Monday's sudden departure of Jay Adelson as CEO of social news aggregator Digg has raised a few eyebrows in the tech community as some rumors imply that it may have been a decision made by the company's board. Regardless of the nature of the breakup, it got me thinking about the dichotomous relationship some startups have between founders and CEOs, and which, if either, is more expendable.
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Digg was originally founded by Kevin Rose in 2004 and Adelson, who had experience as founder and CTO of a few companies in the 90s, was given the CEO role while Rose became "the face" of Digg. Many startups have used this same leadership role leaving the passionate entrepreneurial founder as a separate executive from a business-minded CEO. A similar situation has happened at Twitter, with Evan Williams becoming CEO in place of Jack Dorsey who remains as chairman of the board.
This seems to separate the single-focus CEO from a serial entrepreneur with other interests. Since founding Digg, Kevin Rose has founded Pownce and WeFollow as well as personally investing in several other companies while Jack Dorsey has used his time to found the mobile transaction platform Square.
For the majority of startups, I would think the concept of the free-wheeling founder would be less common, and other times, founders choose to also be CEOs. But in the case of the startups that have two separate people handling founder and CEO duties, who is more vital to the company?
In these cases, founders usually start their company and hire a CEO when things start to pick up and they can't handle everything by themselves. While CEOs do lot of the corporate navigating, the founder, with his passion for the product, is often the forward facing driver of the company. With this argument, I think that losing a CEO over a founder is a better loss than vice versa.
Of course, all businesses are different, and people leave for different reasons, and decisions like this should be taken on a case-by-case basis. However, VCs often talk about how they invest in founders just as much as they do ideas, so for a company to lose that passionate individual that the investors initially trusted might send bad signals about later investments.
I'd like to hear what you think about this issue, and whether you think either a CEO or a founder is more or less likely to stay when someone needs to go. If you have personal experience with the dual relationship of CEO and founder in a startup, please share you experience in the comments below!
Photo by Jim Merithew, Wired.com
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