While other employees might understand specific parts of the founder’s vision — like Steve Jobs’ insistence on simplicity of design — they might not have the gut instinct to make the right calls.
Founders of successful companies also garner a lot of respect, which makes them the ultimate arbiter of big decisions, and helps them recruit other great execs and employees. Having a strong visionary founder can also help companies get more — and more positive — press coverage.
Losing a visionary founder isn’t a death sentence, but the fortunes of their companies often falter when they leave.
Here are 10 examples.
Since Bill Gates left Microsoft, the company's growth has slowed and it has been late to big trends.
Since Bill Gates stepped down as CEO in 2000, Microsoft has gone from high-growth to blue-chip stock. The company keeps turning in decent earnings reports (except during the Great Recession) and it's done some nice work with Windows Phone and Kinect.
But investors worry that it has been late to big trends like search, smartphones, and cloud computing, and the long-held Windows monopoly is cracking under the weight of the iPad and other Internet-connected devices. In Silicon Valley, it's not uncommon to hear people predicting Microsoft's complete demise within the next few years.
Twitter was coasting without Jack Dorsey on board, but now that he's back, it's moving faster again.
Twitter was largely Dorsey's idea, and he was CEO when the company suddenly gained widespread notoriety at the 2007 SXSW conference. But he stepped down in 2008, and while Twitter exploded in users, the company didn't have a clear monetization strategy.
Last year, Twitter got a new CEO in Dick Costolo, who brought Dorsey back full-time in March. The company still hasn't been super-clear about how it will make money, but Dorsey has been instrumental in introducing a bunch of new features and striking a deal with Apple to integrate Twitter into the next iPhone.
Grove became Intel's third employee in 1968 after defecting from Fairchild Semiconductor with cofounders Gordon Moore and Robert Noyce. As its CEO from 1987 to 1997, he grew the company from $4 billion to more than $160 billion market cap. He's famous for his management style, including encouraging engineers to experiment and be ready for big changes -- famously, he told them 'only the paranoid survive.' (And later wrote a book with that title.)
He stepped down as Chairman in 2005. Since then, Intel's stock price has stayed stubbornly flat or down, and the company is under threat from mobile devices that use processors designed by rival ARM systems. Most recently, marquee customer Apple -- which switched to Intel in 2005 -- has been considering ARM-based alternatives for its Macs.
Palm had one of the biggest hits of the 1990s with the Pilot, but didn't do much after founder Jeff Hawkins and his team left.
Jeff Hawkins created the PalmOS that formed the basis of one of the most successful gadgets of the 1990s, the Palm Pilot.
But Palm was sucked up in a series of mergers -- first to U.S. Robotics, who helped bring the Pilot to market, then by 3Com. By 1998, Hawkins had gotten fed up and left with his cofounders Donna Dubinsky and Ed Colligan to found another handheld computing company, Handspring.
Meanwhile, Palm went through some more ownership and leadership changes and had a few successful smartphones in the early 2000s. But the company got sidelined after the rise of the iPhone, and was sold to Hewlett-Packard for $1.2 billion in 2009. Earlier this month, HP announced it was getting out of the Palm hardware business for good.
Danger founder Andy Rubin took his vision to Google with Android, while Danger disappeared into irrelevance as part of Microsoft.
Andy Rubin cofounded Danger in 2000 with the mission of redefining mobile phones as miniature computers. Danger had an early hit in the HipTop (which T-Mobile branded as the Sidekick), but Rubin was ousted in 2003 because investors wanted more of a manager at the top.
He went on to found Android, which was bought by Google in 2005. Under his leadership, it became the most popular smartphone platform the world and completely upended the industry.
Meanwhile, Danger's leaders sold the company to Microsoft in 2008 for a reported $500 million. Microsoft squandered its staff and expertise on the Kin, a short-lived social phone.
Google squandered Dodgeball, so Dennis Crowley left to found a competitor, Foursquare. It's doing great.
Google bought Dennis Crowley's first location-based social network, Dodgeball, in 2005.
By 2007, Crowley was fed up with Google's mismanagement and lack of funding, so he left to found another company that did the more or less the same thing -- Foursquare. Although it still has uncertain revenue prospects, Foursquare is reportedly being valued at more than $500 million and continues to beat back threats against small and big competitors alike, while Google is still getting its own social strategy off the ground with Google+.
Sun cofounder Scott McNealy oversaw the company's spectacular rise during the dot-com boom, but also its steep fall during the bust.
Sun was already in trouble when he handed over the reins to Jonathan Schwartz in 2006 -- demand for high-end servers was drying up as Intel-based servers and software became more powerful, and Sun never quite figured out how to make money from its programming language, Java -- but at least he doubled the company's cash position in the last two years of his tenure, helped by a $2 billion antitrust settlement from Microsoft.
But Schwartz was never able to figure out what to do next, and when the economic crisis of 2008 hit, orders dried up. He was forced to sell to Oracle for $7.4 billion -- less than 1/20th of its peak market cap of $180 billion in 2000.
Steve Case turned AOL into a powerhouse. Time-Warner never figured out what to do with it, and Tim Armstrong isn't having much luck either.
Steve Case turned AOL into such a powerhouse that it was able to buy Time-Warner for more than $100 million in inflated stock. The combined company's value plunged after the dot-com bust, and Case left its board of directors in 2005.
Time-Warner spun AOL back out in 2009, but the company has struggled to find its footing under new CEO Tim Armstrong -- its advertising business isn't yet growing fast enough to replace the decline in its much more profitable dial-up Internet access business.
Yang is infamous for one of the worst business decisions in tech history: refusing to sell Yahoo to Microsoft for more than $40 billion in early 2008. When the economy fell apart later that year, taking Yahoo's stock price down with it, angry investors basically forced him to step aside as CEO.
But his replacement, Carol Bartz, isn't doing much better. She struck the search deal that Microsoft had been seeking for years, but that deal isn't working out so well, and display ad revenues are suffering as well. She hasn't laid out a very clear or compelling strategy for Yahoo's next decade, and insiders say that she's checked out and that she isn't likely to have her contract renewed in 2013.
Jobs himself is the classic example: after John Sculley forced him out in a boardroom coup in 1985, Apple's fortunes steadily declined until the company was a few months away from going out of business. Jobs came back in 1997 and the rest is history.