Founders Do Make Good CEOs ... When They Grow Up

Last Updated Jan 24, 2011 1:51 PM EST

Founders Make Good CEOsIf you weren't surprised by Google's announcement that long-time CEO Eric Schmidt would be turning over the reins of the Internet search powerhouse to co-founder Larry Page, then there must be something seriously wrong with your limbic system.

While the company did its best to downplay the leadership change and spin it as a natural transition, you and I both know that's not the way this sort of thing works.

When Schmidt said, "In this new role I know [Larry] will merge Google's technology and business vision brilliantly ... Larry, in my clear opinion, is ready to lead," you'd think running Google is like falling off a log. Maybe, if it's a 10-ton log spinning down a roiling river in a torrential storm.

There's a reason why Page, co-founder Sergey Brin, and big-time venture firms Kleiner Perkins and Sequoia thought it would be a good idea to bring in a pro to run the show 10 years ago.

Look at it this way: Would you want to go up in a rocket ship piloted by the guy who designed it? Be honest; there's no way you, or anyone else for that matter, would put your life in the hands of a guy with no training or experience commanding a complex vehicle on a dangerous mission.

Think running a huge company like Google in a highly competitive global market isn't the same thing? Think again. Remember, we're not just talking about keeping the lights on here. We're talking about maintaining the growth and extraordinary profitability of a $29 billion company with over 24,000 employees while competing with the likes of Apple and Microsoft, the two most valuable and powerful technology companies in the world.

As if that isn't enough, the track record of founders as CEOs is anything but consistent. Successes like Bill Gates, Larry Ellison, and Steve Jobs are far more the exception than the rule. And those who show up or return to the role late in the game don't always fare so well. Starbucks' Howard Schultz, Charles Schwab, and Jobs pulled it off. Michael Dell, Yahoo's Jerry Yang, and Gateway's Ted Waitt, not so much.

All that said, having spent considerable time pondering the age-old question of whether founders make good CEOs, I've actually come up with a factor that I think weighs heavily on the outcome. Steve Jobs is actually an instructive example here.

It's easy to forget that the Apple co-founder was not always the leadership icon he is today. Apple's first decade under Jobs and his notoriously controlling and sometimes abusive management style was turbulent, to say the least, and he was ultimately ousted by the company's board.

Of course, Apple was then essentially driven into the ground by a trio of CEOs. That set the stage for Jobs' triumphant return and perhaps the greatest corporate turnaround and success story in American history.

But the Steve Jobs who returned to Apple wasn't the same guy who was drummed out of the company 11 years before. He was a far more mature and balanced individual. Clearly, success and failure both contributed to that transformation. After all that had transpired with Apple, NeXT, and Pixar, Jobs had grown up.

Microsoft founder and former CEO Bill Gates seems to have gone through a similar transformation. These days, the man shows little evidence of the once arrogant and childish tyrant who ruthlessly conquered the software world, leaving dozens of trampled competitors in his wake.

After suffering many personal attacks and humiliating defeats, Gates has grown up and become a role model for wealthy executives-turned-philanthropists everywhere. Not only is he giving back to society in a big way, he's inspiring others to do the same.

What Jobs and Gates have in common is experience. The initial ego-boost of a successful startup has been tempered by wisdom and humility that can only come from real-world experience, especially failure.

So, back to the question of whether founders make good CEOs, I think it comes down to this. Every successful entrepreneur, CEO or otherwise, is imminently smart, capable, and driven. What's missing from that equation are experience, savvy, and leadership traits that come from experiencing success and failure: humility, empathy, self-confidence, balance, and maturity.

In short, I think founders have a better chance of being successful CEOs after they've grown up.

Is Larry Page grown up enough to pilot the Google rocket ship? The company's board of directors certainly seems to think so. Me, I'm not so sure. But I do think he has "Steve Jobs envy."
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Image courtesy Flickr user Charles Haynes