Is this the end of ‘founder-led’ startups?

When Twitter co-founder Jack Dorsey announced today his plans to step down as CEO, he didn’t go quietly.

“There’s a lot of talk about the importance of a company being ‘founder-led,’” he wrote. “Ultimately I believe that’s severely limiting and a single point of failure. I’ve worked hard to ensure this company can break away from its founding and founders.”

Dorsey added that he believes “it’s critical that a company can stand on its own, free of its founder’s influence or direction.”

We found this slightly rich, since Dorsey, who is also the CEO and co-founder of fintech giant Square, was Twitter’s first CEO before he stepped down and returned to the role after the five-year reign of Dick Costolo. That’s hardly a lack of founder control.

Still, his comments are pretty counternarrative.

In today’s founder-friendly environment, venture investors often bet on early teams based entirely on their to-date product progress, and founders are increasingly likely to stay at the helm even after their companies have gone public. “[T]here aren’t many founders that choose their company over their own ego,” Dorsey wrote.

After a fun chat about the Dorsey decision on Equity, we hashed out our views about the value of founders who remain in leadership roles long after their companies have reached maturity:

Alex Wilhelm: A call to return to the old normal from the new normal

What’s somewhat incredible about this Dorsey take is that it’s utterly uncontroversial — 15 years ago. Today, sure, but that’s just a mark of how much things have changed.

Recall that investors made the Google founders bring on a business person to be their company’s CEO. You’ve heard of Eric Schmidt. It was commonplace in prior venture eras for founders to step aside from the top job once their company hit scale, as the thinking went that there were folks better suited for the role of scaling a tech company than founders.

What happened to that perspective? Two things. First, major returns from select founder-led businesses. Facebook has done well in financial terms under a single leader. You can throw in a few other names to the mix as well; Coinbase and Airbnb come to mind.

But more important is that venture capitalists have lost much of their prior influence. Gone are the days when VCs could sit in their suburban office parks throne rooms and force founders to come to them. Even more, the explosion in capital available to founders has rendered the core venture conceit — having money to invest — to commodity status. This means that venture folks can’t boss founders around as much as they once could thanks to lower leverage.

So founders get to stay in charge of their companies for as long as they want, often ensconced in a warm blanket of super-voting shares, ensuring lifetime control. Not every VC likes this! Not every VC wants to anoint a king instead of a CEO! And yet, you will not be able to get a single VC to push back on the idea of founder-friendliness, as they all want allocation in the next hot deal. And telling founders that their walking, talking piggy banks might have an opinion, let alone a view that they should be replaced with someone with more operational experience, would not be the move.

But Dorsey is just saying that there are times when founders are not the best folks to lead companies. This is true. While there are great examples of capital creation thanks to long founder tenures, there are perhaps even better examples of the opposite.