Professor Chris Styles

Mark Zuckerberg has done well. He founded a successful company, made a lot of money, changed how millions of people relate to each other, was the subject of an Academy Award-winning movie, and just got married. Not bad for a 28-year-old.

But there are a few dark clouds on the horizon. The recent float was fraught with problems. Trading was 30 minutes late because of technical problems on the NASDAQ, and the share price has already gone from $US38 down to $US31.

Mr Zuckerberg himself cashed out 30.2 million shares at $US37.58, netting a cool $US1.13 billion. This hasn’t gone unnoticed by his world of followers, and there is the prospect of class action suits from investors because of a question over whether Facebook is growing as fast as originally thought.

Indeed, the US Senate banking committee has launched an inquiry. Investment banking giants Morgan Stanley and Goldman Sachs are also in the firing line.

One of the recent criticisms of the new breed of internet billionaire is an inherent ‘lack of maturity’, and inexperience. Wearing a T-shirt is fine for a Silicon Valley start-up, but does being the CEO of a listed company valued in the billions require a slightly different approach? This highlights two issues. First, when should a company founder step aside and make way for ‘professional managers’?  And does age matter?

On the issue of founder vs professional CEO, we see different models. Bill Gates was at the helm of Microsoft for some time before finally stepping aside. Google took a different approach. Co-founder Larry Page started off as CEO but then handed the reins to 46-year-old Eric Schmidt in 2001. An experienced CEO, Mr Schmidt took charge of the company for 10 years while Larry page focused on building products. Then in 2011, it was back to the future when Mr Page again became CEO.

In the initial years of a start-up, the success of the company is highly dependent on the founder. It is their vision, passion, drive and often technical expertise that investors are buying into. At some point, however, as the company grows, there is the need to implement what seem like mundane things such as processes, systems, governance mechanisms and sound financial management.

Is the founder the right person to oversee this phase? Perhaps not. The smart founder needs to be honest about what they are good at, and what they are not. In their own interests, and the interests of investors, the time may come when it’s right to hand over. But it’s not an easy thing to step away from control of something you created from nothing.

The question of age is really about appropriate experience and ability. Over the past decade we have seen a raft of relatively young CEOs in our part of the world – Alan Joyce became Qantas CEO at 41, Cameron Clyne at NAB was 40, and George Frazis was named CEO of Westpac NZ at 43 (he is now CEO of St George Bank).

There were probably others in line for these positions who were older with more ‘experience’, but coupled with demonstrated ability, it was probably the type of experience they had that got them the jobs. We often see job ads that quantify the length of experience needed. What this probably means is that the company advertising the role doesn’t believe that someone with less miles on the clock would have had the breadth and depth of experience the role requires.

But we need to be careful about assumptions. Someone with 10 years’ experience may merely have lived the same year 10 times, whereas someone half that age may have faced extraordinary situations and done extraordinary things. And some ‘younger’ executives have the capacity to reflect and learn fast – from successes and failures – a key characteristic of a good leader.

The next 6-12 months of the Facebook story and its young CEO will be interesting to watch. Does Mark Zuckerberg have the knowledge, skills and attributes to successfully lead Facebook into its next phase? Or will he take a leaf out of Larry Page’s book, appoint someone with the requisite experience, and serve as an apprentice until he is ready to return to the helm once again?

Whatever the case, the honeymoon for Mr Zuckerberg may well be over.

Professor Chris Styles is Deputy Dean and Director Australian Graduate School of Management (AGSM). This opinion piece first appeared on ABC’s The Drum 28 May 2012.