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Comment by idoh | Hacker News Reader

Sometimes non-founder CEOs are worth it and can completely turn around the fortunes of a company. For example, Eisner for Disney, Kroc for McDonald's, Welch for GE, Jobs (the second time around), and either Ballmer or Nadela (depending on which one you pick). So I don't think the founder / non-founder distinction holds up.

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I'll give you Eisner, but Kroc's first franchise was the 9th McDonald's overall and he is the sole reason for its international dominance, so he's not a founder only in the technical definition of founder. Technically, Warren Buffett is not the founder of Berkshire Hathaway, the old textile business.

As for Welch, GE Capital was a good chunk of GE's revenue and profits... right up to 2008 [1] where it might have sunk the company; it is now being sold off by Immelt [2]. So much for the industrial group giving the financial side "stability"...

[1] http://archive.fortune.com/2008/10/09/news/companies/colvin_...

On its business: " though the average citizen probably thinks of GE as a great industrial company, its industry classification in the Fortune 500 is diversified financials. It is by far the largest company in that industry group. The next biggest - and here we begin to glimpse GE's troubles - are Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).

The reality is that for years, about half of GE's prodigious profits have come from General Electric Capital."

On 2008: "But now the stock trades for less than half its price 12 months ago. More than $200 billion of value has vaporized."

[2] https://en.wikipedia.org/wiki/GE_Capital#Restructuring_plan

[3] On who built GE Capital: http://archive.fortune.com/magazines/fortune/fortune_archive... [1997]

"At another level, a small crowd of professional GE watchers know that CEO Jack Welch owes a surprising amount of his success to a profit dynamo called GE Capital Services. What only a handful of people understand--given GE Capital's reclusive nature--is how important this secret weapon has become to GE's continued prosperity, and what a model it is for managers trying to grow in any business."

Fair points, did not know that about Welch. I stopped following GE in 2002.

That's true. I didn't mean to imply that hired CEOs aren't sometimes great leaders. I just don't think they get the same respect and admiration that founder CEOs do, and on average I think they tend to have somewhat different goals and incentives than founder CEOs.

Ballmer ruined the company, not turned it around. He took something amazing and tanked it. Nadella is the example here.

This is often stated, but when you actually look at his accomplishments (from Wikipedia):

> Under Ballmer's tenure as CEO, Microsoft's annual revenue surged from $25 billion to $70 billion, while its net income increased 215 percent to $23 billion, and its gross profit of 75 cents on every dollar in sales is double that of Google or IBM.

...

> Ballmer also built half-a-dozen new businesses such as the data centers division and the Xbox entertainment and devices division ($8.9 billion) (which has prevented the Sony PlayStation and other gaming consoles from undermining Windows), and oversaw the acquisition of Skype. Ballmer also constructed the company's $20 billion Enterprise Business, consisting of new products and services such as Exchange, Windows Server, SQL Server, SharePoint, System Center, and Dynamics CRM, each of which initially faced an uphill battle for acceptance but have emerged as leading or dominant in each category.

It doesn't exactly sound like tanking.

MSFT Market cap when Ballmer took over: $601B

MSFT Market cap when Ballmer announced he was leaving: $270B

That was the problem... even if the initial valuation was ridiculously inflated by the early tech bubble, post-crash, the stock was pretty stagnant throughout his tenure as CEO.

http://fortune.com/2013/08/23/steve-ballmers-market-cap-prob...

Balmer became the CEO right at the peak of the tech bubble. He couldn't (nobody could) possibly have maintained that sort of valuation. It was all hype and irrational exuberance.

It really wasn't the loss post-bubble that was Ballmer's issue, it was that the stock price was stagnant.

Balmer's reign also coincides almost perfectly with the anti-trust actions taken against Microsoft. He was given the worst Microsoft to do anything with.

That's kinda the point I was getting at - some people would pick Ballmer as being a great CEO, others would pick Nadella.

And some people would say they're both wrong.

Ballmer gets credited with XBox etc, but I always thought MS was doing a lot of spray-and-pray management during the Ballmer years, and there were far more failures than successes. There certainly didn't seem to be any realistic strategy or vision. (I remember going to a trade fair with a huuuge MS stand showing off some kind of library or book management service. That product was dead less than a month later.)

Nadella seems to like strategy so much he has a handful running all at the same time. Which is how you get something like "Cloud-first, mobile-first" - which doesn't even make sense.

Point being that CEOs are there to signify the existence of leadership[tm], not necessarily to provide it - and markets and investors don't appear to be able to tell the difference.

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