November 14, 2017

Most founders suck at being CEO

Most founders dream of the day they’ll scale to a massive team and — from iteration to big success — retain their throne as CEO. Unfortunately, that kind of thinking isn’t always best for the company: new research shows that, more often than not, companies run by founders are “less productive and more poorly managed” […]

Most founders dream of the day they’ll scale to a massive team and — from iteration to big success — retain their throne as CEO.

Unfortunately, that kind of thinking isn’t always best for the company: new research shows that, more often than not, companies run by founders are “less productive and more poorly managed” than those which bring in outside CEOs.

Not everyone’s a Bezos or a Branson

The study, from business school professors at Duke, Vanderbilt, and Harvard, examined data from 13k companies across 32 countries and found that founder-led businesses were an average of 9.4% less productive and were rated lower on management satisfaction.

“Founder CEOs,” wrote one of the paper’s co-authors, “were by far the worst type of CEO.”

But… but I’m a good leader!

It’s actually pretty rare for founders to remain on as CEO as their company grows: a separate study found that only 25% of them remain on as CEO by the time of an IPO.

Turns out, investors don’t like going all in on companies that are too reliant on one person’s talents. Being a good founder and a good CEO require two completely different skillsets.

A lot of startup founders suffer from what’s called the “rich versus king” dilemma: they toggle between wanting control and wanting profit. And unfortunately, control often wins.

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