Expert interview: the ideal CEO for your company
Both have had several successful exits: Christoph Jost and Felix Haas from FLEX Capital talk about their experiences in hiring external CEOs. What is important, what are their learnings? The answers in the interview.
Felix Haas is a serial entrepreneur and founding partner of FLEX Capital and the 10x Group. His founded companies include Amiando and IDnow. Felix Haas is also co-host and chairman of Bits & Pretzels, Germany's largest event network for founders and entrepreneurs.
Christoph Jost is a serial entrepreneur and co-founder of FLEX Capital. Among other things, he founded the Absolventa online job exchange and made it the market leader in Germany. He also developed the online listing group Passion 4 Gästezimmer. He successfully sold both companies to the FUNKE media group.
Christoph: Felix, what are your experiences with hiring a CEO for your own company?
Felix: The subject of the CEO succession or collaboration is exciting because, in my opinion, many founders approach it opportunistically, but not strategically. Most of them do it for the first time and they stumble into it. Just like me back then. During the process, you notice what works and what doesn't - and you need to recalibrate. Choosing an external CEO is a very powerful tool to get even more performance and do something for further growth.
I have been looking for an external CEO twice so far. For the first time it for Amiando when it was clear that I would leave as CEO after the earnout, and then for our current founding IDnow. This time we made a conscious decision to look for leaders who complement us and bring in better management skills for the next steps of the company.
Christoph: What did you pay attention to when choosing the CEO and what role did the corporate phase play in this?
Felix: At Amiando we looked for a successor together with the new owner Xing. In the end, we decided on a person we had known for a long time. The same was the case with Amiando. We had already established a relationship and both sides knew what to expect. Even so, the process was very different. At Amiando there was a clearly defined date by when the founders would leave the company and we had to find a successor. At IDnow, as founders, we decided to look for a CEO. It took us two or three attempts to find the right leader.
"The subject of CEO succession or cooperation is exciting because, in my opinion, many founders approach it opportunistically, but not strategically."
Christoph: What distinguished the right leader from the other candidates?
Felix:: At IDnow we have set up an internal catalog of criteria. The leadership qualities of the candidates were an important criterion. Of course, integrity was important to us, but we also paid attention to the cultural fit. We spoke to some experienced leaders who were highly successful and enthusiastic, but we were not convinced of the cultural fit with us as founders and with the company. That's why we decided against them.
I always try to work with people who are a little too early for the coming company phase, but who will find their sweet spot in two to four years. Why? Because in my experience, every leadership transition takes longer than you think. At IDnow, we had a honeymoon period of over a year, during which you prepare. It doesn't always go smoothly, but if you have a common set of values, you will then get into a very productive phase. That's why I tend to look at candidates to see whether they have the skills for this later phase.
Christoph:: You talked about the cultural fit. At Absolventa, my very first foundation, I was looking for a successor as CEO in 2014 because I wanted to focus on other topics. We then brought someone from our extended network in. An incredibly strong guy, but he was so energetic that he almost overwhelmed the organization. He started an aggressive growth course, which we also called for, but the company has struggled with the pace.
"I always try to work with people who are actually a bit too early for the coming company phase (...). Why? Because my experience is that every transition from leadership takes longer than you think."
Felix: You said your successor at Absolventa wasn't a cultural fit in the end. Were you still on board at that time?
Christoph: We hired the colleague six months before I left. First as head of strategy, but with a clear perspective to take over as CEO. At that time, we grew more than 100 percent a year and gave the new CEO the mission to keep stepping on the gas. And he did. After a year, however, we noticed, on the best of terms, that his style was overwhelming for the company. So, I took over again and then soon initiated the final sale. The CEO then founded a company by himself and led it to a very successful exit. So much about the cultural fit and the question of what can be expected of the company.
Felix: That is a very important point. Regardless of whether you are looking for a successor or adding a leader to the team: It is important to have a common expectation. Do we want to go full throttle? Do we want to be more secure? Which major strategic decisions do we want to answer and how? If there is agreement on this, then it is a matter of building trust.
The founder and CEO may be of different types. One is more willing to take risks and simply does things, the other is more structured and cautious. We have such a duo at IDnow. You must quickly agree that you can discuss intensively, but you need to trust each other and sometimes one, sometimes the other, gives in.
Christoph: When I sold Absolventa to FUNKE, I passed on the CEO position to the managing director, who was previously sales manager. In terms of cultural fit, of course, that worked extremely well. We also sold monteurzimmer.de and pension.de to FUNKE and brought in a manager whom we knew before. The third handover was by far the best. Not only because the cultural fit worked, but also because we were transparent and realistic.
During the first exit, we expected the new Absolventa CEO to iron out our mistakes and do this fast. In comparison, we had a very clearly described task with the third exit. The managing director is still very successful for the company today.
Felix: We brought in Andreas Bodczek as CEO at IDnow. We had known each other for many years at the time. I was a business angel with his previous company. He has been on board as a business angel since IDnow was founded. You know everyone strengths. When we were looking for an addition to the management team, we didn't even speak to him at first. We hired a headhunter for the position. The headhunter did a great job, but in the end we got together with Andreas. He had already supported us in the company's strategy process and was a great help. So, it was only logical to ask him whether he would like to work with us more intensively and in a different role. Fortunately, it worked.
“It is important to have a common expectation. Do we want to go full throttle? Do we want to be more secure? Which major strategic decisions do we want to answer and how?”