Sep 4 2007 by Brad

Handling a Poor Reference on a New CEO Candidate

Question: I am the CEO of a company my board is looking to hire a new CEO, for fund raising purposes, and has identified a candidate.  The candidate was in fact referred by a VC, I was asked to interview the candidate and provide feedback. I did this and the interview went fine however I also have a couple of mutual acquaintances and when I followed up with them the feedback was extremely unfavorable.  The CEO of the last company he was with cannot speak about it as he agreed as a condition of this person leaving that he would not provide anything other than hire and leave dates.  My situation is that I cannot provide any detail to my Board on this as I committed to my friend not to and at the same time I am now very concerned that we might make a poor selection since my Board members are very high on him.  As a VC how would you want this handled.

Answer (Brad): I would want you to explain this to me exactly the way you have above.  Be clear, direct, and transparent without compromising your friend.  Since you are involved in recruiting for a person to replace you as CEO, you should be clear with your board that you are not trying to torpedo a potential candidate, but you are uncomfortable based on the data that you’ve received.  A rational board will ask for more details and you should be willing to provide substantiation of “the bad behavior” (whatever it is) – again you should be able to do this without compromising your friend. 

The ultimate way this will be handled has to do with your relationship with your board.  If it’s a respectful relationship where you have real influence on the outcome of this hire, your direct perspective will be valued.  If you are already in a rocky situation with the board and/or the VC who is advocating this person, you will likely come across as defensive.  The more data you have, the better.