies, rigorously scuttlebutt via your network, not just official references (44:07).

• Cost Considerations:
  When your business justifies it, expect to pay $50k–$100k total to get the right CEO via thorough due diligence and recruiting (43:31).

Notable Quotes & Memorable Moments

"I always joke that I'm Teflon for tasks."
—Andrew Wilkinson (02:16)

"There's actually a door three, and door three is hiring a CEO."
—Andrew Wilkinson (05:11)

"I wish I didn't know now what I didn't know then."
—Andrew quoting Bob Seager on losing founder innocence (09:15)

"You have to be willing to walk away and effectively look at it this way. As entrepreneurs, we are all birthing these business babies and now you're giving them to a foster parent. Can you tolerate that?"
—Andrew Wilkinson (14:20)

"Would you let them babysit your kids? You're going to hand over your company, your baby, to this person. So you have to have profound trust."
—Andrew Wilkinson (28:55)

"I'm a big fan of uncapped bonuses. So...if they do $1.2M of EBITDA, I want them to get double, maybe triple the bonus. That’s worked really well for us." —Andrew Wilkinson (47:16)

"The worst thing you can do is have them writing you a whole bunch of reports and constantly texting them and making them feel they don’t have power." —Andrew Wilkinson (36:43)

Timestamps of Major Topics

• [01:43] - Andrew on the reality of owning many businesses & the "final delegation" of hiring a CEO
• [04:46] - Founder psychology: Why nearly all founders eventually want out
• [07:07] - Andrew’s origin story: Burnout at Metalab, trying (and failing) to sell, then discovering the CEO solution
• [11:08] - Is your business ready? Financial criteria, mindset
• [16:54] - How to identify and source strong CEO candidates
• [18:04] - Value of recruiters, why Andrew pays for them, and reference stories
• [22:10] - The "Hammer" metaphor: Assessing candidates' dominant strengths
• [28:55] - Interview red flags, trust tests, and the "babysit your kids" standard
• [31:04] - Why "big company people" rarely transition well to entrepreneurial companies
• [35:30] - Transition advice: Rip off the band-aid, leave the field
• [39:11] - Tolerance for CEO mistakes ("flesh wounds, not mortal wounds")
• [41:06] - Background checks: Why Andrew uses ex-CIA agents
• [44:07] - DIY diligence tips for smaller companies
• [45:50] - Structuring CEO compensation: Base, bonus, and equity philosophy
• [48:54] - Negotiating for skin-in-the-game on equity
• [51:19] - Risks of the model: Is founder-led always better?
• [54:32] - Andrew's operating model: How often do you talk to CEOs post-handoff?

Final Takeaways

Hiring a CEO is the ultimate form of delegation for founders who want (or need) to move on.
It requires honesty with oneself, acknowledging the business stage, and being rigorous in both search and transition. The process is expensive, emotional, and nuanced—but when done right, it’s a force multiplier, unlocking not just founder freedom but often superior business performance. The keys: clear criteria, relentless diligence, trust, and true disconnection post-handoff.

For more from Andrew on this process, access his checklist at NeverEnough.com (never posted as of this episode).