Founding CEOs vs 'professional' CEOs

Founding CEOs vs 'professional' CEOs

In his latest LinkedIn column, Reid Hoffman considers the differences between what he calls founder CEOs and 'professional' CEOs.

Twenty years ago, the classic startup model was to have young founders start a breakthrough company, then bring in “grey hair” in the form of experienced executives once it was time to scale the business. Key examples included Cisco, Yahoo, eBay, Google, and many smaller companies. In the last decade, however, that common wisdom has shifted, at least for consumer internet companies. The new received wisdom is that the best entrepreneurs can stay CEO through the entire growth cycle of the company. Think of Jeff Bezos, Larry Ellison, or the late Steve Jobs. My partners at Greylock and I have invested in a number of young founding CEOs who match this pattern and are doing a fantastic job leading their companies through hypergrowth, such as Brian Chesky of AirBnB and Drew Houston of Dropbox. The question is, why has this shift occurred?

Last year, Ben Horowitz of Andreessen Horowitz articulated a well-thought-out philosophy on why he prefers to back Founder-CEOs and keep them in charge as the company grows. His essay, “Why We Prefer Founding CEOs” lays out three key ingredients that great founding CEOs tend to have, and that professional CEOs often lack:

  • Comprehensive knowledge
  • Moral Authority
  • Total commitment to the long term

Ben’s point is that without these three key ingredients, a CEO won’t be able to maintain the rapid product innovation that is a prerequisite for success in today’s startup world. Ben cites Google and Cisco as rare exceptions where a professional CEO helped steer a company to market leadership and that the evidence is “one-sided and overwhelming” that you shouldn’t bring in a professional CEO. In other words, Ben asserts that bringing in a professional CEO should be a last resort for a founder.

And yet, many of the greatest success stories of the internet era involve founder/professional CEO partnerships.

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