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.
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.”
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.