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Old Debate Returns: Do Founders Make Better CEOs?

Steve Jobs. John Chambers. Bill Gates. Lou Gerstner. Two of those CEOs were company founders. Two were external hires who became leading tech CEOs. Which approach is better?

If a company culture is rooted in innovation, then a founder-turned-CEO is probably the best person to take the company to the next level, asserts Surekha James on VentureBurn.

I like James’ spin on the situation. She also points to Andreessen Horowitz, the incredibly successful venture capital firm, which tends to prefer founding CEOs rather than transitions to so-called professional CEOs.

From Amazon (Jeff Bezos) to Sun (Scott McNealy), Ben Horowitz says founding CEOs often have three ingredients that CEOs recruited from the outside lack:

  • Comprehensive knowledge
  • Moral authority
  • Total commitment to the long-term

Horowitz concedes that not all founders are CEO material. In fact, great CEOs often aren’t all that focused on grabbing or retaining the CEO chair. Instead, great CEOs need the “burning, irrepressible desire to build something great and the willingness to do whatever it takes to get there,” he wrote.

Obsessed With Success

Of course, plenty of “hired” CEOs also become great CEOs. In John Chambers’ case, he previously worked at Wang Laboratories — which went from a $2 billion profit in 1989 to a $700 million loss by 1990. Chambers jumped to Cisco in 1991 as Senior VP and became CEO by 1995. The Wang free-fall left its mark; Chambers was obsessed with never, ever becoming complacent… and never missing the next IT wave.

Generally speaking, I still prefer the “founder as CEO” stories from Silicon Valley, since they typically involve leaders pursuing business dreams at nearly any cost. Some of the stories are reckless. Many end with company implosions. But against-the-odds entrepreneurial victories ultimately fuel America’s ongoing obsession with chasing dreams.

PS: After Nines Inc.’s own CEO, Amy Katz, is company co-founder.

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