How To Successfully Take Over From A Founder-CEO

As soon as the election for the next U.S. president was called for Republican Donald Trump, a new game of “what next?” began in earnest. Some of the speculation has been around purely political questions: Who will serve in Trump’s cabinet? What’s next for the Democrats? Will Trump follow through with his controversial social policy proposals from the campaign trail?

But much of the speculation—and anticipation—has been around business-related questions. How will regulations be cut? When will tax cuts come through, and how generous will they be? What will happen with the tariffs proposed on the campaign trail, and how will they impact business? Can the U.S. remain the leader in AI? What role will cryptocurrency play?

Media outlets, including Forbes, are trying to answer these questions—and more. Many of Trump’s policy pronouncements on the campaign trail were vague regarding exact plans. Others, like what he plans to do about AI, were barely mentioned. We will keep you informed about how the next administration is impacting the economy and your business, as well as the issues you may want to consider when budgeting, planning and looking at big moves. But right now, all anyone can say about Trump’s policies are hypotheses. During his first term, Trump tended to be mercurial in his decision-making, and that will likely be a feature of policy for the next four years as well.

Taking on the CEO’s job at any company can be challenging, but that can be more difficult if you’re replacing a founder. And even harder still if that founder is still on the board. Go Guardian CEO Rich Preece took over for founding CEO Advait Shinde earlier this year, when he stepped down and became executive chairman of the board. Preece talked with me about how he has made the most of this situation for himself, Shinde and Go Guardian. A portion of our conversation is later in this newsletter.

ECONOMIC INDICATORS

With Republicans’ ballot box victories came new highs for the stock market. Last week was Wall Street’s best of 2024, with all three major indexes rallying—the Dow Jones Industrial Average was up 4.6%, the S&P 500 rose 4.7%, and the Nasdaq gained 5.7%. The S&P even briefly crossed the 6,000 mark on Friday, closing at 5,995.54. One of the companies that saw the most movement was Tesla, whose market cap passed $1 trillion on Friday for the first time since 2022. Since the election, its stocks have gained 37%. CEO Elon Musk’s supercharged support for Trump—both on the campaign trail and as one of his largest political donors, providing the campaign about $130 million—helped drive Tesla’s rally. But the gains were not just for the largest public companies. The Russell 2000 was up 8.5% last week.

Adding fuel to the economic fire was the Federal Reserve, which cut interest rates by 0.25% at its meeting last week, bringing them to 4.5% to 4.75%. Unlike the market rally, the cut had nothing to do with the election. It was widely expected due to falling inflation rates—which were down to 2.1% last month, according to the Commerce Department—and a 4.1% unemployment rate. However, analysts cautioned that the Fed’s planned wind-down of interest rates, which were hiked due to high inflation that peaked in 2022, may not unfold as initially anticipated. Trump has proposed massive tariffs on all imported goods, which many economists say could likely raise consumer prices across the board, reports Forbes’ Cyrus Farivar, as well as contribute to more inflation.

NOTABLE NEWS

Weeks after David Joyner became CVS Health CEO, he made a major leadership shakeup. Prem Shah is the new group president, and former UnitedHealthcare CEO Steve Nelson is the new president of Aetna, writes Forbes senior contributor Bruce Japsen. Shah is an 11-year CVS Health veteran, most recently serving as chief pharmacy officer and president for pharmacy and consumer wellness. Nelson has deep experience leading managed care and health care delivery companies. In addition to his years at UnitedHealthcare, he was most recently CEO of ChenMed.

The new positions were announced the same day that CVS Health reported dismal quarterly earnings, with a net income of $71 million, down from nearly $2.3 billion a year ago. CVS Health has faced problems this year, primarily in its Aetna health insurance division. In August, former CVS Health CEO Karen Lynch took over day-to-day management of the division, which she once led. Weeks after announcing 2,900 layoffs, Lynch left the company through a mutual agreement with the board last month.

STOCK MARKET NEWS

The world has a new most valuable company. Nvidia surpassed Apple to hit that mark last Monday, and has largely stayed there. The company has been blowing through all-time-high records in the last week, setting its latest one at $149.77 per share last Thursday. Its current market cap is $3.62 trillion.

Nvidia doesn’t report earnings until later this month, and its rally was driven by two large events: Nvidia replaced Intel in the Dow Jones Industrial Average starting last Friday. And since Donald Trump’s election victory last Tuesday night, the company’s stock has grown more than 5%.

TOMORROW’S TRENDS

How Rich Preece Successfully Took The Helm Of Go Guardian After Its Founder CEO

When cofounder and CEO of educational software platform GoGuardian Advait Shinde decided to step down from his role leading the company and become its board’s executive chairman, the search was on for his replacement. Rich Preece was chosen to take over, and several months into the job, he and Shinde have what Preece calls a good working relationship. I talked to him about how he makes it work well. This conversation has been edited for length, clarity and continuity.

When you were considering this role, you said many people warned you it could be a problem. How did you figure out that you were on the right path?

Preece: I reached out to a number of people, many of whom are in the private equity world themselves, to ask for their thoughts and feedback. The number one piece of advice I got was to be very careful going into a company where I was taking over from a founder, and the founder would still be involved. I was encouraged to tread carefully as I made those decisions.

The way I approached it was to ensure that I really got to know Advait [Shinde] prior to making any decision. We decided to get together multiple times in person. These are large decisions that hopefully impact our lives in a positive way for many years. We needed to have a series of discussions about what this transition would look like, and we needed to do it in person.

One of the most important questions we had was: What were our respective strengths and what roles would we play? My strengths are growing companies and building out operational rigor that supports scale. Advait was the first person to say that was not his strength. His strength is innovation. He’s an engineer. Immediately, we kind of had common ground in that we had complimentary strengths. Then we began to say, in a setup where I’m the CEO and he’s the chairman, let’s talk about some scenarios where we have some difficult conversations.

We would bring up three or four different scenarios. One was a discussion around if we were looking at an M&A target, and I had a strong point of view one way, and Advait had a strong point of view the other way, how would we resolve those types of discussions?

We got to a comfortable place where we were clear on roles and responsibilities. We were clear on how we would break ties in those sorts of difficult conversations. We built trust with each other. There was genuine humility on both sides, relative to where one of us had a strength and one of us had a weakness. That took time, but I think we got to a place where we said, we actually think this can be a very good combination.

How is it going in terms of your dealings with employees and other executives and board leaders?

One of the conversations we had before I joined was: At no time can we allow the organization to feel as if there’s two leaders, because if there’s two voices, we're going to lead to confusion. It’s not fair on the employees and it’s not fair to us. And so with that in place, we made a series of decisions.

Almost immediately after I joined, Advait was no longer on the leadership team. Obviously as the chairman, there are check-ins across various elements of the business board meetings, etc. But from a day-to-day capacity, there was limited engagement. It was important to draw that line, and it was important to not send mixed messages.

Secondly, when we did the transition, we had a fireside chat in front of the entire company. He and I had a conversation, and we took questions from everyone across the company. The questions were around: How is this going to work? Should we still go to Advait about A, B, C, et cetera? We were able to both honor Advait’s past and be clear about the role he plays in the future.

With leadership as it relates to the board, Advait was a board member before he was the chairman, and so now he’s the chairman. The dynamic is not too different because it’s the same group of people in the room, but just with Advait in a different seat.

As it relates to the broader group of employees across GoGuardian—we have about 550 employees—I would say it probably has been fairly smooth for most people, but I have been cautious with one exception, and that exception is the engineering team. Advait was both the CEO, but also he was known as an inspirational element for the engineers at this organization. I know that, for example, he still has those friendships and relationships with some of our senior engineers. I think that’s a healthy thing because, quite honestly, he is just a tremendous engineer.

So the good news is there’s a little bit of that connective tissue, which I think is healthy. Some of it is perhaps in a slightly informal capacity, but it has not at this point caused any elements of concern or confusion. I think we've been able to manage that well. What I have heard is sometimes [in other situations like this,] that founder or CEO has found it harder to let go, whereas Advait has constantly offered to provide value where it’s valuable, and has been very gracious about standing back on everything else.

What advice would you give anyone who is considering taking a CEO role at a company, replacing a founder or highly influential person who will still be around in some capacity?

First of all, I would have a very honest conversation with the other person about their desires and intentions moving forward. Advait was very clear that his desires and intentions were not to be in the business day to day, and the reason was because it was not where he got his energy and passion from. He’s an innovator at heart, he’s an engineer at heart, and he knows he does that exceptionally well. There was a real platform where his intentions and his desires were different than my intentions and desires, because I enjoy being in it day to day. I enjoy the operational side of the business. Most important is understanding that with the other person, because if there’s a conflict there, and if both people frankly want the same thing, that could be a problem.

The second question I would encourage somebody to ask is: What are the respective strengths and opportunities of each person? Because again, if they’re different, then you can have this wonderful symmetry of benefiting from the other person’s strengths. I think if they’re the same, it could lead to some level of tension in the future. I didn’t want to put myself in that position. When I’ve heard these situations that typically do go wrong, it’s often from some element of a cofounder that perhaps feels they made the wrong decision, or the person they brought in isn’t making the right decisions. And it leads to this sort of re-elevation, which leads to a point of tension.

By asking those two questions upfront and building trust, that to me was the most important element of realizing that this was going to be a wonderful opportunity for myself. And I think Advait would say the same thing.

FACTS + COMMENTS

After Amazon announced a strict return-to-office policy last month requiring employees to be in offices five days a week, a group of them wrote a letter to AWS CEO Matt Garman asking him to reconsider.

523: Employees who signed the letter

3: Days per week most Amazon employees currently work in an office

‘Y​ou are silencing critical perspectives and damaging our culture and our future’: The letter’s accusation about Amazon’s rigid decision to come back to the office full-time or look for new jobs

STRATEGIES + ADVICE

Now is the time to begin strategic planning for what the next four years will be like for your business during Trump’s second term as president.