A version of this post was originally published in July, 2008 right after Diane Greene, the co-founder and CEO of VMWare, was ousted from her company. The post has since been updated.
There is no doubt that Diane Greene was a controversial CEO. She was difficult to work with. It was her way or the highway and she churned through senior execs, especially in sales and marketing. She never gave much respect to the folks at EMC either (EMC owned the vast majority of VMWare’s stock – and controlled the board).
Some other hard-headed, “controversial” founder/CEOs that come to mind are Bill Gates, Larry Ellison, Steve Jobs, Jeff Bezos and Mark Zuckerberg. These founders may be difficult to deal with but I’d rather go with them than take my chances with a new hired gun CEO.
Over the years, we’ve observed that it’s difficult, if not impossible, to match the passion and commitment that founders bring to their companies. It’s not just a job for them. It’s deeply personal. The difference in commitment is akin to the differences you might observe between missionaries and mercenaries (or hedgehogs versus foxes).
Look, we have nothing against professional CEOs. They are very smart, capable and hard working people. But the whole situation reminded us of the time Steve Jobs was ousted from Apple more than 20 years ago.
As co-founder and CEO, Diane Green built one of the all time great successes in Silicon Valley. Very few companies ever reach $1B in revenues. Even fewer in the technology industry. Even fewer in the software industry. And even fewer ever reach tens of billions in market cap.
Unfortunately, VCs oust founders all the time (even the ones that proclaim to be “founder friendly.”). We’ve been in plenty of board level discussions around this topic.
It’s almost a rite of passage in Silicon Valley. As a founder, you start a company, get VCs to fund you, recruit a “world class” management team…and eventually, find your replacement (or get ousted).
What people seem to miss, however, is that just about every great company ever created – in technology as well as low-tech, was built by a founder (or a CEO who happened to join the company very early in its growth phase) and a team of dedicated people who grew with their companies over decades.
We don’t believe in “world class” management in the generic sense. “World class” in what??
What we believe in are people who learn on the job and become – over time – the best at what they do. Along the way, they make plenty of mistakes. But that’s part of the learning process (and perhaps the luck of it – because the mistakes happen to be not fatal during the trial and error process).
Some examples of great companies led by founders for decades are GE, UPS, FedEx, Wal-Mart, Southwest Airlines, HP, Intel, SAP, SAS, Apple, Oracle, Microsoft, Adobe, Sun, Dell, Qualcomm, Broadcom, Nvidia, Dolby, Amazon, Google, Netflix, Salesforce, etc.
There are some great companies where the original founder(s) did not grow the company but the CEO who grew the business to $1B+ in revenues joined very early on in the life of the company (typically below $10mm in sales): IBM, McDonald’s, Starbucks, Veritas, and Cisco are examples.
It’ll be interesting to see what happens. Even a founder hanging on to the bitter end won’t save some companies (i.e. Wang, DEC). But we would rather take our chances with a founder who built a $1B business from scratch than go with someone new.
We would rather take our chances with the people who built the business and grew their companies than the “professionals” – the hired guns – the mercenaries – coming in, after the fact, to “fix” things or to “take it to the next level.”
We tell all of our companies this – if you want to build the leader in your industry, you have to have the world’s leading experts in your field working for you. But do NOT expect to find them outside of your company. Someone senior from the outside won’t come in to show you the way. They won’t save you.
Think about it. If you can go outside and hire a CEO or other very senior executives to come in to YOUR company and tell you what to do and how to do it – better than you – then you’ve created nothing special. There is no secret sauce and you have NO CHANCE of building a truly great company.
We like to tell all of our companies this – the world’s leading experts in your business will be the people you develop. The young people you hire today will be your future leaders. Five to ten years from now, they will be the world’s leading experts in your business. You will have to figure it out along the way.
Don’t count on those mythical “world class” managers to come in to save the day. Not only are there no guarantees, I believe they will end up hurting your chances of building a special, lasting company. If you do try to hire them anyway…good luck. What we will guarantee is this – they will negotiate hard for a nice severance package.