I really like the analysis of finding versus maximizing product cycles. There are a few aspects of "Moral authority" that I think have been left out.<p>1. The rank and file know (or at least think) that a professional CEO is less likely than a founding CEO to be around in 5 years. So when a new professional CEO says "Jump" it's much harder to get people to change their way of doing things, particularly if they suspect the next CEO will undo all the changes. When a founding CEO says "Jump," you might as well get with the program because the change is likely to be permanent. (For the economists in the audience, this is a version of the Lucas critique applied to organizations.)<p>2. The "knowledge pyramid" isn't just about the CEO's epistemological state and decision-making apparatus; it's also about communicating the values and identity of the company back to the company. Founding CEOs are in a superior rhetorical position because they can say "I hired you all because each of you ________", and give everyone the warm fuzzies. The professional CEO on the other hand has to speculate or impute motivations to the previous CEOs, which is less motivational. As a recent example, I think Satya Nadella has done a relatively poor job of communicating what makes Microsoft employees different from other employees; instead of saying, "You guys understand the full stack better than anyone" (or something), he can't help but to talk about market opportunities and cloud-first productivity blah blah blah. (Which is to say -- not only was he in an inevitably weakened rhetorical position with respect to BillG, he squandered it when it came to articulating the company's identity.)<p>3. Founding CEOs are in a better rhetorical position when it comes to navigating value conflicts between quarterly earnings and something else ("changing the world"). When communicating with immediate subordinates they can do a kind of good-cop bad-cop routine with the board of directors ("The board really wanted X, but I thought that'd be bad for customers, so we're doing Y."), whereas a board-picked CEO will be assumed to act only in the interest of the stock price. For many companies (e.g. organizations that profess to be on some kind of higher mission) this sort of CEO will be rather uninspiring, and therefore the professional CEO will be less capable of effecting change throughout the organization.<p>4. Professional CEOs have to navigate a more precarious political situation because there's a good chance that one or more subordinates want the CEO's job. (I would hazard to guess that insiders usually replace outsiders and outsiders usually replace insiders.)<p>One thing this article leaves out is a deeper analysis of why the conventional wisdom is to replace a founder with a professional when there are so many famous counterexamples. It could be that at a certain stage in a company's growth investors prefer to be more risk-averse and will give up a potential grand slam in order to get a two-run double, or something. (And by extension the OP is willing to take larger risks than the average VC.) Or that there are hidden social dynamics at play.
Many fine thoughts here, but I was given pause by the statement "Etymologically, the word technology means “a better way of doing things.” I wonder where Horowitz sourced this from.<p>The OED doesn't have anything resembling this. Neither does etymonline. So I'm curious where this comes from.<p>The OED defines "technology" and offers references dating to 1615. I'll reproduce the OED's definitions here briefly:<p>1a: A discourse or treatise on an art or arts; the scientific study of the practical or industrial arts.
1b: Practical arts collectively.
1c: A particular practical or industrial art.<p>Even looking at the stem techno, you will not find anything approaching Horowitz's value judgment that he has inserted: better. Or worse for that matter. This sort of misappropriation of language is not only lazy, it's dangerous, and unfortunately it is pervasive.
Salmon points out that “not a single one of the 12 [candidates] is a CEO who was hired to run a company by its board of directors.”<p>Let me give an alternative explanation for this. Founder CEO's take more risk. And we would expect risk takers to be overrepresented in outlier categories such as "best ceo candidate".<p>The same could potentially explain "analysis of recent exits for high technology companies". They found that founding ceos make better exits. Well that has a survivorship bias, because companies that didn't make an exit (because of a gamble gone wrong?) are not included.<p>EDIT: Drum's post suffer from the same problem. If you evaluate performance during [t0, t1], to not get survivorship bias, you need to have an inclusion criteria based on only information known at t0.
This reminds me of a graph I saw in Forbes that showed tech companies with founder CEO's outperforming the S&P 500. A mutual fund built around the premise would be interesting to watch and possibly invest in.<p><a href="http://ycharts.com/analysis/story/founderceorun_companies_vs_the_sandp_500" rel="nofollow">http://ycharts.com/analysis/story/founderceorun_companies_vs...</a>
Excellent reading.<p>This part about Eric Smith makes me think: "Doing so involves intense communication, deep humility, and some hard compromises."<p>I believe communication is very important, but not practiced at the companies.<p>Now, as I'm starting on the management of a very small company, it's the chance to do what I believe it's the right thing to do and I did not seem being doing well in all the companies I passed: communication, humility and great respect with employees.
Is anyone familiar with Jim Colin's hedgehog concept mentioned in "Good to great" - <a href="http://en.wikipedia.org/wiki/Good_to_Great" rel="nofollow">http://en.wikipedia.org/wiki/Good_to_Great</a><p>I'd even assume it's 'inspired' by it, as they did similar studies and came to the same conclusion...
Another way to read this is that a best practice is for a professional CEO to take pains to share power with the founders in critical areas.<p>If you have a strong CEO with the humility and discipline to do that, it can be just as powerful a combination that lets a founder still add maximum value.
There's more good than bad in this post, but Ben had to ruin it, and his credibility in general, with this:<p><i>Bottom feeding publications such as Valley Wag</i><p>Valleywag is cynical and harsh, but it has done more good for technology and humanity than all of Sand Hill Road combined. Ridicule is extremely powerful (see: Stetson Kennedy's exposé of the KKK in the 1960s) at taking down a reputable evil.<p>In the ongoing war between Frat Boys and People of Substance (aka Real Technologists) the Frat Boys have local advantage, because they've got better playa skillz with the VCs. It takes a continuous rash of ridicule to draw attention to the <i>global</i> concerns of technological advancement (also known as Real Technology) and keep us out of the shitty local maxima that Frat Boys tend to bring us to. If we want People of Substance to have a chance in the VC-funded world, we need a strong "yellow journalism" to ridicule bad actors and, thereby, clear the field a bit for the good.<p>If Ben Horowitz really can't see this, then he doesn't deserve to be a leading investor. Of course, this post is five years old and his views may have involved.