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This may be the first time you’ve read this newsletter — if so, welcome! If not, you already know that. Alex created him. And if you read last week’s issue, you also know that I’m taking over. This makes me something of a non-founder CEO, so today’s topic is also personal – A-N-A.
Deliveries and twists
Our colleague Brian Heater wrote about Peloton’s below-expectations earnings earlier this week. But aside from how many bikes and subscriptions the fitness company did or didn’t sell, it was this quote that caught my eye:
“Twists are hard work. It is intellectually challenging, emotionally draining, physically exhausting and draining. It is a full contact sport.”
This is an excerpt from the letter to shareholders written by Barry McCarthy, CEO of Peloton since February. McCarthy’s predecessor, John Foley, resigned when the company he co-founded cut 2,800 jobs worldwide – about 20% of its workforce.
McCarthy’s job since then has not been easy. The new CEO focused on three priorities, he said: “1. stabilizing cash flow 2. putting the right people in the right roles and 3. growing again.” It’s too early to say whether he will succeed, but Peloton’s position is not unique.
Peloton is one of several tech-enabled companies that have enjoyed strong headwinds during the pandemic and are now facing the “market whip”. The list also includes Netflix, Robinhood and Zoom, for example.
Airbnb is a related case, but a little different. The company hopes its lodging market will benefit from the “travel recovery of the century”. But it also plans to reinvent itself, CEO Brian Chesky told TechCrunch.
Unlike Peloton, Chesky is a founding CEO who will lead Airbnb through this transition. But not every founder still has the stamina or the right mix of skills to do this after several years in charge. This is one of the reasons why CEOs are replaced so often, and the tech industry can’t act like it never happens.
The cult of the CEO takes many forms, one of which is dual-class stocks. This share structure is part of a broader myth: that a founding CEO should be in control forever. And of course, no one wants to lose control of their company or be fired by the board. But it’s also forgetting that founding CEOs might want to step down.
There are many reasons why lead founders leave. “Former executives leave all the time after the acquisition,” observed my co-worker Natasha Mascarenhas on twitter. (She was commenting on the healthcare company Ro, which has lost more employees than its fair share since it was acquired.)
Founders may also want to leave before an exit, even when an IPO appears to be in the pipeline. Sometimes because of your company. Sometimes on their own. And sometimes both. That’s the case with Monzo founder Tom Blomfield, who was open about the unhappiness that led to him stepping down but also praised his replacement.
There’s no doubt about it: delivering a project you love can be bittersweet. And the prospect of having big shoes to fill can be daunting for the new manager. But it’s not uncommon, so let’s stop pretending it is. Let’s just make the best of it, okay?