The original research from academics at Duke, Vanderbilt, and Harvard asked the question if founding CEOs make good managers. That question is much different from whether or not they make the best CEOs.
Most already know intuitively that founding CEOs are bad managers. There are exemptions. Having worked at Intel at the end of the Andy Grove era, I have seen one of them. Grove was part of the original traitorous trio that left Fairchild Semiconductor to found Intel. He was not only a great technical visionary, he helped create one of the best corporate management environments of all time.
Being a great manager isn’t the purpose of most founding CEOs. However, taking the data that was published, the media portrays founders as the worst CEOs. They aren’t. They are often simply bad managers.
Looking at the largest software companies, those that have gone public and achieved more than $4 billion in revenue, it is evident that founding CEOs are still very much in favor. These companies, which include core software (Microsoft, Oracle, SAP, Symantec, CA, Intuit), Internet/cloud (Salesforce, Facebook, Google), eCommerce (Amazon, eBay, Alibaba), and entertainment (EA, Tencent, Netflix) companies, and one catch all (Apple—yes I count them as a software company), demonstrate first and foremost that founding CEOs are generally around for a very long time.
In fact, the founding CEOs of these companies were around for an average of 15 years, and many of them are still in charge. Of the 19 companies, all but two led the company through their IPO, and one (Pierre Omidyar of eBay) changed out that same year. In addition, the average time they stayed on as CEO after their IPO was another ten years.
The exceptions to this longevity are mostly few and orderly, Omidyar hired Meg Whitman as his replacement six months before IPO. Larry Page stepped aside as Google CEO for ten years, handing over the reins to Eric Schmidt before taking them back in 2011. At Symantec Gary Hendrix stepped down after two years through an acquisition a full five years before IPO, and stayed on in the company in a lesser role.
So, if founders are such bad CEOs, why do they stay around so long at the most successful software companies of all time? Because they are the technical founders and visionaries. It’s no mistake that 13 of the 19 founders have a technical background. More importantly, each of the companies was foundational in its field, and the CEO at the helm was the driving force of creating something new. They were the right visionaries to pull it off.
Can you imagine where Google would have been with its visionary founding leadership? What would Facebook be today if Mark Zuckerberg had stepped down? You might get a glimpse by looking at the worst exception of the group: Steve Jobs. His infamously bad management was replaced with John Skully, a consummate management professional. However, the years of professional management for Apple after Jobs were the worst in the company’s history: John Skully, Michael Spindler, and Gil Amelio were brought in as great managers and left as terrible Apple CEOs.
On the flip side, you’ll also find that many of these great companies have had the support along the way to create great management underneath. Bill Gates was balanced by Steve Ballmer’s sales leadership, Steve Jobs version 2 was counterbalanced by Tim Cook (where were you in 1983, Tim?), and Mark Zuckerberg has surrounded himself with great advisors, and great managers including Sheryl Sandberg. The right CEOs know or realize what they can do and find support from others for what they can’t or don’t want to do.
So does every founder have it in them to be a great CEO? No. In fact, some should never be CEO. I’ve worked for, with, replaced, and invested in CEOs that were bad managers. Many of them were successful with good management around them. That they stay in place without the right management support is often the fault of the board and investors. Those that are the worst suffer from the king vs. rich dilemma and they should be avoided or removed because they won’t step aside. Yes, there are stories. Bad stories.
Many others do not need to stay as technical visionaries, especially when the original technical vision adapts dramatically over time. Rigidity and inflexibility are company killers as much as bad management skills. But the fact that a founder shouldn’t manage is different from the founder being the CEO. Most founding CEOs are not there to be great managers. Helping them to realize that and compensate for it early on will make things go a lot smoother.
The end of the cult of the founder may be near because it should never have existed in the first place. The realization that being the founding technical visionary is different from managing, and doing something about it is something everyone should embrace. If a founding CEO isn't willing to accept it, that may tell you much about them and even more about how successful their company won't be.