The Second CEO Expert Reveals the #1 Mistake Founders Make When Hiring Their Replacement
Are you a founder ready to step aside—but terrified you’ll choose the wrong CEO to replace you?
You’re not alone. And according to second CEO expert Matt Sharrers, most founders get it wrong—and the consequences are brutal.
Matt has lived the journey from elite athlete to Fortune 500 executive, to private equity–backed CEO, to now author of The Second CEO: Accelerating Scale When Following the Founder. In this powerhouse conversation, he delivers the ultimate no-fluff blueprint for what every founder and successor CEO needs to know to scale without regret.
Why Most Founders Fail at Replacing Themselves
Founders are visionaries, risk-takers, and market creators. But when it comes to hiring their replacement, they’re often blind.
“Everybody’s replaceable,” says Matt, “but most founders don’t believe that applies to them.”
Why? Ego, lack of self-awareness, and emotional attachment. Founders often confuse their identity with the business. They hire for familiarity—not competency. And worst of all? They look for a version of themselves instead of the leader the company actually needs for its next stage.
“The job of founder and the job of CEO are two very different things,” Matt warns. “One is a title no one can ever take away. The other is a job description—and you might not be the best one for that job anymore.”
The Private Equity Lens: Are You Backable?
Matt knows both sides of the table. As CEO of SBI, he helped lead two successful private equity transactions—first buying out a co-founder, then selling 80% of the firm.
What does private equity care about?
“Backable CEOs. Backable teams,” Matt explains. “Private equity firms don’t want a second full-time job fixing your company. They’re investing in a team that can deliver results—without you.”
Founders often think PE firms are betting on the product, the IP, or the market. They’re not. Those are table stakes. What they’re really betting on is who’s running the company post-deal.
If that team isn’t world-class—or if the business can’t run without the founder—expect a major discount or a hard pass.
The Blueprint for Picking the Right CEO
So how should a founder approach hiring their replacement?
Matt breaks it down:
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Think like an investor, not a founder.
Start with the future state of the business—not the current one. If you want to grow from $100M to $300M and 3x EBITDA, what type of CEO can do that? -
Define the competencies before the candidate.
“Most founders start with the person—‘Oh, Mike could do it!’—instead of asking what skills and traits are actually required,” says Matt. -
Get external objectivity.
Bring in outside experts to help define the role and evaluate candidates. Matt used GH Smart to assess himself and built a scorecard to measure performance. “Then I posted it on our company intranet. I told everyone: here’s what I’m good at, here’s what I’m not, and here’s what I’m working on.”
That kind of transparency builds trust. And it sets the tone for a high-accountability, high-performance culture.
The Culture That Second CEOs Need to Succeed
Culture is often described in vague terms—but for second CEOs, it’s mission-critical.
According to Matt, a second CEO walking into a founder-led culture must have three things:
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Clarity of Purpose
Why does the company exist beyond just making money? -
A Compelling Vision
What’s the next mountain we’re climbing—and why does it matter? -
Real Values (Not Plaques)
“These aren’t the words on the wall,” Matt insists. “They’re how people actually behave. You hire to them. You fire to them. You reward based on them.”
Without this foundation, a second CEO is walking into quicksand.
Avoiding the Authenticity Trap
When Matt took over as CEO of SBI, he made a huge mistake: trying to copy his predecessor’s leadership style.
“I wasn’t being authentic,” he admits. “I thought the firm worked because of certain things the founder did, so I mirrored them. But I had to show up as me, not as a tribute act.”
He hired a firm to assess his leadership strengths and weaknesses. Then he shared the findings company-wide.
That level of vulnerability takes courage—but it also builds loyalty. “People don’t follow perfect leaders. They follow real ones.”
Scaling Is Boring—And That’s the Secret
What about accelerating scale?
“It’s unglamorous,” Matt says bluntly. “It’s about doing boring things well, over and over again.”
That means consistent operating rhythms. Weekly meetings that start and end on time. Every exec with a clear scorecard. A culture of radical accountability.
You don’t need magic. You need habits.
What Founders Must Do Now—Before It's Too Late
Founders: if you're even thinking about stepping back, the time to act is now.
“Transitions take years to prepare for,” Matt warns. “Don’t wait until the deal is on the table. You need a team that runs the business without you long before you start talking to buyers.”
And don’t let fear or ego delay the process. Remember: you’ll always be the founder. But the CEO seat is just a role. Someone else might be better suited to take your creation to the next level—and that’s okay.
Why This Isn’t Just About Money
Matt drops a truth bomb founders often learn too late:
“Having money doesn’t mean having joy.”
You can 10x your bank account and still feel empty if your identity was tied up in the business.
Joy, he says, comes from giving your unique gifts to the world—and building a legacy that lives beyond you.
Final Thought: Replace Yourself the Right Way
The worst mistake a founder can make is assuming that replacing themselves is just another hire. It’s not.
It’s the most important leadership move you’ll ever make.
As Matt puts it: “This is your shot to scale the impact of what you built. Don’t wing it. Don’t wait. And whatever you do—don’t go it alone.”
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