Hired-gun CEOs often stumble when founders just won’t let go

High-profile returns by originating CEOs are on the rise. Sometimes their vision is needed—but sometimes they just can’t stay away

 
Tinder co-founder Sean Rad (Tommaso Boddi/Getty Images for Tinder)
Tinder co-founder Sean Rad (Tommaso Boddi/Getty Images for Tinder)

February may be the most popular month for breakups, but hookup app Tinder didn’t wait till the deep of winter to end things with its CEO. The company announced last week that founder Sean Rad would be retaking the top job, only five months after handing control to former eBay and Microsoft executive Chris Payne.

Rad’s about-face is at least the third high-profile return by an ousted founder this year: Zynga brought back Mark Pincus in April to take over from Canadian Don Mattrick and Twitter replaced Dick Costolo with Jack Dorsey, albeit on an interim basis. Boards acting in this way are hoping for a prodigal CEO: a founder who used their time apart to learn the skills necessary to lead the company they founded. “All of those founders had originally left to bring in a more professional leader or CEO-type,” notes Vince Molinaro, Managing Director for Leadership Solutions at Knightsbridge Human Capital Solutions and author of The Leadership Contract. “If [the founders] don’t have a strong business acumen and operational skills, they hit a cap on how far they can take their business.”

Bringing back a founder is sometimes an act of expediency, not strategy. It’s a particularly easy trap to fall into when the former leader retains significant influence within the organization. Dorsey may have stepped back to start payments company Square, but he was also chairman of Twitter’s board during his period “away” from the company. Pincus remained Chief Product Officer for a year following his first stint as CEO, and was also chair of Zynga’s board before starting his second. Rad never left at all, becoming president and taking charge of product and marketing.

It’s called Founder’s Syndrome: an originator maintaining disproportionate control of the company they started while someone else is nominally in charge. While there has been no public suggestion of founder meddling in the cases of Tinder, Zynga or Twitter, it can’t have been easy for these hired-gun CEOs to operate in the shadow of their predecessors. “It’s tricky if the founder is a visionary, highly charismatic, has a strong personality—those are big shoes to fill,” says Molinaro, who suggests companies shouldn’t be holding on to former leaders in formal roles if they want their new CEOs to succeed. “You’ve got to come in and assess that, assess strengths and gaps. But then you’ve got to carve your own path.”

A strong founder in the background also complicates things when a company’s board is assessing the state of the business. “When your performance isn’t meeting expectations, is that about you or is that about the meddling of your predecessor?” asks Molinaro.

Tinder’s CEO change puts it in another circle of three recent events: high-profile departures just a short time into a new leader’s tenure. At the University of British Columbia, president Arvind Gupta stepped down after a year in charge, and Martha Piper resumed the role on an interim basis. At Telus, CEO Joe Natale will be replaced by his immediate predecessor, Darren Entwhistle despite only assuming the top job in May 2014.

There’s some dispute as to whether average CEO tenure has been on the rise or on the decline in recent years. In the case of a five-month stint like Payne’s at Tinder, it’s about a mismatch between company and leader rather than regular turnover, says Molinaro. “If a change happens within a year, I wouldn’t say that’s a tenure play,” he says. “That’s more a misfit, or a decision being made that things just didn’t work out—both sides cutting their losses and moving ahead.”

There’s something to be said for acting quickly when things aren’t working out, says Molinaro. “It’s a courageous act to admit that a mistake was made—to cut bait and move on, as opposed to saving face and trying to make it work, and then three years go by while company performance continues to decline.”

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