Eric Schmidt, executive chairman at Alphabet Inc., right, speaks during a summit in New York (Photographer: Michael Nagle/Bloomberg)

Eric Schmidt Shows Adult Supervision Lost Its Cool

(Bloomberg Gadfly) -- One of the trendsetters of "adult supervision" in the technology industry is now out of the picture. It's too bad. Today's tech startups could certainly use more adults. 

Eric Schmidt, the former CEO of Google and executive chairman of parent company Alphabet Inc., said on Thursday that he would step down from that role. He will stay on Alphabet's board of directors and become a technical adviser to the company. 

It's hard to overstate Schmidt's role in the maturation of Google and how he helped shape leadership practices in Silicon Valley. In 2001, the longtime technology industry executive was hired to serve as a guiding hand for a company founded by two twentysomethings with little corporate experience.

In an interview at the time, one of those whippersnappers, Sergey Brin, was asked why he and co-founder Larry Page needed someone else to run Google. "Parental supervision, to be honest," Brin replied. 

It was a quip that changed technology. It became accepted for companies to hire experienced CEOs to serve alongside or in place of young founders. Sometimes those hired guns were good for a company, as was the case with Jim Barksdale at Netscape Communications and Meg Whitman at eBay. Sometimes adult supervision fell short. Look up the track records of John Sculley and Gil Amelio at Apple. 

Now, the pendulum seems to have swung to the opposite direction. Founder-CEOs are cool again in the tech industry. Page took the CEO job from Schmidt in 2011. Arguably the most respected and feared company in the industry, Amazon.com Inc., has been run from the beginning by its founder, Jeff Bezos, and it's hard to imagine the company without him. Ditto for Mark Zuckerberg at Facebook. He made every founder-CEO think he or she was inevitably the best person to run the company.

But not everyone is Mark Zuckerberg. Uber Technologies Inc. booted its founder-CEO this year in favor of, well, an adult. Microsoft Corp. rediscovered its mojo after it hired its first CEO without connections to the company's founding. It might not be a bad thing if Evan Spiegel had a little less power at Snapchat. 

Google has done more than great since Schmidt stepped down as CEO. "Day-to-day adult supervision no longer needed!" he said when he left the corner office. Definitely not. The company's market value has climbed more than $500 billion -- that is not a typo -- since Schmidt stepped down as CEO in early 2011. In a way, Page is now the adult supervision to Google's chief executive officer, Sundar Pichai.

Google isn't in desperate need of more adults. But the rest of the technology industry might be.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Shira Ovide is a Bloomberg Gadfly columnist covering technology. She previously was a reporter for the Wall Street Journal.

©2017 Bloomberg L.P.

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