

Why We Prefer Founding CEOs - jcr
http://bhorowitz.com/2010/04/28/why-we-prefer-founding-ceos/

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bignoggins
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?

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brlewis
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.

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keiferski
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.)

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ecaradec
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.

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bfe
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.

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mbesto
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.

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

