When to hand over the reins
You’re going to think this post is about Zenefits but it’s not. I wrote it on Saturday morning, a few days before the news broke. I had been thinking generally about the industry and whether we’ve swung too far in becoming “founder friendly.”
We hear about the “magic touch” of a founder, that creates a moral authority that can’t be had by a hired gun. Venture capitalists reinforce this: much better to lose a check (even a large one) than lose the next Zuck who is worried you might fire him or her.
But I wonder what companies we’re handicapping by not having a more thoughtful conversation about the different skills and interests required at each phase of a business. The right CEO to go from napkin sketch to product-market fit might not be the right leader to think through defining internal incentive structures, or how to scale the creation of new product lines.
To move from player, to coach, to general manager and finally, to commissioner, requires constant re-invention. Frankly, the skills for each role are so incredibly different, it’s amazing it ever happens at all. And yet we look at the Dells and Ellisons and understand that there is only one way build a big business.
Here’s Andy Grove, Intel’s first employee, who later became Intel’s best CEO:
“I helped make Intel’s transition from an entrepreneurial outfit, none of which was my doing, to the manger of a medium-sized company, which was actually a very difficult transition to make…Everybody can start a startup and come out with one product– you see that all over. But, making the company into something of a self-sustaining institution, with its own methods and mores and organization– that’s tough” (via In The Company of Giants)
Grove remade Intel and should be viewed as a cofounder of the second phase of Intel. If Intel had continue to be run by its founders, we might remember Intel as that memory company that went out of business in the 1970s.
Our equity structures are heavily weighted towards those who were there early; and yet the very best thing to do for your equity might be to hand off the reigns to someone who can take it to the next level.
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