When The Founder "Steps Up"

I saw the news reports last night that Reid Hoffman has hired a CEO to run LinkedIn.

The headline to the VentureBeat story I linked to is:

LinkedIn’s chief executive steps down

I'd like to suggest a new word to describe what really happened. Reid 'stepped up' to the role of chairman. It's not a demotion or some kind of forced management change as the VentureBeat story alluded to (since updated):

Sometimes, venture capitalists agree to invest only on certain terms, and they may have done so last month only on condition of a change in executive — but we aren’t certain of this.

Stepping up is hard. But it's often the right thing to do. The timing is critical. It's generally not a smart thing to "step up" before the product/service and business model is figured out. Entrepreneurs are better at the tinkering style of management that is required to get the product/service and business model right. Hired managers are often better at executing it once the plan is set.

So judging from where LinkedIn is right now, my sense is that Reid picked a good time to "step up". According to OM at GigaOm:

Hoffman will remain chairman of the company, and will take an additional title of president of products.

That's pretty clear that he's not leaving the company. And that's important. Look at all the founders coming back to their companies these days to fix them. When founders leave completely, it's often not good for their companies.

We had a similar management change in our portfolio last year which I think was handled exceptionally well. Dave Morgan, the founder of TACODA and its CEO for its first five years, handed over the CEO job to Curt Viebranz, who is an experienced media company manager and had been COO for the prior two years and a board member since inception.

TACODA went through a number of iterations during the first five years but by the middle of last year was solidly on a plan to build the leading behaviorally targeted advertising network. Dave "stepped up" and Curt is now running the company. But Dave hasn't left as anybody close to the company or the online media business will attest. He's doing different jobs for the company and he's still contributing that magic element that only a founder can bring.

So I hope Reid will do the same. I know he's been quietly building one of the best portfolios of angel investments out there and he is probably headed to investing full time at some point. But as long as LinkedIn is an independent company, he should keep one foot in the door there. It's important to step up instead of stepping down.

Comments

[righton]

Good way to promote your favorite blogs. Lets look at another heading from couple of months back: http://www.techcrunch.com/2006/11/29/bittorent-raises-25-million-bram-cohen-is-history/

Looks like a very shoddy work to me. What is your take on that?

[Victor Agreda Jr]

100% agree with you here. I think it's important for founders to stay on for as long as possible. There is that certain magic they bring to the table, like Miyamoto brings to the Mario franchise. It also helps when the "management guy" actually listens to the founder, however. I was a young guy when I saw "Tucker" and this has always stuck with me-- you just can't crush the dreams of a creator and expect the magic to stick around.

[Les]

I think its very important to realize that it may not ALL be positive for the founder to move "up" but not out. While the ideas and influences of some founders may be invaluable, there are some significant implications for the hired gun CEO who steps into a position which perhaps may have been filled by a "legend." Operating in this environment, filling the shoes of a large personality who has accomplished the impossible of starting and building a substantial company from scratch, while someone remains to look over his or her shoulder can be an undue burden that hinders rather than helps the company. The fact that many founders return to their old jobs years later may not be such a good sign. Witness what may go down in history as one of the best performed transitions (albeit not of a founder) with Jack Welch giving way to Immelt. Jack carefully picked his successor after years of scrutiny (may be a big lesson there too on the care taken to select the successor) and then left the company entirely, in order to enable Immelt to do the right thing and not be encumbered by Jack's legecy.