The word transition is so loaded that I hate to use it. But it is what it is. Startups go through transitions all the time. And the biggest transitions of them all are when founders step back and bring experienced managers into their companies. The startup world is full of stories about the times when the transition was forced on the founders. But in my experience, the best transitions are not forced by anyone. They are driven by the founders. Our former portfolio company TACODA went through such a transition when Dave Morgan turned over the keys to the car to Curt Viebranz. Craig Newmark did the same thing with Jim Buckmaster. Reid Hoffman, a hall of fame founder in my book, did the same last year with the hiring of Dan Nye.

Our portfolio company Etsy has been going through a similar transition in the past couple weeks. A few months ago, Etsy hired Maria Thomas as their COO. But that gig did not last long. It was quickly apparent to founder Rob Kalin that Maria was the right person to be running the company day to day. And so today, Etsy announced that Maria would be taking on the CEO job. Etsy also announced the hiring of a new CTO, Internet industry vet Chad Dickerson. As Chad explains on his blog,

Etsy and the community it serves are all-around inspiring and I can’t wait to jump in

We can’t wait either Chad.

But in these transitions, it’s easy to forget about the founders. Rob, Haim, Chris, and Jared created Etsy in 2005 and gave the better part of three years of their life to creating the service. I remember the fall of 2006 about four or five months after we first invested, Chris and Haim were single handedly rebuilding the entire Etsy web service. I think they were sleeping about 2 hours a night and it had been going on for something like three or four months. They got it done but it basically killed them and almost killed the company. It was among the most heroic acts I’ve witnessed in my 20+ years in startup land. Fortunately with the arrival of Maria, Chad, and others, Chris, Haim, and Jared will not have to carry that kind of load going forward.

It’s hard to explain the value that Rob brings to Etsy. It’s his baby in so many ways. And Rob will be staying on as Chief Creative Officer, a role that was made for him. Creativity is way more than designing a great web page, something that Rob can do in his sleep. It’s about designing an ecosystem that allows people to make a living making things. It’s about building into something that can help teach millions of people how to do exactly that. And it’s about continuing to push the envelope of what the Internet can do to make people’s lives better.

Transitions are never easy on the people involved and the company that goes through them. But they are inevitable in the evolution of a company. I have learned that they can’t be forced, they must happen on a timetable that makes sense for the company and the founders. Now is Etsy’s time and they seem to be doing a great job working through it.

#VC & Technology

Comments (Archived):

  1. DonRyan

    We went through a similar thing at our company. In the initial stages it was all hands on deck, try to stay cash flow positive, and see if you can get traction. After that stage, we took a hard look to see if we were the right folks for these job functions and if our time could be spent more positively and productively by bringing on professionals different areas. In the end, you have to realize that the company, while it has your heart and soul invested in it, is bigger than you and can thrive if the right key people are brought in.It’s a tough decision. Hats off to Rob for being able to step back and see the big picture.

    1. George

      Sounds like the grownups are finally taking over. Rob was definitely not suited to run things. His immaturity was very apparent.

      1. fredwilson

        He was the right person at the right time as evidenced by what he and his partners built

  2. Frank G

    Finally! Let the transition to eBay II begin!

    1. fredwilson

      I doubt that is going to happen. Etsy is a different kind of place.

  3. denmeade

    congratulations to the Etsy team. this sounds like challenging but really good news for them and the site. Etsy is one of my favourite places to shop but also to discover talented people making interesting things. i’m not a big shopper in the real world but have ‘met’ some great Etsy sellers and bought some fabulous presents (for others and for me!) as a result..

  4. Kartick Jamenson

    Transitions have to be driven by the founders. Unlike what happened with other startups in Silicon Valley remove the CEO by killing them.

  5. Cody Simms

    Chad’s gonna rock it there at Etsy. You’re getting a true winner. Congrats!

  6. blakeborgeson

    Pmarca posted about hiring a CEO back in August of last year, and he basically said that if one of the founders isn’t capable of running the company anymore, you still shouldn’t hire a CEO–it’s time to sell the company. I think he’s got a lot of truth in there, but I can see both sides of the issue.To me it begs a good question to think about: how do you know as a founder when you’ve reached the stage “in the evolution of the company” when it makes sense?One tentative answer to that: when (a) you’ve got the money to do so (either from revenues or from solid funding rounds), (b) the vision of the company and product/market fit have been sufficiently realized that the new CEO can guide the company from there, and (c) the founder running the company isn’t as good at executing as someone you could bring in. The tradeoff between b and c is the crux, and it’s still pretty hazy to me.

    1. fredwilson

      I think marc is right if the company is very early stage but I don’t think he’s right once it gets to the stage that TACODA, LinkedIn, craigslist, and Etsy reached. When the business is working, the strategy is clear, and execution is what you need, you can and should hire someone to run it

      1. timtrampedach

        It’s hard to dispute a proven leader like Marc Andreesen, but I’m generally skeptical of blanket statements that effectively say there’s only one way. I think the issue of leadership change (and succession planning) his heavily dependent on the underlying circumstances, with the first and foremost being the type of company you’re dealing with.For example, heavily science or engineering-based businesses with major IP and technology investments by definition and necessity are clearly best led by the people that created the technology when the company is young. You have to make the product work and in most places outside of Web 2.0 this timeframe is measured in double-digit months, not weeks. Yet even in those companies, the time for changing to a non-founder and less technical leader can be very early. Getting complementary skills on board is the idea – let people do what they do best and you should be willing to bring people that don’t eat the same ice cream flavor as you on board.A classic scenario necessitating this is getting a round of funding that’s intended to bring a now-proven technology to market. Sure, the technical founders are technology visionaries and can pitch the product better than anyone. But getting in with customers, having a go-to-market strategy, building strategic partnerships, or even more primitively, finding commercial application for the stuff coming out of the science lab… all that is often best left to others.Now I’m sure there are many exceptions to this where there are those do-it-all people, even for the hypothetical situation above. Maybe Marc is one of them. They definitely exist, but they are few and far between. And that exception to my proposed exception is exactly the point: it’s hard to make blanket statements about this.So I’m not saying Marc is wrong. He’s probably right for the companies he’s been involved in, but he’s probably wrong for plenty of other companies that don’t come on his radar (think biotech or semiconductors). I’m sure there are academic papers floating around that will give you statistics of founders who were still the go-to-person when the company had an exit and even those will likely have a sample bias of excluded failed startups (which I’d be interested in seeing). It’s an important topic, because it involves high stakes, ego, motives, trust and probably just a little conflict sprinkled in as well. πŸ™‚

  7. John

    What’s the market for finding potential replacement CEOs for early stage startups? I’m sure many early stage startups die on the vine when they would have taken off with the right CEO. How do startup companies typically find a replacement CEO? Word of mouth? Recruiters?Best of luck to Etsy. My sister uses it to sell her crafts and loves it.

    1. fredwilson

      i do not think the founder should step aside and bring in someone to run the company until the business model is fully developed and the strategy is very clear. when you say “early stage” i think of founder/CEO. i think “hired CEO” is more appropriate for expansion stage.

  8. Bradley Horowitz

    Congrats to both Etsy and Chad. He’s gonna be a huge asset in getting Etsy to the next level…

  9. andyswan

    Such a good point that founders need to be behind the decision 100%

  10. gregorylent

    umair said it could be the next google, back in february … i dunno .. to me it is an online juried craft fair, safe from getting rained out, upscale customers, downscale vendors, and i am frankly boggled that it is big business. what is the goal, luxury market? frivolity commoditized?very clean design, well-thought out structures, consistent, but important? ex-yahoo cto important? wow. i miss the future international aspects, village crafts to urban elites, maintaining village traditions.happy that it is successful, but a mystery nonetheless, for my feeble mind anyway.

    1. fredwilson

      Its all about allowing people to sell stuff they make. You can’t sell mass produced items at etsy

      1. ebbandflo

        er……..mass produced items are sold on daily basis on etsy and numerically are the biggest sellers on the siteit is not a juried site (tho’ it won’t be physically rained off) unless you look at front page exposure and the gift guidesmaybe the transition is the route back to ‘all things handmade’? i would dearly love this

        1. fredwilson

          Are you speaking about supplies and vintage?

          1. ebbandflo

            yes, i’m specifically talking about supplies and vintage, and not the rogue listings that escape unflaggedover a year ago the constitution was drafted to exclude supplies and vintage from being sold on etsy. there was a huge outcry as no notice had been given about this abrupt change. the constitution was re-drafted but S&V sellers still remain uncertain about their future on the site (eg. search was recently made default for handmade only which was great news for crafters and artists but not so amazing for S&V until an alert for users was added to the search area informing them of the change).supplies and vintage definitely have a place within Etsy, but continue to be at odds with the mission statement “your place to buy and sell all things handmade” causing confusion to hope is that the transition will enable clearer thought and planning for sellers, thus decreasing some of the (amny) frustrations felt by users of the site

          2. fredwilson

            That’s my hope tooThere’s a role for supplies and vintage but it needs to be worked out in thecontext of the overall mission of the service

      2. dangerousmezzo

        But people do sell mass produced items at Etsy — not even counting the supplies and vintage (which no one promoting Etsy ever does). Mass produced, non-handmade by seller items are all over the site: promoted on Etsy’s blog, put in the Gift Guides, featured on the Front Page. Users are encouraged to flag mass produced items, but to no avail, it seems.

  11. glemak

    chad is awesome – your getting one of the good ones πŸ™‚

  12. watching the wheels

    Diversification.How does having supplies and vintage go against the original statement? i fail to see how having additional product lines takes away from hand crafted items. Wouldn’t the additional product lines also increase the amount of potential buyers?Why is it not possible to work within an upfront context of having all three? Etsy could still be touted as the place to buy all things handmade. The other two product lines offer the potential for Etsy to have revenues that would otherwise be going to Ebay.Isn’t part of a business’s purpose to turn a profit?