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This may be your first time reading this newsletter – if so, welcome! If not, you already know that Alex create it. And if you’ve read it problem last week, you also know that I’m taking over. This makes me feel like a CEO not a founder, so today’s topic is also personal – Anna.
Transfer and Turnaround
Our colleague Brian Heater wrote about Earnings below Peloton’s expectations earlier this week. But aside from the number of bikes and subscriptions the fitness company sold or didn’t, this quote caught my attention:
“The turnaround is hard work. It is intellectually challenging, mentally exhausting, physically exhausting, and all-consuming. It’s a purely contact sport. “
This is an excerpt from letter to shareholders Written by Barry McCarthy, CEO of Peloton Since Feb. McCarthy’s predecessor, John Foley, stepped down as the company he co-founded cut 2,800 jobs globally – about 20% of its total staff.
McCarthy’s job since then hasn’t been easy. The new CEO has focused on three priorities, he said: “1. stable cash flow 2. find the right people in the right roles and 3. return to growth. It is too early to say whether he will eventually succeed, but Peloton’s position is not unique.
Peloton is one of a number of tech-enabled businesses that have experienced strong headwinds during the pandemic and are now facing “Market Conflict.” The list also includes Netflix, Robin Hood hero and Zoom for example.
Airbnb is a related but slightly different case. The company hopes that its accommodation market will benefit from the “recovery of tourism in the century.” But it also has a plan recreate itselfCEO Brian Chesky told TechCrunch.
Unlike in Peloton’s case, Chesky is the founder CEO who will lead Airbnb in this transition. But not every founder has the stamina or the right combination of skills to do this after a few years at the helm. This is one of the reasons why CEOs are often replaced, and the tech sector can’t function like it never did.
The CEO cult comes in many forms, and one of them is dual class stock. This equity structure is part of a broader myth: That a founding CEO should stay in control forever. And certainly, no one wants to lose control of their company or get fired by the board. But people also forget that founding CEOs can want to step down.
There are lots of reasons why potential client founders leave. “Former executives always leave after an acquisition,” notes my colleague Natasha Mascarenhas on Twitter. (She commented on Ro medical company, which has been lost more employees than its fair share since the acquisition.)
Founders may also want to leave before exiting, even if it looks like an IPO. Sometimes for the sake of their company. Sometimes for their own. And sometimes both. Such was the case with Monzo founder Tom Blomfield, who open about the misfortunes that led him to resignwhile also full of praise for his replacement.
There’s no doubt about it: Handing over a project you love can be bittersweet. And the prospect of having big shoes to fill can be daunting for newcomers in charge. But it’s not uncommon, so let’s stop pretending. Take advantage of it, shall we?
