The cult of the founder CEO | FT Tech
Big Tech is fascinated by founder-CEOs. But the very qualities that makes them so dynamic and attractive to venture capitalists can mean they’re not always the best person to lead a company to prosperity. And, as examples such as Sam Bankman-Fried have shown, they can come with a dark side
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The Valley loves founder CEOs because they know the impact of what one individual can do to make or break markets.
Well, the founder CEO has become the hero of American corporate culture. And now, being a founder is the most well known, most admired, most respected path to fame and wealth and impact.
I think the tech sector is extremely obsessed with founder CEOs.
The tech sector started with the founder CEO, and there's a massive obsession that's there. Why is that obsession? Well because venture capitalists like to bet on founders. They believe in the founders.
They see the vision and they want them to be successful. And they build everything around the founder.
Well, today we're witnessing a dramatic change in the role of the computer.
I think the reason why is because no one really knows this kind of business, especially when the businesses are so young. It's really hard to rip and replace that kind of talent.
Founder CEOs, by definition, have written their own rules. And they've built a system from scratch.
We're blessed with having a lot of them here, and in Silicon Valley it's a make-up of a couple of things. One is a number of feeding universities from all around the region. The second is the venture capital community is unique and it's been hard to mimic in a number of places.
Venture capitalists always gravitate to a certain mould, and that's the same thing. Like Hollywood producers grabbed a certain cast. It's a casting of characters when you put a company together. You cast a type of a CEO.
You cast the type of the research person. You look at the profile. Hey, did they go to Stanford? Did they go to MIT? Did they go to Caltech?
Studies show that you often give money or have confidence in people who look like you. So young white male VCs are going to likely invest in people that remind them of themselves. And so there is the risk that women are left out. Minorities of other kinds are left out.
That sort of arrogant, brash, outrageous personality is less common in women.
Plenty of the normally under-represented categories have had less success in getting financing, and it's back again to some of the networks.
I think the same things that make founders capable and great - there's a shadow side. So you take really bright people who have a lot of confidence in their own thinking and some narcissistic tendencies and you give them a lot of money and potentially outsized rewards, things can get a little crazy. And we see that too.
Seeing the most successful examples of someone thinking totally differently, I think you're almost inherently going to get better products and more originality, but you're also going to have a lot of flameouts and things that don't work at all. Think of someone like Sam Bankman-Fried. He would fit the vein of a visionary CEO who could come up with one of the most innovative crypto companies on the planet. He's also in jail right now.
Crypto fraud guy.
I think far too many analyses will just look at a confined number of examples, and then draw the lessons from what it means to be a founder based on five successful examples and forget Sam Bankman-Fried, forget Elizabeth Holmes.
Those examples are just as pertinent.
There are very few CEOs that can scale a company from zero all the way until the end of the company's life cycle.
That is the hardest thing for a founder to do is to scale out and be able to do that.
I think there's a certain flash that you need as a young company trying to make its name. Once you're at a certain stage, largely speaking, you don't really want that.
Jack Dorsey: If you really want investment, then show up to an investor with a prototype that works.
Dorsey's interesting because he is one of the founders of Twitter. Left for a bit, came back. Towards the end, he err, by all accounts, checked out. His leadership style became increasingly, I don't want to do decision making. So that's perhaps an example of when a founder CEO kind of winds down and loses passion.
So we think of it sometimes as a relay race. We really believe that there's a manager for every season of the business. We believe really deeply that if people are sharing more, then the world will be a more open place where people can understand what's going on with the people around them.
One of the biggest founder CEOs who is still staying the course and therefore remains very interesting to me is Mark Zuckerberg. He's grown a multi-billion dollar company. And so as a founder CEO, you've seen him go from this sort of boyish, testing things here and there, into becoming more of a sort of seasoned businessman making acquisitions, being, perhaps, famously ruthless towards competition as he's continued growing the business.
But we're out there trying to prevent any issues from happening going forward. Very rarely is someone who founded a company the best person to be the CEO of a public company. Now we see that with Zuckerberg and other people, but they're outliers. That is not the norm.
So there's a natural business life cycle that has to be accounted for in succession.
And frankly, every founder CEO needs to be working on a succession plan. It's the hardest thing for them to think about early on. Succession planning actually really needs to start all the way back up to the board.
What we've seen is a divide between those that have stayed the course and do not leave and those that work out a succession plan that find people to come in under them that get them ready, and then pass on the reins.
Some of the best stories that we got when we did the interviews were the founders that basically became the biggest champion - the sales person to make the next person ensure they succeeded.
Let's look at Google, for example, when Larry and Sergey left, they put in Eric Schmidt. But they supported him for quite some time, and then they, founders, left. And then of course, they were able to do the transition to Sundar Pichai. That was a big shift.
That's not very easy to do. But if you want a company to succeed and become an institution, you have to do that.
Well certainly, nobody's suggesting that kids should use computers all day.
The transition between Bill Gates, to Ballmer, and now to Satya, is another example. There's still input in the founders. The founders haven't disappeared, they're just in the background. They're there for counsel.
People talk to them. Infosys, a great example. Nandan, one of the founders, well there's Salil there as a CEO. Nandan is still in the back, quiet in the background.
Mr Cook on the left, Tim right here. How about a thumbs up, Tim? Look this way. Look this way. Mr Cook,
Skill sets between Steve Jobs and Tim Cook, they hardly have any overlap. Tim Cook is not a visionary in the product sense. He's probably a visionary in the industrial manufacturing sense. I think that's actually what made them a perfect pair when Steve Jobs was alive because he's the sort of founder that wouldn't want to give credit to somebody else, except all the things that Tim Cook brought to the table were things that didn't impact Steve Jobs' ego.
So one of the biggest questions I have or that we will learn presumably by 2030 is who does Apple pick as their next CEO? Does it go back to some visionary? Or does it stick with an operational person? I think they're not willing to risk the company.
I think they're so good at producing a quarter of a billion iPhones alone, let alone iPads and computers every year, that to do that you need someone who just understands management, inventory, sort of things that we consider boring and certainly don't have a cultural understanding of. There's a reason why movies have been made about Steve Jobs. Movies have not been made about Tim Cook.
No one's interested. But it's one thing to be really colourful for a $2bn company that wants to be worth £10bn. Very different for a $3tn company that is going to be worth $10tn.