Page 15 - Harvard Business Review, Sep/Oct 2018

CASE STUDY CAN I STEP BACK FROM MY START-UP?

SHOULD ELENA ELENA’S BEST OPTION is to sell the company. 2 Proud Pups’ customers love about it—
Though she seems conflicted, I sense that
but so could Christine. There aren’t any
APPOINT CHRISTINE what she really wants is to be finished guarantees either way.
Rajeev is the one who already knows
with 2 Proud Pups. Her primary goal is to
THE NEW CEO have more time for herself, her dogs, her the market, current trends, and probably
a lot of the same customers and potential
husband, and her baby, and only one option
OR SELL TO guarantees that she’ll get that time. targets. The two businesses are a good
Also, hiring Christine—someone who
strategic fit for each other. And if Elena
DOGHOUSE LUXE? has neither founded nor led a company can manage the transition correctly—
before—as the new CEO would involve
ensuring that employees are retained,
THE EXPERTS a lot of risk. Though her credentials placed in good jobs elsewhere, or given
severance, and that other stakeholders are
and references are impressive, she has
RESPOND no proven track rec ord. Elena, as the equally well cared for—she should have
fun seeing where the merged firm goes.
top shareholder, could find herself still
having to weigh in on or make a lot of When I decided to step back from my
decisions. There might be personality own pet care products company, Cain &
conflicts between the two women, or Able Collection, I faced a similar dilemma.
between Christine and some of 2 Proud (In fact, the teaching case from which this
Pups’ employees, suppliers, or existing story is drawn is based on my experience.)
customers. And what if something were to Like many start-ups, the business had
happen to Christine? plateaued, and we knew that ramping
Even if Elena isn’t leading the company’s up would require some changes. I looked
day-to-day operations, she would still be at outside investment and bringing
on the hook for too much of its future.
Things could get even more complicated if ELENA’S PRIMARY GOAL IS
the company accepts outside investment, TO HAVE MORE TIME FOR
which would dilute her control.
Selling the company, however, would HERSELF, HER DOGS, HER
solve almost all of Elena’s problems. HUSBAND, AND HER BABY,
It would get her out of the business, AND ONLY ONE OPTION
ensuring that she didn’t have to think— GUARANTEES THAT SHE’LL
or worry—about it while navigating her
new role as a mother. At the same time, it GET THAT TIME.
would position 2 Proud Pups to flourish,
because merging with Doghouse Luxe manufacturing in-house but ultimately
would provide the new company with decided to merge with a friendly
multiple sales channels. And it would competitor. Although I’d been happily
result in a better payday for Elena, helping working 60-hour weeks for nine years,
her buy that house and start that college I decided after having my first child that
fund. Plus, she would still own 10% of the I couldn’t handle that schedule anymore.
business, so she could sit back, relax, and Eventually, my new partners and I chose
collect money as the company grows. to sell to a larger organization, and that
Like any other entrepreneur, Elena too was a relief. Like Elena, I was ready
doesn’t want to watch her life’s work to move on to the next chapter of my life,
disappear. But handing the reins to and after spending some time raising my
Christine would be riskier than giving kids, I’ve now started a new company.
them to Rajeev, who knows how The Doghouse deal is the best way
to build a company. Yes, there’s for Elena to get what she wants. It’s also
a chance that he and Doghouse the best way to help her company get the
Luxe could change what growth it needs.
CANDACE LEAK IS THE
FOUNDER AND CEO OF
LOANABLES.COM.

148 HARVARD BUSINESS REVIEW SEPTEMBER–OCTOBER 2018