Why We Prefer Founding CEOs | Hacker News Reader

Why We Prefer Founding CEOs

bhorowitz.com

66 pointsjcr7 comments

My question is: if the performance of founding CEOs is clearly better, what are we to make of the VC horror stories where they kick out the founders to make way for professional management. One notable example is Sean Parker and Plaxo. Is this overblown, or is Horowitz different than the majority of VCs?

The article describes it as the "most controversial component of our investment strategy" and contrary to conventional wisdom. So if the article is to believed, they are different than the majority of VCs.

Interesting how this might be confined to tech, due to the shorter product cycles. Case in point: Richard Branson and Virgin's empire. Technically, they're (Virgin Group) a branded vc firm, but Branson himself is a chairman, not a CEO, and I believe that he wasn't the CEO for the companies that he started either (the name Nik Powell rings a bell.)

Taken as such, perhaps it's not that hired CEOs are useless intrinsically(as the tech world loves to believe) but merely are good at operating in existing industries (Virgin Records wasn't the first record company, Virgin Atlantic wasn't the first airline, etc.)

Except if you consider that Branson is actually the CEO of his empire. He seems to draw the line of what products needs to be. Telling the story is the CEO job and he seems to be in charge here. I'm referring to some letter send to the virgin airline lately here.

I agree with you though that the tech world love to believe CEO are useless.

This is a terrific post, but it is also one of a couple of examples where Marc and/or Ben later acted in seeming contradiction to what they espoused in one of their blog posts (relying on Ben here describing this post as representing both his and Marc's views). It wasn't long after this post that HP's CEO search committee, of which Marc was one of I believe four members, picked lateral CEO Leo Apotheker.

That made me wonder what the circumstances in this case were that led Marc to a different conclusion in that case, or whether he was overruled by the rest of the committee, or if his judgment was that HP is such a mature and diverse company and far enough along by now along that all of its potential internal candidates by now are more professional bureaucratic managers than founder-type market-discovering innovators and so they might as well look outside the company, or if he found Apotheker to be among that exceptional breed with the special sauce to be a super-awesome lateral CEO like the two exceptions mentioned in the post, Eric Schmidt and John Morgridge, who will surpass the professional CEO's curse of maximizing the current product cycles but failing to anticipate the next ones.

Interesting point because Apotheker was quietly shuffled out of the largest business software company in the world - SAP. Mind you this was only after he served as co-CEO for 2 years. I was shocked when I heard HP had decided to hire him as a CEO, because he was (for lack of better words) horrible at SAP. It was clearly the dark days of innovation at SAP.

I think what Ben might be getting at is that Eric and John are very much exceptions to the norm and that finding/identifying these type of people is extremely difficult to do.

On the other hand, what about some other technology companies who do have founding CEOs. How about RIM? Lazaridis and Balsillie have traditionally done a remarkable job, but lately it looks like innovation is about to fail as Android and iOS begin to eat their market share.

Ben's posts are consistently insightful. This one is no exception.

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