When Chinese e-commerce company Pinduoduo announced on Wednesday that it had reached 788.4 million active users, surpassing Alibaba’s 779 million and Amazon’s 300 million, its founder and chairman, Colin Huang, revealed he’d be stepping down. But why would Huang, who resigned as CEO in July and has a net worth of $50 billion according to Forbes’ estimate, exit upon reaching such a milestone?
Rarely is stepping down easy for a chief executive, but it can be especially challenging for those who are employee No. 1. For Huang, the increased scrutiny his company, as well as the rest of the Chinese tech sector, has come under in recent months may have contributed to his decision to walk away. He’s not the only founder to have done so in recent months.
After CEO churn dropped 20% year-over-year with 1,314 exiting in 2020—due, in part, to companies’ reluctance to make major leadership changes amid the coronavirus crisis—195 departed in the first two months of 2021, according to recruiting firm Challenger, Gray & Christmas. Several have been founders. And while some did not resign voluntarily—including John Matze, who was ousted as the CEO of Parler after Amazon Web Services took the social app offline in response to its ties to the attack on the U.S. Capitol, and Leon Black, who stepped down as CEO of Apollo Global Management following an independent review of his relationship with late financier and convicted sex offender Jeffrey Epstein—most stepped down on their own accord, a result, says Jane Stevenson, vice chair of organizational consultancy Korn Ferry, of the pandemic.
“People are more mindful of the things they want to do, and if it’s a successful founder, there may be other priorities that they want to address sooner than later,” she says. “I’ve seen CEOs and board members who have said, ‘You know what, life is really short, and this is too much. I’m out.’”
For evidence of this trend, look no further than one of the most notable founder-CEO resignations of the year so far: Amazon’s billionaire Jeff Bezos. In February, he announced plans to step down as chief executive of the e-commerce giant he launched from his Seattle garage in 1994. Bezos, who Forbes estimates is worth $178.1 billion, will be taking on the role of executive chair, while Amazon Web Services CEO Andy Jassy succeeds him. In a memo to staff about the news, he wrote, “When you have a responsibility like that, it’s hard to put attention on anything else,” nodding to the time he now hopes to spend on his philanthropic Day 1 Fund and Bezos Earth Fund, aerospace company Blue Origin and The Washington Post.
At the time his announcement took the world by surprise, but perhaps it shouldn’t have. Amazon had just reported a record-breaking $125.6 billion in sales during the fourth quarter, and after 27 years at the helm, he’s going out on top, having spent more time in the chief executive role than most of his counterparts: While the average CEO tenure is longer than that of any other C-suite executive, it’s just 6.9 years, down from 8 years in 2016, according to data from Korn Ferry. “There are a lot less CEOs that have been over a decade in the job than there used to be,” Stevenson says. Many of the founder-CEOs who’ve stepped down this year have, like Bezos, been exceptions to this rule. “Founders are very tightly tied to the organizations [they start], from an identity standpoint,” she adds.
Kendra Scott, for example, stepped down as CEO of her namesake jewelry business in February, nearly 20 years after founding the company. With a majority stake in the brand, the Texas jewelry tycoon is worth $510 million by Forbes’ estimate, and like Bezos, will remain involved with her brand, focusing on design, customer experience and philanthropy as executive chairwoman when Tom Nolan, currently president, takes over. After guiding her business through a period of rapid retail transformation in response to Covid-19, it’s likely Scott sees the impending return to normalcy as an opportunity for a leadership transition.
“It might be a time for a change. It might be that the CEO says, ‘You know what, I’m going to see it through to stability but then I’m done,’” Stevenson says. “I think everybody’s been holding on in a lot of ways for a year.”
That’s certainly the case for Girls Who Code CEO Reshma Saujani. A decade after founding the nonprofit, she decided it’s due for a leadership change, and when she steps down in April to become board chair, her COO, Dr. Tarika Barrett, will step up. “I’m a big believer that leaders cannot or should not stay in organizations forever, and that you can’t stay innovative if you have the same person leading the movement forever,” Saujani told Forbes in an exclusive interview last month. “I think that especially with Covid-19 happening, we were at a juncture as an organization. And in many ways, that is the right time for leadership change.”
A time of crisis can shine a light on the importance of succession planning, especially for founder-CEOs, who have both a professional and personal stake in their companies. For this reason, Stevenson says they tend to tap successors from within.
“When you think about where a company is heading, having the right leader to take it there is really critical,” Stevenson says. “It’s pretty clear from the data that it’s advantageous when possible to promote internally versus going externally for succession process, because you’ve got the cultural credibility, you’ve got an understanding, you’re already engaged in the market.”
It’s for this reason that just last week, a Reuters report that said Salesforce COO Bret Taylor is being groomed to take over as chief executive led to speculation that billionaire founder Marc Benioff might be the next founder-CEO to make a move. If these recent founder exits are any indication, though, if he does depart, he’ll likely not be going very far.
“Very often, the founder moves to a chair role, whether it’s executive chair or non-executive chair,” Stevenson says. “It’s hard for a founder to step away entirely.”