Zeligsoft founder Francis Bordeleau doesn't hesitate to admit that his talents are best focused on the company's technology rather than on the operation side of running the business. (Photo by Darren Brown, OBJ)

When Gatineau's Zeligsoft appointed a new CEO last January, founder Francis Bordeleau moved onto a position with which he was more comfortable.

The company, which makes software development tools for the embedded computing industry, hired former Nortel executive Ross MacLeod as president and CEO, while Mr. Bordeleau went on to become chief technology officer and vice-president of product strategy.

Mr. Bordeleau explained to the OBJ why he decided to make the move.

OBJ: Tell me about Zeligsoft and what has led you to make this decision.

BORDELEAU: I founded the company in November 2002. We started with just two employees and we received seed financing in December 2003. We closed series-A financing of $2.5 million in December 2004, and series-B financing of $5 million in June 2007.

From the very beginning when I founded the company I stayed on as CEO, but I always thought when the time is right, the goal was to bring on another person so I would be able to focus on the technology aspect. Also at some point during the growth of the company, you need to be able to change the dynamics. There are some founders who decide to stay on as CEO for the lifetime of the company.

My passion is the technology side. I have a PhD in computer science and before starting up this company, I was a computer science professor at Carleton University. I knew from day one I was looking for a CEO, and I stuck around until we found the right person to take it over.

OBJ: What are the different skill sets you were looking for in a new CEO?

BORDELEAU: You need someone who is really focused on the operational aspects of the business. That was something I didn't necessarily have experience in when I started the company; I didn't have 10 years of experience as a senior manager in a company.

It's two things. You need complementary expertise to bring the company to the next level, that's true also.

That was one of the main things we were looking for in a new CEO, someone who had deep expertise in our target market. We looked for someone who had experience in the telecom wireless field, someone who had a strong operational background, and someone who had a passion for the technology we were developing.

There is the skills and ability aspect to it, but there's also the fact that after five years, I was ready to step aside. It's a lot of stress to be the CEO of a company.

So now we have two different points of attack: we can go from the technology point of view or we can go from the expertise that our new CEO has.

OBJ: How has this move refocused your company?

BORDELEAU: The second round of financing was there because we had developed technology and we wanted to bring the technology to the broad embedded market, starting with telecom wireless. The timing of the hiring was so that we could bring in a new person who could help us with that.

OBJ: Was it hard to find him?

BORDELEAU: No, not really. We found (the new CEO) in the network of the board members. We didn't go through a recruiter in this case. The company is on a good track, and we have been able to recruit extremely good people in the past year. The fact that we have very strong board members has really helped.

OBJ: How are you enjoying your new role?

Well, it's still a transition, but I must say that I like it very much. Like I said, after five years and two rounds of financing, my first passion is with the technology. When you're the CEO, even if you say that you're going to set aside time to focus on the technology, the reality is, whenever there is another priority, that's the one being pushed aside. At this point in the company, we need someone who has a full-time focus on technology and I thought I had much more to give to the company if I focused on the technology aspect and bring someone else on the management aspect.

OBJ: What would be your advice to other founders who are wondering if they should step aside?

BORDELEAU: I can understand the idea that you found the company, you're the CEO for the rest of the life. Some people actually start a company with the idea that they want to be a CEO and they found the company and they want to move it forward.

The second option was what happened in my case: I founded the company but my idea was to build a team. I think I've been pretty honest with assessing my strengths and weaknesses. I admire people who can do (the operational side) well. I'm pretty proud with where I have brought the company.

But the third option is that a person will found a company and be replaced by a CEO because the he is doing such a bad job. No one wants that to happen.

My advice would be you shouldn't be attached to the title. For people who are title sensitive, it must be a terrible thing to step aside and let someone else be the CEO. I have heard that. Some people have told me once you're CEO, you don't ever want to go back to anything else.

Can someone be the CEO of a company for more than five years? Some people can, but I truly believe in bringing in new blood because everyone gets motivated by having those new ideas and new skills brought to the company.

THE EXPERTS SAY

I refer to many founder choices as being "rich versus king." King options will enable founders to keep control of key decisions by keeping control of the CEO position and the board and often to keep more of the equity for themselves.

Rich options should enable the company, and likewise the value of the founder's equity stake, to become more valuable, but sideline the founder by risking the loss of the CEO position and control over major decisions.

My research indicates that a critical factor in this trade off is the founder's motivation. Is the founder starting the venture in order to run the show and leave his or her imprint on the venture, or is the founder pursuing the good old profit motive?

The key isn't that a particular "rich" choice is better than the competing "king" choice, or vice versa, but how well each choice fits with the founder's motivation. Founders who make choices that are consistent with their motivations should have a much better chance of achieving their goals.

A king-motivated founder who doesn't give up a lot of equity and decision-making control to co-founders, hires, or investors is being consistent with his goals. A rich-motivated founder who gives up equity and control to attract excellent co-founders, hires, and investors is making different decisions.

It could be argued that the key isn't what percentage of equity the founder holds but the value of that equity stake, like a "smaller slice of a larger pie" analogy.

Noam Wasserman, Harvard Business School professor, author of the "Founder Frustrations" blog

Very often it is a VC who says that they're going to bring in someone with more experience.

VCs have investors behind them so they have to justify their decisions. If they bring in a guy who has been there and done it before, it would be very difficult for their investors to say you backed the wrong horse. But if they back some bearded hippie who figured out how to write five lines of code, and say "this guy is going to run this $100 million company" and it doesn't work, they are left having to explain why they would let this guy run the company.

VCs know that not everyone who can write code can run a company. And people always say, well Bill Gates did it, but the truth is that he didn't; he was a businessman.

Sometimes, investors will bring someone in at zero to 50, another CEO for 50 to 100 and another for 100 to 200. Some CEOs are great at start ups and some are great at taking companies public.

Sometimes the owner realizes it because he's just not up to running a company at that size. I was listening to the CEO from the company Open Text in Waterloo speak and he said, "I was a university professor. At a certain point I realized I never managed two people, let alone 100 people."

Larry Rudner, Matrix Transition Management Corp.