Leadership

Why being company founders helped Bill Gates, Jeff Bezos and Reed Hastings succeed as CEOs

Bill Gates
Ramin Talaie | Getty Images
Bill Gates

What if Bill Gates laughed at your start-up idea?

That's exactly what happened to former Microsoft product manager and entrepreneur Rich Barton in the 1990s when he pitched beginning his own company outside Microsoft.

But Gates had a different plan. Looking ahead at the risks Barton could face, Gates allowed him to bring his company idea to life within Microsoft. That start-up eventually became the billion-dollar online travel company Expedia.

Gates possessed the one key characteristic that Barton says makes him, Jeff Bezos, Reed Hastings, Mark Zuckerberg and the late Steve Jobs the greatest kind of CEO: He's the company founder.

In the latest episode of Bloomberg View columnist Barry Ritholtz's podcast "Masters in Business," Ritholtz interviews Barton about his successful start-up companies, such as real estate app Zillow and jobs site Glassdoor.

Barton tells Ritholtz he focuses on CEOs who founded and still run the company. "There are terrific professional management CEOs that come in later, there's no question," Barton tells Ritholtz. "But a professional CEO never quite has the credibility of the founder."

Gates, along with later-Microsoft CEO Steve Ballmer, became Barton's first venture capitalists. Gates gave Barton a budget, the freedom to hire "the most entrepreneurial people" at the company to grow Expedia internally and the chance to make it its own company.

Unlike CEOs who later take over companies, founders "have the license" to make billion-dollar investment risks, Barton says.

Barton explains that chief executives who later take over usually aren't "able to really think long-term" and consider their employees and investors "along for the long ride."

Take Netflix for example, for which Barton sits on the board of directors.

Barton got dinner with Netflix founder and CEO Reed Hastings about 15 years ago, soon before the DVD-mailing service went public. Barton, one of the few web-savvy guys Hastings brought onto the board, thought the service was "cool" but saw no future in DVDs. Barton proclaimed it would die.

Yet, he recalls Hasting's confident, foreshadowing reply: "We didn't name it 'DVD-by-mail-flix', Rich. We named it Netflix."

"He is a visionary, long-term guy," Barton says. "There are very few people who can do this."

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