Founding a company is a big deal, and taking on the CEO role to drive that company forward is an important choice. Some founders are able to lead their startups all the way through the process of company building. If you look at the list of most valuable companies in the world, however, you notice that the people at the top of tech companies aren’t always the original founders.
If you’ve spent any time doing board work — or if you’re talking to experienced VCs — you realize that it’s not uncommon for startups to switch CEOs, although it’s rarely discussed out in the open. Private companies usually have no obligation to announce leadership changes beyond the closed doors of the boardroom.
Still, choosing to give up the reins to a startup you’ve been bleeding, sweating and tearing for is a hell of a decision. I spoke with one CEO who went through that transition a few months ago to see how he reached the decision.
“I’ve been in healthcare pretty much my whole adult life,” said Troy Bannister, founder of Particle Health. “I was an EMT when I was 18.” When he was in college, he switched majors, from business to pre-med, later working at a VC accelerator called StartUp Health. “I met hundreds, if not thousands of entrepreneurs, all building healthcare startups. I saw Plaid and Stripe and Twilio, and I wondered: Why isn’t there an API model for clinical data? And so I started Particle.”
The company was either prescient or got a little lucky; the anti-information blocking rule that was part of the 21st Century Cures Act meant that patients were given access to their information. That also meant that startups working in this space needed a way to safely request and securely store the information. That’s where Particle found its niche: making connections to 320 million people’s health records available to, well, whoever needs it.
Five years down the line, however, Bannister discovered something was amiss. He had built from the ground up, having raised a Series B and grown the company to 65 people, with 50 or so customers on the books, and a clear track to a Series C in the next couple of years. But now there was a hard choice looming: Would he be the right person to sit in the CEO chair for the company’s next stretch?