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The 3 Things that Uber, Facebook, Google, Twitter, and Tesla Have In Common

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Why the world's most successful tech companies are all founder-led.

 

Uber, Facebook, Google, Twitter, and Tesla are very different companies. They have different cultures, different products, and different cost structures, face different risks, and have grown along different trajectories. So what do they have in common, other than that you wish you had founded each of them?

Thing #1: Their products have transformed our lives and our society

These are product-driven companies. They have introduced solutions that have fundamentally altered the way we travel, communicate, do business, and imagine what the future will look like. Their products do not live in the background of our lives; we think about them and interact with them every day.

Thing #2: Their products consistently win in competitive markets

All of these companies have long outlived the flash-in-the-pan designation. They are constantly one step ahead of the evolutionary curve. Google was a search company that now powers 80% of our smartphones; Tesla has moved from exotic roadsters to everyday vehicles and captivates with each new product announcement; and Uber has thwarted an innumerable host of upstarts with their eyes on the ride-sharing throne.

Thing #3: They are all founder-led

Despite experiencing extended periods of massive growth, all five of these companies are still led by founding CEOs.

But a venture capitalist told me founders rarely scale…

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What does it mean that these five icons of the tech world continue to be run by their founders? Are VCs wrong to dispatch so many founder CEOs for supposed failure to scale? Not necessarily – after all, these are special businesses built around inspired products. But it’s worth considering that founders are the source of a startup’s initial product inspiration. If that initial product is one with high potential, then at least one of the founders must have had both intuition and insight about the market that others did not. As market conditions and customer preferences evolve, who is more likely to generate the next inspiration that will keep the company ahead of the market: the founding CEO who has already proven her intuition about the market, or the outside CEO who has proven his ability to ‘scale’?

When VCs remove a founding CEO, they are often removing the individual with the clearest vision for what the company’s product is and can be. They are implicitly trading off product in favor of operations. That tradeoff may be a good one when a product is highly stable and execution is the biggest barrier a company faces; however, the truly great companies that consistently win in big markets rarely do so simply by executing on a stable product.

Technology startups, like species, are subject to the forces of evolution. Shifting landscapes of customers and competitors force companies to evolve or perish. Tempting as it may be to cast aside a founder for a veteran CEO, VCs would do well to remember that the guy who had the foresight to build the arc the first time might be their best bet at anticipating the next flood, too. Just ask Travis, Larry, Mark, Jack, or Elon. (Or Jeff Bezos. Or Bill Gates. Or Steve Jobs.)

7 thoughts on “The 3 Things that Uber, Facebook, Google, Twitter, and Tesla Have In Common

  1. Great post, as always, Jay! So do you think part of the solution would be to make sure to hold the majority share ownership (as at least Page & Brin did, and potentially the others) to stop getting the boot from VCs who may actually not know better?

  2. “When VCs remove a founding CEO, they are often removing the individual with the clearest vision for what the company’s product is and can be. They are implicitly trading off product in favor of operations. That tradeoff may be a good one when a product is highly stable and execution is the biggest barrier a company faces; however, the truly great companies that consistently win in big markets rarely do so simply by executing on a stable product.”

    It’s hard to say, I think. Unfortunately, some of the people with the best product vision can be the worst at other parts of the business that are really, really important early on; from past observation I’d say some examples of fatal weaknesses for product visionary founders are the inability to build a company culture that retains talent, the inability to hire the right people for the team, or the inability to relinquish control. I don’t disagree that product vision is enormously valuable, but I have to say, there’s a lot of times when I’ve thought booting the founder-CEO would be the right choice.

  3. Great post on founder CEOs scaling with the company but I don’t agree that geat companies have to be founder led. All these companies have had experienced operators running or playing a pivotal role in the companies though. Eric Schmidt ran Google through its most important period where it went from a search engine to a cash generating engine using Adwords. Elon Musk wasn’t a founder in Tesla but was an early investor who took over from the founders. I think starting a company and running a large organization need different skillsets. There are people like Larry Page who are able to manage both or able to learn it during the journey.

  4. I agree with your post from the perspective that there many instances where the VCs are too quick to replace the founder-CEO because they do not fit the profile of a person that can scale. Profiling could be a way for the VCs to mitigate their risks, but I also think that it can limit the potential of a company whose future for becoming a game-changer depends on the vision and drive of the founder-CEO. Many of the great entrepreneurs we know today, such as Steve Jobs, probably would not fit the profile as someone with operational expertise that can scale the company.

  5. Great argument for supporting founders to run their companies. Do you think the same argument can also be applied for early stage employees? If companies constantly need to adapt/evolve, then staying with the early stage employees during and after scaling might also make sense…

  6. This is a very interesting post Jay! I agree that markets conditions and customer preferences evolve continuously and that founders are likely to have a very good intuition of what’s needed in the market. However, they have to prove their intuition by actually making money. If the founders are making enough money and growing, I don’t think VCs would want to replace them with someone else.

    The challenge arises when the founders are not able to make money or grow the company. From a VC’s perspective, there are only so many chances they are willing to give a founder during those times. If founders keep going back to investors with an ‘evolved’ intuition every year without showing growth or profits, that’s when investors start to worry.

  7. Great post Jay! I wonder to what extent your points #1 & 2 drive your point #3. In other words, one could posit that (at least some of) these companies are still ran by their founders precisely because the companies (i) have transformed our lives, and (ii) are the winners. I’d argue that (for at least some of these companies) these two factors contributed to major up rounds of valuation, which in turn allowed the founders to maintain significant share and control of their companies. Thoughts?

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