Why Founder CEOs Fail

The Product CEO Paradox, and what it has to do with running your own company

Written by Mira Shenker

Entrepreneur Ben Horowitz is a big supporter of founder-run firms. But, as much as he believes in companies with as founder CEO, he readily admits that it can be a disastrous situation. In a recent blog, Horowitz argued that when founder-run firms fall apart, it’s not because there’s a CEO at the helm who also considers the company to be his baby, it’s because many founder CEOs don’t know how to stop being an inventor/entrepreneur and start being a boss. It’s what he calls the “Product CEO Paradox.”

According to Horowitz, there are three main reasons why founders fail to run the companies they created and are replaced by a professional CEO. Either the founder doesn’t really want to be CEO, the board panics and replace him or her prematurely, or he or she falls victim to the Product CEO Paradox.

Read Why Founder-Controlled Firms Are Best

When you first launch a company, he writes, you’re involved in every intricate detail of product planning and execution. As the company begins to scale, you go from being the “visionary product founder who kept cohesion and context across and increasingly complex product line” to being the “seemingly arbitrary decision maker and product bottleneck.” So you pull back and start delegating some decisions to other people. And that, according to Horowitz, is the Product CEO Paradox.

“The only thing that will wreck a company faster than the product CEO being highly engaged in the product is the product CEO disengaging from the product,” writes Horowitz.

I’m not sure I can get behind the term (it’s confusing: what is a Product CEO? Or is it a CEO Paradox…?) but I’ll agree that there is something paradoxical about asking a CEO to pull back while staying involved at the same time.

We’ve run our fair share of stories urging business owners to avoid being the company’s bottleneck. Our writers have advised readers on how to stop doing tasks they should be delegating, how to pull back from day-to-day tasks at your company, and why it pays to take a break. But if you believe in the paradox, then pulling back can be your downfall.

Almost all the great product-oriented founder/CEOs stay involved in the product throughout their careers, argues Horowitz. Bill Gates sat in every product review at Microsoft until he retired. Larry Ellison still runs the product strategy at Oracle. Steve Jobs famously weighed in on every important product direction at Apple. Mark Zuckerberg drives the product direction at Facebook.

So, how do you pull back in the right ways while staying involved in product development?

Horowitz runs through the type of involvement you should have:

  • Keep and drive the product vision. You’re the one person who is both in position to see what must be done and to resource it correctly
  • Maintain the quality standard. You set the bar for how good is good enough
  • Be the integrator. You’re the only one who will make the time to ensure products are consistent in the right ways, says Horowitz
  • Make people focus on the data they don’t have. Staff will optimize the product around the data they have, says Horowitz, who asks, “What about the data they don’t have? What about the products and features that need to be built that the customers can’t imagine? Who will make that a priority?” The answer?The CEO.

Horowitz has written this with the tech entrepreneur in mind, but the advice holds for any business owner with a company that’s scaled to the point where he or she can’t possibly be involved in the minutia anymore.

He recognizes that these bullets aren’t easy to accomplish, especially if when you started you were involved in product development at a much deeper level. But, get over it. “If you cannot let go a little without letting go entirely, then you probably should consider a CEO change,” he says.

Read his original blog here

Originally appeared on PROFITguide.com