There are a number of founder leadership models that can work well as a startup evolves. I have lived a few as an entrepreneur and worked with many as a board member. Getting the founder model right is critical because the founder is the soul of a company. If you can navigate a leadership model that keeps the founder involved and engaged in the business as it scales, it meaningfully improves your odds that startup magic will happen.
Putting aside the complexities of multiple founders (as I talked about in my post, The Other Founder), the founder leadership model tends to fall into a few buckets:
- Ellison Model – Named after Oracle's Larry Ellison, who did this for over 50 years in one of the most amazing executive and entrepreneurial runs in history, this model is where the founder runs the show from end to end with no #2. Founders who pull this off are able to hire strong functional managers, weave them into an operating team and grow as leaders with the help of these strong managers. Steve Kaufer of TripAdvisor is 15 years into running on this model and going strong.
- Zuckerberg Model – Named after Facebook's Mark Zuckerberg, this model is where the founder hires a #2 early on so (e.g., Sheryl Sandberg) that they can focus on one aspect of the business (e.g., product), while letting the #2 run most of the day-to-day operations. You sometimes hear board members talking to each other in short hand about this model when they say, "we need our Sheryl".
- Schmidt Model – Named after Google's Eric Schmidt, this model is where the board hires a professional CEO early on to provide company leadership to build the company around the founder's early vision (e.g., Sergei Brin and Larry Page). Schmidt joined Google initially as chairman and then 6 months later as CEO. That is VC playbook 101: get the CEO-in-waiting on the board, let the founders and them get acquainted, and then see if you can make a match. But even with the new CEO in place, the founders should remain deeply involved and lead major initiatives (e.g., the founder becomes CTO). And, in a few rare cases, founders return to run the company after the CEO retires, now that they have had time to grow as leaders (e.g., Akamai – where founder Tom Leighton succeeded operational CEO Paul Sagan, and of course Google, where Page succeeded Schmidt).
I have implemented each of these models in my portfolio. The right model varies based on the circumstances, obviously, and most importantly based on the makeup of the founder and what they are good at and what they love to do. Good founders realize early on that there is a Start Up Law of Comparative Advantage and that they need to quickly figure out what they are uniquely awesome at and hire the right complimentary team around them.
I find the old school model of shoving the founder aside happens only in rare situations. More typically, early investors focus on employing one of these three models to keep the founder(s) close to the business and put the right team in place around them to allow the company to successfully evolve and grow.