Fred Wilson: Why Handing Over Your Company to a CEO Is Sometimes Best
Yesterday, Zynga announced that founder and CEO Mark Pincus would be handing the reins to former Microsoft interactive entertainment head Don Mattrick--sparking debate about exactly what Mattrick can do for the ailing game giant.
Former entrepreneur and venture capitalist Fred Wilson had something more general to say on the matter.
"This is not a post about why this will be awesome for Zynga's business and its stock...but this is a great opportunity to talk about entrepreneurs who choose to hand their company over to someone else to manage," Wilson wrote on his blog Tuesday.
According to Wilson, there are three things to keep in mind when contemplating a power transfer.
1. Loss of title does not mean loss of control. "There is a difference between hiring a CEO and turning over control of the business," Wilson notes.
In the case of Zynga, he explains, Pincus will retain a large measure of control through his placement on the board and majority ownership of the company. In this type of transfer, Wilson explains, Mattrick's role is more reminiscent of a C-suite employee than Commander-in-Chief.
"Mattrick is coming in to work for Mark and the shareholders," he writes. He compares the relationship to former Google CEO Eric Schmidt--who still answered to founders and boardmembers Larry Page and Sergey Brin--and LinkedIn's CEO Jeff Weiner, who was hired by founder Reid Hoffman.
"The point is that the CEO's job is to manage the business and he or she does that for the board and shareholders who ultimately control the company," writes Wilson.
2. Great founders don't always make great CEOs. As Inc. contributor Steve Tobak pointed out in April: Entrepreneurs don't always make the best CEOs.
Recognizing that you, the founder, may not be ideal CEO material is both important and humbling, Wilson writes.
"It's worth noting that Mark has kept the Chief Product Officer and Chairman titles in this transition. He clearly intends to go back to focusing on product and strategy while Don runs the company," he writes. "This is a great model if the CEO and Founder can figure out how to operate well as a team."
3. Think about what's best for your company. "The thing we always remind entrepreneurs is that bringing in a CEO does not mean losing control of the company. In fact, bringing in a CEO is often a great way to keep control of a company if you do it well," Wilson writes on his blog.
Successful examples of CEO/Founder partnerships like those at Google, LinkedIn, and--hopefully--Zynga, can provide you with a roadmap to a peaceful and productive transition, he concludes.