Q. I sold my startup to a private equity firm, which is starting to make cuts. One of the cuts is a feature I am most excited about—and something that I see as an opportunity to build an entire company around. How can I approach the CEO about parachuting out?
—Founder who wants to start again
This is a complex question, but I think there is an elegant solution in which everyone can win.
Typically speaking, private equity CEOs are paid for executing the plan that’s best for the bottom line. That means they are focused on cutting costs and getting a good return for investors. Often, they are not interested on things that will take several years to get to fruition because they may not have that kind of time.
That could be good news for you. The fact that you have different goals and different appetites can work in your favor. You can present the CEO with a very compelling proposition. Have a conversation in which you say you understand that they want to shut down this business. You see it as something with great potential, but you also know it will require significant investment of funding and time. While you know they don’t want to do that, you are willing to go out and raise money and try build it. If they let you spin out, you will give them a piece of the action (maybe 5% ownership in the company). That way, if it fails, it will cost them nothing, but if it succeeds, they get to participate in the upside. Also, in the immediate, they can reduce costs because instead of sitting on the bench collecting full-time salaries, you could be off the payroll. With this plan, the CEO saves face and expense, and it would be a smart move for them to accept.
This seems like a clear path to let them let you go, let you chase your dream, and let everyone benefit from doing the right thing. But this is likely only going to work if they are reasonable and if you have a positive versus an acrimonious relationship, so I hope that you have a foundation on which to execute this plan. Good luck!