Why These Founders Decided to Demote Themselves
The founders of Seven Corners realized the only thing standing in the way of scaling their company was themselves.
Two decades after starting their international travel insurance company Seven Corners, co-founders Jim Krampen and Justin Tysdal reached a painful conclusion: their CEO just wasn’t cutting it and would have to leave.
The decision was made somewhat easier by the fact that Krampen and Tysdal were the bosses. So they fired themselves.
Their story is a cautionary tale for any entrepreneur who wants to make his company bigger.
The two started Seven Corners in 1993. “We knew everything. We were in our 20s and decided to build a better mousetrap”, Krampen said from his office in Indianapolis. “The barriers to entry were very low. All you needed was a brochure, a phone, a fax machine and some business cards. Everything was done on paper.”
Fast forward 20 years. Seven Corners was a success, but there were warning signs: two years of growth in the 2% or 3% range, when the company had been growing in double digits.
“Justin is the one who said, ‘Look, we’re either going to grow or we’re going to die. Let’s just blow it up, and we need to set bigger goals,’” Krampen said. So they shot for the moon: the goal was to double revenue to more than $100 Million in five years. How would they do that? By looking outside for help.
“One of the things we realized was that we were entrepreneurs and we were not going to get this company to $100 Million by being entrepreneurs”, Krampen said. “ We knew we needed the talent to scale it. So we demoted ourselves.”
Krampen took the title of Chief Revenue Officer. Tysdal became Chief Strategic Officer. And they started the lengthy process of filling up the C-suite. That first year was all about talent acquisition. For many entrepreneurs, talent is the biggest and toughest task to tackle. Greg Norman, the legendary golfer who built Great White Shark Enterprises, told me in the video below that becoming the number one golfer in the world was easy compared to hiring the best talent to grow his company.
The talent that came into Seven Corners were at first, skeptical of the founders.
“We’d send them out to dinner or drinks with the other C-level people and that question came up every time,” Krampen said. “‘Do they really not dictate? Do they really value your positions and value your input?’ And the answer always is, ‘yes.’”
Change didn’t come easy. A lot of long-term employees couldn’t understand why Seven Corners needed to bring in outside management. The company ended up replacing almost its entire IT team, and then doubling the size of the department. Krampen jokes that he once worked at an insurance firm that used technology. Now he’s at a technology firm that services insurance.
But he believes Seven Corners had no choice.
“It was the best decision I’ve ever made,” he said. “We had no training or experience outside this company, which is terrible. You cannot scale a company if you have not seen things somewhere else and seen the trials and errors of other people. The Bill Gateses of the world are one in a million — the type that can take it from their garage to where it is today.”
Besides, he said, the change plays to his strengths.
“I’m terrible at operations. I hate operations. I hate management,” Krampen pointed out. “I’m very good at sales and relationships. I am not going to be the CEO of a $100 million company. I’m smart enough to know I have to hire someone to do it.”
So how’s it working? Good enough to where Krampen and Tysdal may soon demote themselves — again.
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Originally published at www.inc.com on September 6, 2016.