Apple Shows Why Founders Beat Professional Managers

In 1985, Steve Jobs, the Apple co-founder, lost his operating role and left the company. In Peter Thiel's telling, Jobs could be charismatic or erratic, and that eccentricity backfired when Apple's board removed him. Jobs had clashed with chief executive John Sculley over strategy, spending, and control after the Macintosh sold weakly, and the board backed Sculley.

Thiel, the entrepreneur and author whose book retells the episode, uses what happened next to make a single argument about why founders matter more than professional managers. Credentialed executives ran Apple in the middle years and left it close to failure. A founder came back and made it endure.

Apple bought Jobs's computer company NeXT in late 1996 and brought Jobs back as an adviser. In 1997, the board asked him to lead as interim chief executive when Apple was near bankruptcy. He had first started Apple with partners. This time he returned on his own to rebuild it, which is what Michael Moritz means by alone.

Moritz, author of a history of Apple's early years, wrote: "When did a founder ever return to the company from which he had been rudely rejected to engineer a turnaround as complete and spectacular as Apple's?" He wrote: "It is not too much of a stretch to say that Steve founded Apple not once, but twice. And the second time, he was alone."

Thiel writes that Jobs was an artist who favored closed systems and cared most about great products. Bill Gates, the Microsoft co-founder, was a businessman who kept products open and sought broad reach. In the book's account, both men stood apart from normal business life yet sat at the center of their companies, and both led their companies to results that others could not have matched.

Under Jobs, Apple released its music player in 2001, its phone in 2007, and its tablet in 2010. Jobs stepped down in 2011 during illness. Within a year, Apple ranked as the most highly valued business on earth.

Thiel ties that value to one founder's vision. He writes that Apple's value "depended on the singular vision of a particular person." He writes: "This hints at the strange way in which the companies that create new technology often resemble feudal monarchies." By that he means rule by one trusted leader, like a king with loyal staff, who can decide firmly and plan for decades while hired bureaucracies, as Thiel writes, "usually act with short time horizons."

Thiel writes: "If anything, we should be more tolerant of founders who seem strange or extreme." He adds: "Founders are important not because they're the only ones whose work has value, but rather because a great founder can bring out the best work from everybody else at his company."