The CEORater Technology Founder CEO Index outperformed its peer group Year-to-Date through September 18th 2018.
The CEORater Technology Founder CEO Index returned 32.3% and 28.5% on a Weighted and Unweighted Stock Price Return basis respectively (click here for detail) during the January 2nd 2018 – September 18th 2018 period.
The following 7 rules apply to public companies across a variety of industries – particularly to Enterprise Software, FinTech and Information Services companies. 1.) Make Your Numbers 2.) Regular, Transparent Investor Communication 3.) Drive Expanding Operating/EBITDA Margins 4.) Don’t Stockpile Cash 5.) Control Waste 6.) Use Debt as a Tax Shield 7.) Board Composition –…
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We created the CEORater Technology Founder CEO Index in 2017 to illustrate our strong belief that founder CEOs are better qualified to lead Technology companies than are “hired” CEOs/ professional managers. The CEORater Index remains undefeated through July 13th 2018.
The CEORater Technology Founder CEO Index returned 24.7% and 22.8% on a Weighted and Unweighted Return basis respectively (click here for detail) during the January 2nd 2018 – July 13th 2018 period.
Personality Analytics Holds the Key as to Why Apple Was More Innovative Under Steve Jobs than Tim Cook
Apple has lost its creative mojounderTim Cook. Incremental product enhancements have become the norm, replacing a time when revolutionary new products, space age design and landmark advertising was the standard. What changed? Look no further than the CEO chair. Apple founder, CEO and creative genius Steve Jobs prematurely passed away in October 2011. Jobs’ hand-picked successor, Tim Cook, is by experience an operator with a background steeped in supply chain experience. Cook could not be more different from Jobs from a personality standpoint (see our table below).
The importance of assessing a CEO’s personality when conducting a CEO selection process (corporate boards, executive recruiters), or investment due diligence process can not be overstated. This is especially true of industry verticals marked by rapid change where the cost of having an ineffective CEO can be extremely high. It is not so rare to find a situation where a CEO, Board and institutional investor base were slow to realize that a given company’s customers were migrating elsewhere due to product obsolescence or other factors that ought to have been recognized. Few participants want to acknowledge this type of deterioration early or mid-cycle and only do so when it’s too late.
CEOs that create “adaptable” corporate cultures are less likely to lead companies that suffer irreparable declines due to product under-investment or other negligent factors. Adaptable cultures are less likely to be caught off guard and instead lead market change.
Corporate cultures are often an extension of the CEO’s personality. Yes, CEOs influence culture and corporate strategy even in mega-cap companies. Look no further than Microsoft (MSFT) during Steve Ballmer’s tenure as compared to Satya Nadella‘s time as CEO. MSFT’s product & services strategy is dramatically different as is the firm’s approach to competing and partnering with other technology companies.
We highly value the personality trait “openness” in large part because of its relationship to adaptable cultures. Steve Jobs and Tim Cook score similarly on the openness scale – 92nd percentile and 94th percentile respectively. However, looking at the personality sub-traits under openness, Jobs scores far higher than Cook in the two most creative personality sub-traits: “artistic interests” and “imagination”.
Given that Cook lags in these areas, one would need to get comfortable with the idea that a non-creative personality like his (32nd percentile and 14th percentile as detailed below) is capable of generating massive creative output from Apple’s 120,000-plus employees. This is asking too much of Tim Cook in our view. What doesn’t come naturally doesn’t come easily and may not come at all.
For the Lamborghini Countach – the successor to the revolutionary Miura (our header image) – Ferruccio Lamborghini chose three of Lamborghini’s best and brightest. Then he did something revolutionary – he left them alone.
early model Lamborghini Countach
Openness and Adaptability
Elements of Lamborghini’s leadership style – openness and creativity – are congruent with our recent CEO personality research, particularly as it relates to dynamic, fluid segments of the technology industry (think Artificial Intelligence and Autonomous Driving) where creative approaches to problem-solving and adaptability are key success factors.
The Wall Street Journal recently published an article detailing the process by which Lamborghini brought the Countach to life. To access the article as it appeared in the WSJ CLICK HERE
Our recent CEORater Podcast on the subject is below.
Even more on the Miura (we all have favorites) courtesy of Petrolicious – “The Lamborghini Miura Is Still Untamed”
Ferruccio LamborghiniFerruccio LamborghiniFerruccio Lamborghini with his tractor, Countach (L) and Miura (R).Ferruccio Lamborghini and his Miura
Similar to VCs, public investors want to invest in a bold vision. (See Tesla). Why does TSLA enjoy a premium valuation to other Auto OEMs? Answer: Musk’s vision and spin.
2.) Don’t Be Bullied by Investors – Dictate Your Story:
Tell the Street you plan to take margins down temporarily to pursue “X” initiative. Investors will cut you slack so long as you explain the rationale, the execution and the intended outcome.
3.) Balance Execution Today with Investment for Tomorrow:
Don’t fall into the short-term EPS growth trap at the expense of new product development, keeping your products fresh and building a culture of innovation.
If you pursue the short-term – investors will love you in the short-term (fleeting). The key is to build long-term value over years and decades (see AMZN, CSGP and SSNC as examples of the latter).
It is true. Your CEO’s personality influences his/her ability to scale (among other things). It may seem self-evident. One’s intuition may suggest such a relationship between personality traits and workplace effectiveness. Well, it is more than a hunch. Published research demonstrates a relationship between CEO personality traits and company performance. Gow, Kaplan, Larcker and Zakolyukina…
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We created the CEORater Technology Founder CEO Index in 2017 in large part to illustrate our strong belief that founder CEOs are better qualified to lead Technology companies than are “hired” CEOs/ professional managers. The CEORater Technology Founder CEO Index returned 13.0% and 10.5% on a Weighted and Unweighted Return basis respectively (click here for detail) during the January 2nd 2018…
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Making Numbers Is Not Enough The hallmark of a great company is not one that simply meets or beats consensus estimates with some regularity. Imagine if Reed Hastings and Netflix chose not to pursue the company’s over-the-top (“OTT”) strategy when investors where hungry for DVD profits. Imagine if Jeff Bezos and Amazon scaled back their…
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Square’s Jack Dorsey – Tech’s Best Value Over Past 14 Months
We dipped into our CEORater database as we regularly do and ran a query to return the Technology stocks with the greatest stock price appreciation over the period January 3rd 2017 through February 23rd 2018.
We then took the Top 20 Technology Companies as measured by stock price appreciation during the period and asked the question: “Which of the 20 Technology CEOs were the best value in terms of CEO Compensation required to generate each percentage point of stock price appreciation?” For example, in the case of Mr. Dorsey at Square (tkr: SQ, Dorsey is also CEO at Twitter tkr: TWTR) who finished first on our list, for every $7 dollars of CEO Compensation the Company generated one percentage point of stock price appreciation.
Second on the list was Take-Two Interactive’s (tkr: TTWO) Strauss Zelnick at $183 of CEO Compensation for every percentage point of stock price appreciation generated. The table below details the Top 20 CEOs. Further, below the table each CEO name is linked to his/her CEORater profile page where additional detail may be found.
Technology CEOs – Best Value Jan 3rd ’17 – Feb 23rd ’18. (Click to Expand View)
