Entrepreneurs are often worried that their investors are secretly planning to hire a more experienced CEO as their startup scales. It’s an understandable fear (usually unfounded), but one of our portfolio CEOs recently demonstrated that hiring a seasoned CEO can be a decision worth a small fortune.

Jesse Proudman started building websites at age 13. While in college he recognized an opportunity for a managed hosting company and built that too. We were thrilled to co-lead the first funding of bluebox and it’s been an honor to serve on Jesse’s board.

One of the most mature decisions he made during his tenure as the CEO was realizing he wasn’t the best person for the job. Instead of fearing replacement by his investors, he recognized that the company would be in a far stronger position if he became laser focused on the technical opportunities for which bluebox was already well positioned.

So he got busy recruiting a CEO who had deep expertise in the industry.

Jesse found Matthew Schiltz, a seasoned executive whose most recent experience had been as CEO of Tier 3. Tier 3 was an infrastructure-as-a-service/cloud management platform that was ultimately acquired by CenturyLink. This experience endowed Matt with a number of benefits that could definitely benefit bluebox:

• Daniel Docter, a partner at EMC ventures had served on Matt’s board at Tier 3. He was happy with the sale that Matt engineered to CenturyLink and was keen to be support him again.
• At Tier 3 Matt spent time developing a bench of loyal lieutenants in sales and business development roles. He could bring their expertise to bear on behalf of bluebox.
• Most importantly, Matt had a sterling reputation in Seattle’s cloud community. Jesse understood that in the time it would take him to set up first meetings with a bunch more key customers, Matt could activate a really impressive network.

Jesse recognized that all of these skills and experiences were highly augmentative to his own and relentlessly wined and dined Matt, constantly selling him on his vision for bluebox. The credibility that Jesse had already built in the OpenStack community didn’t hurt.

Today, the company has announced that it’s being acquired by IBM, leaving everyone at the organization, regardless of title, ecstatic.

This isn’t a Euphemism

The startup world loves euphemisms.

Companies don’t fail, they’re “acqui-hired.” When startups are in tough shape they don’t panic they “pivot.” Founders smile through gritted teeth when they’re forced out of the CEO role, or out of their company entirely.

This is not one of those cases.

Jesse natively understands how to appeal to developers and the people who are customers of bluebox. Like most founders who start a company in college, he had no first-hand experience running enterprise sales cycles at Fortune 50 companies. Insecure founders would treat this a cause for concern. Jesse treated it like another engineering challenge and found the most elegant solution to the problem.

I have no doubt that Jesse could have accelerated his company’s ability to sell to CIOs and other execs at large companies. He’s a smart and tenacious founder. But there would have been bumps along the way. It most certainly would have taken longer to build the business. The window for a company like bluebox might have closed during that time. Or IBM might have bought a competitor.

At Founder Collective our mission is to be the most aligned investors for entrepreneurs. Ideally, we want to back founders who will ultimately lead their companies to success as CEO. Yet things don’t always work out that way.

It’s not a failure for a founder to ask for help. For every Zuck that went from dorm room to world domination, there are 10 stories like Larry and Sergey hiring a veteran leader such as Eric Schmidt to expand their business. Jesse made a decision beyond the maturity of many of his peers, and today, he was handsomely rewarded for it.