Silicon Valley Benefits from Founder-Led Companies

In Silicon Valley, the very word “founder” has a kind of shamanic power. Using it to explain a decision can stop an argument cold. To say “the founder(s)” brought in a new executive, chose the office location, or even designed the logo requires no further discussion. If they did or said that, the thinking goes, that’s good enough for us. After all, they are The Founders.

But it’s also true that being lionized as a founder can cover a lot of sins. It’s no secret that founders can be famously headstrong (Steve Jobs or Travis Kalanick, anyone?). They can rise on a single original idea, even if they can’t master the details that ultimately matter, like product development or scale. They can let the gold rush of investment go to their heads and get spun up by too much media attention—which, in these overheated times, often comes too early. (For more on the drawbacks to founder-led companies, see what Scott Rosenberg has to say.) We want to personify a thing we rely on, whether it’s Facebook, Spanx or Box. Founders allow us to do that.

There’s another business stereotype that deserves reevaluation: the “suit.” This is a person with business or operational bona fides who is brought in to tame (or to succeed) a founder. Suits can provide adult supervision and gravitas; apply business skills in sales or operations; bring a seasoned network of execs to attract more real-world attention; undertake a turnaround. Traditionally, the suit became the CEO (Eric Schmidt famously played this role at Google); more recently, a suit-like figure often partners with founder(s) as the COO or board chair. Examples of this trend: Michael Lynton at Snap, Claire Hughes Johnson at Stripe, Marne Levine at Instagram.

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Whichever role they take, suits can provide a lot of value, and sometimes make a real difference between life and death for a business. But I have also seen suits who are corporate clock-punchers. Their focus is keeping the board or investors happy at all costs, and they tend to focus entirely on managing up. This can lead to them sidelining an iconic culture or mission.

Do founder-led companies still have the same cachet? My experience as a full-time employee at eight companies over 25 years is balanced between the suits and founders: Four companies were founder-based, and four were led by suits or successors. In looking back at how each place shaped my career, I considered which jobs were most rewarding in non-tangible ways, which ones helped me learn or grow the most, and which places gave me the best opportunities to try out new ideas.

At the four companies where founders played an active role, either as CEO or in key product positions (cf. Larry Page and Sergey Brin, the ever-present Google cofounders), I had better personal and professional experiences. I was more challenged, worked alongside smarter people, and developed new skills. The culture at a founder company was infinitely more coherent and cohesive than at a successor company.

As for the suit-led companies, several elements stood out: There were endemic organizational issues (confusing and inefficient reporting structures; no meaningful employee development; distant exec staff). Some of these companies had a parade of bad executive-level hires (people who are the wrong fit, are uninspiring, or, more unfortunately, are definitive assholes).

One more noteworthy characteristic: These companies fostered a boring or inauthentic culture—often with much lip service about how great the founding culture was. The storied past was dutifully trotted out, but not in a way that inspired either pride or a clear throughline about the original vision. In these places, most everyone (including me) was there to tick some boxes and mark some time.

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