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.


Comments (Archived):

  1. Mark Birch

    This makes sense in theory, unfortunately many founders are hesitant with such arrangements because VC’s that pushed for a professional CEO did so with ulterior motives. I am not saying that the concept is sound and clearly there are situations where it worked well, but there are many other examples where it turned into a nasty fight over control.

    1. Matt A. Myers

      From what I read somewhere – could be wrong – that Mark owns 61% of voting shares – so must have been his own thoughts driving decision or pressure and him making the final decision.

    2. Suranga C.

      I agree, though, funnily enough, I experienced the reverse tension. I realized (after some considerable soul-searching) that I needed to bring someone else in to be CEO, but I got push back from shareholders/Board who were worried it was happening too early. Ultimately it’s one of those decisions where everyone has to try really hard to leave their ulterior motives (and they can be STRONG ones!) at the door and be honest with who can do what and who wants to do what. If you don’t, you’re just bottling up an issue for later.(my story in case you’re interested: http://surangac.com/2012/10

    3. ShanaC

      one of the things I am realizing – most people are control freaks at heart because fear is such a powerful motivator

  2. Dave W Baldwin

    Can understand the tension, but everyone has to look forward and there comes a time where either the product/tech person needs to understand they need to stay in that role.

    1. Richard

      Then again, there are many a one product pony who can never repeat their first smash hit.

      1. Dave W Baldwin

        To the white room if required…..

      2. Jill Stern

        I swear I read something about zynga getting into online poker- if true, that is a money maker. let’s hope so….

  3. William Mougayar

    There is a big difference between being a founder & becoming CEO. The reality is that not all founders can become CEO’s, and often it’s too late before they recognize it.I don’t know Mark Pincus nor Don Mattrick, and every situation is different. But I don’t think Mark did this because of not being able to be CEO. I’m pretty sure Mark is and has been a great CEO. I think he did this because he wanted to go back to being a Founder & return the company to its greatness. In fact, to show how great of a CEO he was, he did the downsizing himself prior to bringing the new guy.The way I’m interpreting this is Mark needed to free himself up from the daily operational duty that a CEO has, so he could focus on the product side which is where the biggest pain is now. I too believe this will be great for Zynga.

    1. Matt A. Myers

      Who knows. Maybe he just wants to be able to vacation more, or have people stop directing operational problems towards him. A company of their current size would have a lot of stuff you’d have to deal with that you normally wouldn’t in a smaller company.He controls 61% of voting shares from what I read somewhere else, so this shift could mean a lot – pressure from board or maybe his own thoughts drove it? I think it will be really good / healthy for Zynga though – and probably everyone involved.It would nice to hear Mark chime in.

    2. JamesHRH

      Inspring product & vision people get worn down by the volume of decisions (all of which are important but are not individually critical).Great business leaders are volume based.Great value creators are insight based.

      1. JLM

        .A most interesting comment indeed.JLM.

      2. awaldstein

        Not sure whether i understand or don’t agree actually.The greatest business leaders sell value. I don’t see the split.

        1. JamesHRH

          Jony Ives does not run Apple because he could not care less about the details of maternity leave – using this as a random example.That’s one of 10,000 small but important details that need to be right for Apple to be a great company.

          1. awaldstein

            OK–I see this in a structure as large as Apple where functions natural break as the organization grows.Not true for the small company.Becomes clear in all of these discussions that talking in general about roles in business and companies is invariably not true for sub 100 people companies and the enterprise.What Apple or Zynga does is interesting but my world where I work is early to mid stage mostly.

          2. LE

            Agree with your parent comment (and the above). Your attention can’t be bifurcated among multiple roles (requiring different skills and parts of the brain) unless you are in a low hanging fruit situation (rising tide makes everything work).Most of what people know about business success stories is based upon what they have read which was written by either editors or pr people buying into a particular pov. It’s simply impossible for one person time wise to handle well multiple roles. Same as you wouldn’t want a brain surgeon who also does hip replacements and manages the office practice and worries about which copier to buy.

      3. William Mougayar

        How about both. It’s possible, but sometimes you need to shift gears and focus on one thing vs. the other.

        1. LE

          But when you shift focus you also lose focus on the thing you shifted from.

          1. William Mougayar

            I meant that’s when a 2nd person like Mattrick focuses on what you’re not.

        2. JamesHRH

          Its really rare.Suggest 3 people who you think did this and I will wager you a caffeinated beverage that I can show you that they were not that great at one of the areas.

          1. Vineeth Kariappa

            Page, Gates, Ellison, Jobs, Buffett

          2. JamesHRH

            Buffet is an investor.Jobs, Act II, very very good on all fronts, but the first thing Tim Cook did as CEO was change a large number of outstanding HR / admin issues – he was allowed to annoy employees / drive them nuts because he was a genius who made them all rich (still does not mean he was a great leader of people).Jobs, Act I, borderline idiot business leader / product design genius.Ellison has never ‘made’ a good product – he is a dynamic business leader and opportunist, but people hated his products for years (if not decades). He pushed his sales teams psychotically (talk about leadership) and begged forgiveness from customers during this period ( pre-2000 ).Gates is a poor leader of people. If you know anyone @ MS who worked at even a mid-range level in the 1990’s they invariably describe the culture in a way that makes you think of Lord of the Flies. Ballmer built the business – have you ever seen the YouTube clip of Steve ‘pumping up’ the team? Engaged for sure. Allen & then Myrhvold led the strategy. Gates was the product person / megalomaniac. People forget that Gates was the most hated man in SW pre-2000. That happens when your wife was a senior PR leader (to his credit btw).Page’s performance as a leader is overshadowed to the point of opacity, given the unbelievable product success. From buying the tech for AdSense ( a la Gates’ purchase of Excel for $50K ) to YouTube turning the corner, he could be the worst leader of people on the planet and GOOG would still grow. TIme will tell.You asked.;-)

          3. Vineeth Kariappa

            1. Buffet is a person He built a gr8 company.2. Only diff with Jobs II, more diplomatic with his board. Same person. (never spoke abt Cook)3. Ellison’s product IS the way oracle “sells”.4. Gates was never in a popularity contest.5. Page built the product, he hired a CEO, learnt.

          4. JamesHRH

            1. Buffet would disagree with you about the building part.2. The point about Cook actions reflects Jobs shortcomings – immediately changing how they’ would treat employees shows how poorly they had been treated.3. Oracle founded in 1977 with the motto ‘just ship it’.4. Corporate productivity was the issue.5 We will see.Again – all our geniuses. None are multiple arena geniuses.If your Founding CEO is your product genius, get a new CEO. If your Founding CEO is a Business Leader genius, get her a certified Product Wizard.

          5. Vineeth Kariappa

            The gr8 CEOs are more often extremely good at multiple areas.1. 20 years to geico. Perfected Graham. He built his own investing ideas.2. Cook “IS” an employee!! stop talking abt him!3. Exactly. Their product is they damn f’ing good at sales.4. what?5. Stock increase, more than enough.

          6. William Mougayar

            Look at this list in this post:”Why we prefer founding CEOs”http://bhorowitz.com/2010/0…

          7. Donna Brewington White

            I remember reading that and thinking Ben made a strong case. But what is even more interesting to me is how this belief has shaped the a16z business model and the support provided to the portfolio CEO. I am always very interested in how a principle or belief is translated into how a person or an organization functions rather than just as a platitude. You know, rubber meeting road, and all that…

      4. Vineeth Kariappa

        n how did u arrive at your conclusion?

        1. JamesHRH

          Personal experience. Personal observation. Observation from afar.The idea stems from my usage of the Enneagram.

          1. Vineeth Kariappa

            No offense here. No1 knows why Pincus gave up CEO. May be trying what page did or what hoffman did, we will only know when he makes a statement, after a few years. n u r concluding its because he can not do both?

          2. Andrew

            He did it because he knew he wasn’t good at it and felt he was better suited to be focusing on product. I believe his letter to employees said this.

          3. Vineeth Kariappa

            Bad PR if his statement was anything else. My opinion.

          4. George A.

            Hmm, if you are an investor with red ink, you know exactly why he did this…b/c he had to. amazing how folks on this blog live in a fantasyland and are not talking how Pincus singlehandedly became a pariah in spheres well outside the public equity landscape or the casual gaming landscape.When your name becomes synonymous with massive destructive of shareholder value, you step down. That is the playbook.I too would welcome the comparison with Larry/Sergey when they hired when Schmidt… but everyone outside of the AVC la-la-land the analog is probably closer to Andrew Mason who left too late to save his reputation.

          5. Vineeth Kariappa

            Made the same point above. The move was for good PR.

      5. Matt A. Myers

        Volume using the values determined to be focused on is good.Volume with the value out of sight would turn into a nightmare.

      6. ShanaC

        depends – can you teach people to manage both processes

    3. JLM

      .One of the harsh realities of any public company is the notion that the share price is the ultimate arbiter of success and effectiveness.Fair?JLM.

      1. LE

        “Fair?”That’s one of those subjects that should be taught to students in school at an early age. So they realize how very little in life is fair. Maybe that is why games with rules were invented to give people a way to feel that they have control over things. Just like god was invented to be able to control the masses when things couldn’t be explained.

        1. pointsnfigures

          Public markets price in all public information immediately as it’s known. They don’t care about fairness in a “normative” way.

      2. William Mougayar

        More than fair. A quarter of a billion dollar fair.That’s about how much value ZNGA is gaining today as a result of this announcement.

    4. Kirsten Lambertsen

      “In fact, to show how great of a CEO he was, he did the downsizing himself prior to bringing the new guy.”Great point. I hadn’t thought of it that way.

      1. LE

        “show how great of a CEO he was”I’ll tell you something funny that I found out in the brief period of time that I worked for someone else (after I sold my 1st company). My eyes were opened to the whole “credit” thing going on and how people needed to politic and look good and get credit for success to further their career. I understand of course why that is necessary it’s just that I never had to think that way. [1]When I was running my own thing it didn’t matter to me at all who did what and got credit because all I knew was it put money in my pocket. So I didn’t need to be rewarded in any way but the right thing happening – the money. I realize for obvious reasons this isn’t the way it works in a company with various stakeholders. (Or even in a school, town or university). And yes it sucks when you put in effort in a group, something good happens, and nobody knows it’s because of you (have had this happen).In the case of Zynga and Mark I don’t know if this matters or not to him of course. But at the end of the day even if this month in the press it’s written one way or another and Mark gets a “buzz” by feeling like he has “showed how great a CEO he was” by my rule of “advance time and things won’t matter” in, say, a few years non of this will make any difference at all.My point being is that you should make decisions based on popularity or what people think of the decision because all of that is short lived.[1] I remember as a kid my father used to pit me against my cousin to see “who can drink their milk the fastest”. My cousin sat there and took the challenge seriously while I just thought “what do I get if I win?”

        1. Kirsten Lambertsen

          I think, though, that optics in this case are very important for the new ceo. Having his first act be laying off a ton of people would not, obviously, be a great start for him. Having Mark conduct the layoffs and then bringing in the new ceo as a “fresh beginning” seems like the right order in which to do things when it comes to setting up the new ceo for success as much as possible.Who knows? Maybe the new ceo insisted on it…

          1. LE

            Sure but “laying off a ton of people” assumes thata) new ceo won’t have people to lay off as well andb) he would have layed off the same people.After all he will be running the show so maybe he would want to keep more people in a particular department and axe from elsewhere.In a sense Mark has made the bed and now new guy has to sleep in it and make it work. Nobody likes to walk into someone else’s mess and clean it up, right?

    5. JamesHRH

      Don’t know Mark at all, but many founders believe they are polymaths, when they are not.Or they are naive ( best way to tell if someone is naive is to wait for them to say ‘it did not look that hard’ ).Another thought: there were a lot of times in the last 12 months when it looked like Zynga might be toast – he may not have had any alternative to clearing up the situation himself.Have to stop ordering the Guatemalan Cynic coffee beans.

  4. pointsnfigures

    Had a founder friend tell me once he loved to run companies from 0-100 employees. After that, he hated it. He wasn’t running companies after 100 employees, he was managing people. He liked to build stuff.Hope the new Zynga isn’t so spammy.

    1. PhilipSugar

      I didn’t know we were friends! Good news is now you can do a bunch more with 100 people. But I wrote that exact quote in my MBA Mondays post.

      1. Matt A. Myers

        What starts to break down around 100 people? Is it mostly managing people becomes full-time? Wouldn’t you create positions for that though? Or do you have those positions already, and need to manage the managers? Oy.

        1. pointsnfigures

          In the book Outliers by Malcolm Gladwell he said 150 people were the max for a “tribe”. Many times it pays to break people off and start a new tribe when it gets that big.

        2. JLM

          .The 100 member tribe is also a marker for levels of management.Once you get to three levels of management the ability to control things from on high dissipates.JLM.

        3. ShanaC

          it is the point where you start not recognizing your employees

          1. btrautsc

            Terrifying. Luckily, I am great with faces.

          2. pointsnfigures

            It’s why big corps have name badges.

          3. btrautsc

            unfortunately they usually clip on the belt so you walk up to someone and immediately check their slacks.

          4. Donna Brewington White

            An employee at the Barnes and Noble cafe told me the other day that wearing a name badge made him feel branded like a slave. A little over the top (there was more to the analogy) but I sort of got it. Anyway this guy needs to be at a startup…but for now brilliant and standing behind a counter, learning about customer service and responsibility.

        4. JamesHRH

          What breaks down – the ability to know if you are getting fooled by your own people.

          1. Matt A. Myers

            I could see that potentially happening – just not enough quality time to available for each person / group / team.

  5. WA

    Management/Owner conundrum. In this case moral hazard mitigation going forward and outside blood that is an expert in the company’s mission focus. Thumbs up as soon as I saw it on the wire. Congrats.

    1. Kirsten Lambertsen


  6. JimHirshfield

    This strategy seems to be working for Twitter, no?

  7. Richard

    This is a great opportunity for Mark. When he builds the next great game /platform and the company rebounds, i dont think he will rue today’s anouncement.

  8. PhilipSugar

    There are two very distinct scenarios. One is you hand over your company when you are doing well, the other is when it is not doing well.This is a topic near and dear to my heart because the one area I’ve seen real consistent heartache from fellow entrepreneurs is when an entrepreneur hands over their company out of a position in weakness because things have not worked out as quickly as hoped.Many times this just accelerates the failure. That might be fine if that was inevitable. However, I have seen many times the product succeed. The sad part is that it succeeded after a fire sale because it was ahead of its time, and the entrepreneur has the bittersweet opportunity to watch her product finally take off, only to know that they didn’t make a single penny.I give you two such examples because many times people speak without experience but I can give many more:http://www.ihs.com/productshttp://www-03.ibm.com/softw

    1. Matt A. Myers

      Ouch. I don’t want to ever experience that. I think that is why everyone says to make sure you raise enough to get done what you need – regardless of dilution.

      1. pointsnfigures

        Braintree founder handed over the reigns, and now they have accelerated. Next time he starts a company I’d almost back him blindfolded. He hit every mark perfectly. Made it seem seamless like the company ran itself.

        1. LE

          “Next time he starts a company I’d almost back him blindfolded.”I’m fearful of hero worship like this. First what’s “n” here? 1? Let’s say “n” is even three. How do you know if there wasn’t someone else surrounding founder that won’t be around to make a success in the next company? Or that the randomness of life caused the success which you so admire? Or that things are simply different with the market and opportunity of the “next time”.Not a comment on Braintree or founder (no nothing about this). Just the “blindfolded”.

    2. ShanaC

      how do you know though?

    3. awaldstein

      Good stuff.Handing it over when things are doing well is a transition. When they are diving, an aspiration for a save.I’ve been part of turnaround teams, not as CEO but as the marketing and M & A lead. Always a challenge rapt not only with market but internal issues.

      1. JLM

        .Turnarounds are a specialty unto themselves and trickier than dancing with the Devil.JLM.

        1. awaldstein

          Something I know well and agree.(Actually I really like them though.)

        2. Donna Brewington White

          They are an amazing challenge to do the recruiting for! As much as I love startups there is something particularly gratifying and at the same time incredibly difficult about finding the right leaders for turnaround situations. Even more so to find someone who will not only lead the turnaround but then stay on to continue leading. There are people who excel at and thrive on the turning part but not what comes after.

      2. LE

        “Handing it over when things are doing well”Perhaps person handing over things when doing well sees and knows things that others do not and is just getting ahead of the game to save their reputation. Like a Seinfeld going out while on top in entertainment.

  9. Tom Labus

    I hope that these guys have had many conversations to gain some comfort level before they made the decision.Let’s see what happens when they are not on the same page.

  10. JLM

    .The big issue here is really what is the title v what is the role of the respective individuals.Being CEO requires a bit more attention to the vision of the company than this reported change seems to indicate.A CEO is not a guy who simply does the dirty work that the founder/product guy does not want to do — that is more of a COO role.There is absolutely nothing wrong with whatever arrangement they might have regardless of how the language may be mangled. But it is very important that they both negotiate their respective roles carefully to ensure there is no duplication of effort or blurred and competing visions.A business model which is emerging as a viable solution to this type of business organization evolution is that of the business “chief of staff”This organizational model is drawn from the military staff arrangement which is an effective model and is the way the American White House is typically organized. Well, when it is actually organized at all.It is not intended to be authoritarian or military in any sense but rather a different organization scheme and operating environment. Done well, it is highly effective.In the COS model, the CEO provides guidance to the entire staff and the COS is responsible for ensuring that the guidance is converted into detailed plans which are then circulated amongst the staff for comment and ultimately presented to and approved by the CEO.Planning, review of plans and finalization are not held hostage to CEO interest or bandwidth.Thereafter the COS is responsible for their implementation, scoring and feedback.A good COS would be a former CEO who understands the industry.A good COS is an extension of the highest quality leadership manhours within an organization and does not share command but provides additional hours to the CEO to ensure that the details are dealt with in an organized and timely manner.There has been almost no organizational theory development or actual organizational evolution in a century in American business other than the emergence of different “C” suite specialties with the implementation of technology.Yet, the dilemma of the product oriented and operationally disinterested CEO is a phenomenon that has been around for 50 years or more going back to the American automobile industry and the huge improvement in American industry from WWII. Product driven cultures.This is an idea which merits some careful consideration to develop a new path for such companies to develop methodically without the logical re-CEO-ing causing an upheaval.JLM.

    1. JamesHRH

      All of these guys are basically COOs.The CEO title tells staff that they can’t go around him to the founder.

    2. William Mougayar

      I have seen the COS in a small startup, and I’m not entirely sure of the value it brings. The COS is kind of “stuck in the middle”, and they could insulate the CEO. The CEO sends a wrong message if they have a COS and the company has 30-40 employees.If you have a good COO & CFO, I’m not sure why you’d need another “Chief” of Staff. I think it works when the environment is highly administrative and there’s a lot of “information relaying” (e.g. WhiteHouse, Military), but in a fast-moving, dynamic environment, I’m sitting on the fence for that one’s applicability to emerging companies.

      1. JLM

        .A COS approach — which I am not advocating to be clear — is never the right approach for a small startup. I was only using it in the context of a company of Zynga’s size, not an emerging company.In a small startup, the CEO/Founder is all that is required or can be afforded.As to the CEO, COO, COS arrangement — in most such instances, you would not have a COO but rather divisional operating heads.I am personally very suspect of COOs as a breed of cat from a purely organizational basis and often think they are more administrative than operational.I have never seen a combination of a CEO, COO, COS and could not see exactly how it would work.The effectiveness of the COS approach is well tested in a military context even in support units which are tantamount to commercial enterprises as they perform identical functions though in support of military units.JLM.

        1. awaldstein

          I really like the functionality of a COO type of role. In most early stage companies I’ve been involved with the financial lead also plays the operational and HR lead role as well.There is comfort and functionality in having that under control because invariably in a company under 100 people stuff just doesn’t get done without that leadership.And I agree, talking in general about how this functions for a public company and a start up/early stage in the same breadth is really not that informative.

          1. JLM

            .The combination of founder skills and how they complement and supplement each other is a conversation that can go on forever because each combination can be so unique.This is also tempered by the experience of the individuals.In many instances an experienced CEO does not require the assistance of anyone else and there is no room in the cockpit anyway whether from a vision perspective or a financial perspective.Sometimes companies can only look to have the leadership and management they can initially afford.In startups the focus on product is so great and pure that “getting things done” is more a function of product development than anything else.Much of running companies today is simply a matter of broadening individual skill sets — my theory of The 360 Degree Businessman.JLM.

        2. William Mougayar

          We agree with ourselves more than we agree with each other :)Yup, a division’s GM is their own COO and they just need an operations staffer.For a smaller company under 100, I think the cat’s ass would be a COO-CFO all in one.

          1. JLM

            .I always fear that the financial aspects of a startup are very low brow in the continuum of success with the talent not being essential to success until it comes to raising a meaningful amount of money.I am very ambivalent about this because the smartest thing a CEO can do in an enterprise of some meaningful size is to have a very good CFO.I have had two world class CFOs in my business career and they were priceless.JLM.

  11. JamesHRH

    I do not have the malice of the facts, but I struggle to believe that Eric Schmidt did anything other than make investors feel like an adult was in charge.

  12. awaldstein

    Changing control in a startup (pre revenue model or certainly pre profitability) and changing control for a public company, two different animals.Both rapt with issues but different in the dynamics and the expectations.

  13. jmcaddell

    It’s easy, when you think about upheaval in the C-suite, to neglect the potential benefits of collaboration. Some of my most enjoyable leadership experiences and most successful results have been when I had a strong collaborator with complementary skills. Each collaborator brings key skills and dialogue helps rein in the extreme tendencies of each person. Two can be a lot better than one.If there’s too much concern about who has the last word, or who is the real head of the organization, it won’t work. And it’s easy for rivalries to take hold (not least because the press likes reporting on them). But if both parties have respect for each other, and aren’t overwhelmed by ego considerations, it can be a great solution.Let’s see what happens here.

  14. Sebastian Wain

    I think before stepping down as a CEO you should ask the same question Andrew Grove asked Gordon Moore when Intel was in troubles: “If we got kicked out and the board brought in a new CEO, what do you think he would do?”

    1. christopolis

      fire a bunch of people, do a reorganization, acquire companies for lofty valuations, look for a new job. wait that’s yahoo.

  15. reece

    i had this conversation yesterday with a friend who is raising her first round, and is concerned about protective provisions/control in the term sheet. many of the terms are standard, but she fears the loss of control…to counter, i told her i know that there’s a chance that i won’t run Shelby forever. i don’t want to hand over my CEO title, but i’m prepared to do so if it comes to itit’s about putting the company first, and building a legacy that outlives any one person

  16. Donna Brewington White

    First of all while I was never excited about Zynga as a product I am fascinated with Zynga as a company largely because of what I read about Mark Pincus as a leader. He is someone I have admired from a distance.This move is reminiscent of the discussions we’ve had around here about hiring a COO to compensate for a CEO with shortcomings as a leader and /or manager. But perhaps this is in a situation that is much smaller than Zynga or where the issues are different.Interesting comment about maintaining control of the company without being CEO. Takes the idea of control to a different strata.

    1. $28312048

      What exactly do you admire about Pincus? By most accounts of his reputation and behavior he makes Steve Jobs look like a saint. I don’t know the guy, so I’m not passing judgement, but beyond peddling scammy links for unknowing kids to run up daddy’s credit card and asking employees for their stock options back – there is not a lot of good press surrounding him. The tech press will surely dog pile on the story as a demotion. I just don’t see an encouraging narrative around him, but would be interested to hear why you think so.

      1. Donna Brewington White

        Admittedly my information is old and from limited sources. Much of it from AVC. He had some interesting ideas and practices around giving people a sense of ownership over their areas of responsibility and empowering contribution and engagement.After these early impressions I didn’t continue to follow the company ‘s progress except those things that hit the press.The stock options situation was interesting … I’d forgotten about that

        1. $28312048

          I imagine Zynga would still be peddling scams if not from intense pressure on multiple fronts. Despite all the talk of wanting to build a 100 year company (which in games is probably the most absurd thought imaginable), his mentality always seemed much more mercenary, at least in the press. The product quality was derivative and mediocre. I want to like the guy, but if there is a redeeming quality about him, there are few expressing it in a public forum.(Just stating again I’m not passing judgement, as I don’t know the guy, and the tech press always has an axe to grind that will always color the story)

  17. panterosa,

    I am a reluctant CEO, and Founder, following Fred’s example of being a product nerd. I intend to stay chief creative and looking for someone to take over the CEO role. It is very difficult though, conceptually. Like a child looking for a parent.

    1. Dave W Baldwin

      Hard decision and back seat drivers do not understand… You made the right move.

    2. Roger Cude

      I applaud you for your wisdom in recognizing that you are the creative genius, and that you have the vision for what you want to accomplish, but that you do not know, what you do not know. Finding a complimentary operational and organizational partner will move you to where you want to be much quicker.

      1. panterosa,

        I hope I am wise enough to chose the right person to run this. Mainly I’ve done more than 50-60% of the work to make connections and place the products well in their markets. The business is a feel good one and easy to love, and a role you can shine in for it’s big earth hug. It’s mostly all ready to execute on.The big fear is to have someone not understand how to let me run with the ideas, and get the people needed to pick up any idea when ready to produce therefore keeping me where I add most value – well baked ideas replete with design specs, many of them.I have zero interest in fighting with the person I hire to run this. God forbid they try to fire me. Whomever fills the shoes needs some sophisticated chops. Know anyone looking? Send them my way. The insightful @donnawhite:disqus is working on cracking this nut with me…

    3. William Mougayar

      Smart that you are recognizing this early.

      1. panterosa,

        Thanks William. It is simply the issue that keeps coming up.,This has been an ongoing conversation with @jerrycolonna. The subject was addressed in the video he did with Jason Calacanis recently, touching on CEO’s not knowing what really is going on. I have known early, for a long time even before this business, that I would work best as a YSL type if I found my Pierre Bergé. We discuss the best way for me to manage until I hand over the reins.I will produce more, of better quality, ad infinitum, if I find the right person to manage the work, by loving it, getting it, and monetizing it. I am a cash cow looking for a smart farmer.#lookingforsmartfarmers

        1. William Mougayar

          Your next critical step is Going-to-Market. And that’s a very important stepping stone. With or without a business partner, you’ll need to do it right so you can hit the market “with force”. So, what you need initially is some marketing muscle, not a CEO necessarily.If your market is via mobile downloads, you’ll need to understand the science and art behind App marketing. I’m getting a taste of it myself working with a mobile app client.

    4. Matt A. Myers

      I think I might end up being a reluctant CEO, though I first hope to reach the opportunity to find that out

    5. awaldstein

      With utmost respect for you, at this stage where vision and founder passion drive the world in front of it, you would make a perfect CEO if you had a partner to complement you.My opinion only.You are oh so early to be giving up the reigns on your really interesting product idea.

      1. panterosa,

        Thanks for the compliment Arnold, on the product idea, and my ability to be perfect CEO.I had an interim COO, who you met. He learned to code while in med school before taking Step 2, did an accelerator with me this spring, before he graduated, and was perfect in this role of jack of all trades.Now, sadly, he has been sucked into residency. Until there is a paid spot for him in the company, rather than equity, he has to start paying back med school while earning his license to practice.Back to the CEO – my issue is this – I deliver way more value in product. Would you agree with that first point? If you do, then the next point says that no one so far, in decades, has cracked the nut I am working on, and I’m not even a scientist. And that’s only half the business.So remind me again, if I am not a fan of the other work, it doesn’t turn me on like it gets others going, and other people can do it as well as me, why should I be doing it? That’s my question – the parsing exactly of the CEO part that needs me and only me.

        1. awaldstein

          Hey…not going to argue with who you perceive yourself to be and what you want to do.I’m not the one, you are obviously.Your company is at pre company stage. It’s all vision, It’s all futures. It’s all you.What do you have to manage at this point really? How about a COO and Biz Dev person?Newco’s need life. That life, that culture comes from the top even with a handful of people.

    6. PhilipSugar

      I will say this. Of my four companies I have never been a founder, but always a partner and and CEO. So don’t take my comments below as saying somehow you are weak, if you don’t want that position. Remember that you might think that people report to you as CEO, but actually you report to everyone else.The one area which I think this really breaks down is pay-scale. I am on record as saying the best contributor of each department gets paid more than the manager.I believe the same thing for the CEO, and if you ask anybody I’ve worked with that knows me for the last 20 years, you will know I practice what I preach.The only point I make is that if you have an investor team that wants to break up your team, you need to remember that you leave the field with those that you came on with.

      1. CJ

        Tweeting that.

      2. panterosa,

        Phil, I totally agree as CEO you report to everyone else. Already I do that.I’d like to think I can manage to go without funding for a while.I prefer to get some revenue the hard way, organically. Especially after @fredwilson ‘s valuation post the other day. I found that to be birth control for those wanted to avoid funding.So hopefully, I can chose my dance partners, have a few, and keep them as I need. Isn’t that every girl’s dream?

        1. PhilipSugar

          Absolutely. My main point is that I believe in founding teams. It is hard as hell starting a company and I can’t imagine doing it myself.There are many that disagree with me and that is fine as well. Birth control for funding. That made me smile.

          1. panterosa,

            I’d like to move to the founding team part. I mentioned my interim COO in comment above who is like a co-founder but on a dual career track.I have been a sole founder for so long. The products grew organically out of my own work and thinking over the course of many years. They are infused with my questions about how we play and learn, and the missed opportunities of enhancing those experiences from a 4 year old to a PhD. The tough part about finding a team is to have that alignment. I will launch our app in July, and a Kickstarter shortly after. Hopefully, I’ll find some more help then. Shipping product takes time from match making.

    7. JamesHRH

      Terrific analogy.

      1. panterosa,

        Hopefully it’s for a long term parent and not a foster parent where they can send me back to the home…..

  18. Brandon Burns

    “This is not a post about why this will be awesome for Zynga… because the Gotham Gal and I own millions of Zynga shares and stand to benefit when [***not if!***] Zynga’s business and stock bounce back.”So, this is at least somewhat a post about how awesome this will be for you and Zynga.#humblebrag

    1. kidmercury


    2. jason wright

      was this post disclosure compliance, or buzz jacking?

  19. CJ

    As a shareholder, I hope this works out well too! 🙂 I still believe that the market is trending towards more casual play with defined monetary transactions to enable jumping the queue. If you look at most MMRPG’s you’ll notice that aside from WoW and Eve, most are going towards the Zynga model; free to play, transactions to cut the grind/jump the queue. Zynga’s issue right now seems to be their perceived lack of originality and hopefully Mark focusing on Product will correct that.

    1. Raph

      They have a lot of reputation repairing to do. As a gamer, I cringe whenever I see the Zynga brand. But note that I’m not a casual gamer so I’m probably not the demographic the company is going after currently.Zynga’s “fast follow” games ( euphemism for rip-off )The Ville is the Zynga version of Sims Social (Sued by EA)Dream heights is the Zynga version of Tiny TowerBubble Safari is the Zynga version of Bubble Witch SagaHidden Chronicles is the Zynga version of Gardens of Time

      1. CJ

        Well that’s what I mean, hopefully ‘fast-follow’ will become a thing of the past and they’ll innovate a bit more and repair the brand and gain the audience/revenue. As a hardcore gamer, I don’t play any Zynga games actually, but that’s fine. I like the idea behind it in terms of making money, I just think the execution needs to be tweaked/enhanced.

  20. Raph

    Because of Don’s plans (or they could’ve been someone else’s plans and he just approved them) for Xbox One, Microsoft looked like complete idiots in the eyes of the gaming community for a solid week. E3 was a total debacle and Don’s ridiculous comments didn’t help at all.As you may know, every headlining distinguishing feature about the Xbox One was taken back because the response from gamers was so overwhelmingly negative. I think that’s a sign that he may not know the gaming business as well as you think.

  21. christopolis

    some of it is about losing control some of it is about the feeling of giving up. entrepreneurs are about persevering, handing over your job feels like the opposite.

  22. IR Smartt

    Gutsy move

  23. Marc Barros

    Great post as usual Fred.Founder and CEO are very different roles. I didn’t realize this until I failed at making this transition. Understanding them and how/if I wanted to make this decision would have saved me a lot of personal grief.

    1. Matt A. Myers

      I won’t steal the laugh from people who visit your link – though I loved when I first read his letter.

  24. William Mougayar

    There are 2 related links,- fascinating account about the transition and with background about Don Mattrick. I didn’t know he’s Canadian AND from Vancouver. yeah! +10.My take is this isn’t a typical founder turning the reigns to a CEO. This will go down in the history books of turnarounds. Both Mark and Don will complement each other, and Zynga as a company will benefit.http://online.wsj.com/artichttp://www.fastcompany.com/

    1. andyidsinga

      +10 on the canadian enthusiasm bro!

      1. William Mougayar

        well, we’ve got to help the US once in a while 🙂

  25. Paul

    Seems to me that Zynga has a product problem more than a company problem and that this move therefore solves very little. Company problems can be solved by a strong and trusted COO, in any case.

    1. CJ

      I disagree. This frees up their head of product to do product and gives them a solid manager to take over for him. It’s a win/win. It’s just gotta work.

  26. ZekeV

    The problem is that users are tired of games that manipulate them with intermittent reinforcement schedules, and are protesting en masse. A new model is required. Casual / social game companies like Zynga rely on simplistic 50-year-old models of how people react to rewards, and how reward schedules reinforce behavior — in this case, monetizing behavior. The classical view is that intermittent rewards are the most powerful in reinforcing behavior — or rather, that behavior takes longer to be extinguished when reinforced intermittently as opposed to either no reinforcement or constant reinforcement schedule. However, there’s another classic 1950s Skinner experiment that is largely undocumented, known as the Hungarian Revolution experiment. I only know about this anecdotally from a clinical psych prof I had at Columbia, Eugene Galanter. This experiment showed that while intermittent reinforcement is very powerful in reinforcing behavior, eventually some animals — Skinner used pigeons — get tired of the bullshit and abruptly refuse to continue the behavior. If you’re reinforcing pigeon behavior, usually it’s with food. Press a pedal, and a food pellet is dispensed. If this happens at seemingly random intervals, the pigeon will keep pressing the pedal for quite some time. But eventually the pigeons get tired of the game. And the pigeons will actually commit suicide at some point, rather than play along with an Orwellian reinforcement schedule. The experiment was conducted around the time of the Soviet invasion of Hungary, so the researchers thought of it as analogous to the Hungarians (who were relatively prosperous as part of the Eastern Bloc) revolting against their Soviet masters, apparently against their own self-interest. http://www.americanscientis…My point is, come up with a less transparently manipulative reinforcement schedule and maybe we’ll play your games again!

  27. David

    I can’t imagine how scary it would be to have my whole life wrapped, maybe my whole net worth, wrapped up in a company and then turn it over to somebody else. That takes a lot of guts and a lot of confidence in the new guy.Granted, Mark Pincus has made his money already, but Zynga is still *the* Mark Pincus company.

  28. Ben Casnocha

    Reid Hoffman wrote one of the definitive pieces on founder-CEO succession, and about how the relationship at LinkedIn works: http://reidhoffman.org/if-w

  29. george

    I don’t think at this stage the Founder is worried about control but rather more effective decision-making – that’s what drives better outcomes…

  30. JLM

    .That is the voice of experience and wisdom speaking.I can smell the smoke and feel the callouses.JLM.

  31. Brandon Burns

    when there’s a will, there’s a way. this is the way for those who have the will.

  32. Dave W Baldwin

    Good arrangement!

  33. William Mougayar

    “Founders, you should define what kind of CEO”But how can a first-time CEO know that? They “think” they know, but they don’t really know. It’s a tricky rope. There aren’t 64,000 ways to being a CEO. There are some basics you can’t avoid, no matter how startup-ish and fast-growing you are.I have a litmus test for whether a founder has become a CEO or not. When the first thing that comes out of their mouth is talking about their product, they are still a founder, and not a CEO. When they start talking about their company and their position (not their product’s position) in the universe,- that’s CEO-speak.

  34. PhilipSugar

    I knew you would have good things to say about this. And define yourself is a gem.Somehow people think there is one type of CEO.How far from the truth. Look at the difference between Larry Ellison and James Goodnight.That’s an example that quickly came to mind. But somehow there is some thought that every CEO needs to be the same.Man, woman, old, young, well dressed, hoodie, nuturing, yelling, product focused, business focused, sales focused, consensus builder, autocrat. Knowing when to do each and be each that’s the key (except for the fact I can’t be a young, good looking, or a woman)

  35. William Mougayar

    That test was meant for startup CEOs that have achieved product/market fit and are growing but they seem to be stuck with the product focus & not the company and its business model realization.

  36. awaldstein

    Hmm….My test is simpler.If someone knows what they don’t know and can hire and manage to others strengths, that’s a big litmus test.

  37. panterosa,

    You are kind Charlie to think I have the sense to do this right. Actually, I’d like to show you this and see if you have some ideas. You have eclectic taste, like me….