Handing Over Your Company To Someone Else To Manage

Yesterday Zynga announced that Mark Pincus is handing over the CEO job to Don Mattrick. This is not a post about why this will be awesome for Zynga's business and its stock because I don't know Don Mattrick and also because the Gotham Gal and I own millions of Zynga shares and stand to benefit when Zynga's business and stock bounce back.

But this is a great opportunity to talk about entrepreneurs who choose to hand their company over to someone else to manage.

First, there is a difference between hiring a CEO and turning over control of the business. In Mark's case, and also at LinkedIn and Google, he is retaining a large measure of control over the board and overall ownership of the Company. In effect, Don Mattrick is coming in to work for Mark and the shareholders. At Google, Larry and Sergey hired Eric Schmidt to be the CEO and that worked out great for about a decade. Then Larry decided he wanted the job back. At LinkedIn, Reid hired a CEO, that did not work out, he went back to the CEO job for a bit, and then brought in Jeff Weiner. That has worked out spectacularly well. So the point is that the CEO's job is to manage the business and he or she does that for the board and shareholders who ultimately control the company.

Second, many entrepreneurs are product focused individuals who don't enjoy and are not good at operataing a large scale enterprise. It's worth noting that Mark has kept the Chief Product Officer and Chairman titles in this transition. He clearly intends to go back to focusing on product and strategy while Don runs the Company. This is a great model if the CEO and Founder can figure out how to operate well as a team. That model worked very well at Google for a decade.

We often advocate for this kind of transition in our portfolio companies where the founder is struggling to be both the CEO and the product leader. Sometimes we are successful in making the case for this model but many times we are not. Founders are very protective of their companies and their control over them and are almost always petrified of turning over the company to someone else to manage.

The thing we always remind entrepreneurs is that bringing in a CEO does not mean losing control of the company. In fact, bringing in a CEO is often a great way to keep control of a company if you do it well. Time will tell but I am optimistic about the Mark/Don combo at Zynga. Don is a gaming veteran and knows the business as well as anyone. With Mark providing the high level vision and energy and Don providing the operating leadership, Zynga seems well suited to execute its vision of Play as a daily experience in all of our lives.