Much has been written about when it is time to hire a “professional CEO” to run a startup company and, of course, that has long been a norm in Silicon Valley when a technical founder, like that of DataSift, finds that their inexperience may be a limiting factor in company growth (known as the Peter Principle).

Much less has been said about when the technical CEO is the best person to run the company.

Yet if you look at some very successful market changes in the last few years it does point to technical prowess in the number 1 seat. Case in point is the return of Larry Page to the role as CEO of Google. I don’t think that Google would have become the success story we all know without the leadership of Eric Schmidt through the years he led the company.

So why did Larry need to return?

It seemed that Google was being out innovated by another Silicon Valley technical leader, Mark Zuckerberg. Somehow in a world of rapid change Mark had been able to right his ship much faster than the highly bureaucratic organizations that places like Google, Yahoo! and Microsoft had become. Bringing back Larry seemed an effort to streamline, to innovate, to compete.

Of course, Larry returning wasn’t the only Silicon Valley comeback. Steve Jobs is perhaps to most famous comeback in our industry’s history and while Jobs wasn’t quite the “techie comeback” relative to his replacement, John Sculley, who was a marketer from Pepsi, he certainly was a technical visionary.

In more recent times we have seen people like Matt Mullenweg — the founder of WordPress — step back into the company’s CEO role after 8 years.

In a way, it seems the model has been to bring in professional management to help a company through a growth spurt while technical founders focus on becoming an industry leader in terms of innovation and then when the less experienced technical founder is ready they step back in the role. In many ways that might be one way to interpret even Facebook where Sheryl stepped in as COO but by all accounts ran much of Facebook for a few years (other than product). It now seems that Mark is more firmly in control.

All of this is top of mind for me personally because I’m just now dealing with a technical founder — Nick Halstead — retaking the CEO mantle as we announced today at DataSift.

Our big news is announced in this DataSift CEO — Time for Growth post — it’s worth checking out.

The DataSift Story: Helmed By A Technical Founder

I first met Nick Halstead in 2009 when he was running a company called Tweetmeme (the predecessor to DataSift) who had invented the Retweet button and actually helped Twitter develop its early API. He explained to me much of the Twitter infrastructure and why Twitter data would become super valuable.

He focussed not only on the Tweet text but also the meta data describing the Tweet (who sent the Tweet, from which location, on which device type, at what time of day, etc.).

Even more importantly, he used the probabilistic inferences you could draw from the data (who is the Twitter user following and who is following him or her?), was the sentiment of the Tweet positive or negative? what was the frequency of Retweets, @ mentions and so forth). Equally important he pointed out that since Twitter is a place you send links to your followers — crawling the link URL to read the text that was in the ultimate article being shared would tell you 10x more than the Tweet itself).

Nick was always and remains a huge visionary in where public, real-time data was heading. He’s one of those rare people that after every meeting you have with him you feel like you have much more insight into the future of the technology industry than before your conversation began.

We kept meeting at conferences over the next 18 months and he kept showing me what he was working on. When he had his prototype solution for DataSift and had secured re-syndication rights (the rights to resell Twitter data — which only three companies ever had) I knew I wanted to work with him.

Nick was based in Reading, UK (near London) which was a slight but not insurmountable problem. I didn’t mind heading out the England a few times a year — after all I lived there for a decade and even became a dual citizen. But I firmly believed the company needed to have a large presence in the US given our major data partners were all here and the biggest companies looking to buy our products were also based here.

I like technical founders so this wasn’t an issue. But when I asked Nick if he would move to the US he told me he preferred not to. Although he seemed to be in the US incessantly — his home and his family were rooted in England. When Roger Ehrenberg and I agreed to fund Nick’s first institutional VC round we agreed it knowing that he was staying in the UK, that he was building out product & engineering in the UK and that he was the CEO of the company.

But during the funding process we certainly asked whether Nick was open to hiring a US-based CEO so that Nick could focus on engineering prowess and leadership and not having to build out a sales, marketing and support organisation in the US. Luckily for us, Nick was extremely mature and believed it would be in the best interest of the company. So, Nick drove strategy & tech from the UK and remained an active Board member and CTO of the company.

Bringing In A Professional CEO

That enabled us to bring Rob Bailey on board as the CEO and it was the best decision we could have made at the time. Under Rob’s leadership we built out an amazing organisation of seasoned enterprise software veterans in the US market. He travelled tirelessly to clients, data partners and to the UK to make sure the global organisation was synchronised.

Under Rob’s tenure DataSift grew to 10s of millions in recurring revenue, signed up more than 1,000 enterprise customers, raised >$60 million in venture capital, hired more than 100 employees and has become one of the fastest growing SaaS companies in the industry. We simply wouldn’t be here today staring at this opportunity in front of us without Rob’s leadership.

Rob has written this incredibly thoughtful post on the topic if you’d like to hear it directly from a CEOs perspective.

I learnt much in watching Rob execute and enjoyed my experience in working with him tremendously. I think it’s fair to say that Rob managed me as a board member more than I managed him. Simply put — I’m 100% sure I’ll continue working with Rob Bailey — as long as he can put up with me again!

So why on Earth would Nick, the technical founder, be returning to become CEO and Rob become a Board member?

Our industry has hit such a fast pace where a technical founder can bring massive growth and fortunes to companies while missteps can mean a company’s quick demise. Here, I quote John Sculley on letting Steve Jobs go:

“I did not have the breadth of experience at that time to really appreciate just how different leadership is when you are shaping an industry, as Bill Gates did or Steve Jobs did, versus when you are a competitor in an industry, in a public company, where you don’t make mistakes because if you lose, you’re out.”

Shaping An Industry With Machine Learning The DataSift Way

That is the opportunity in front of us. For years we’ve been a close partner of Twitter and despite Twitter having acquired our largest competitor GNIP we still maintain a very close relationship and partnership. And, of course, we have dozens of other data sources making us a much broader platform than Twitter data.

But we have to acknowledge that the industry has changed. 18 months ago Nick embarked on what I started calling our “Manhattan Project,” which defined the next major leap for the company from organising public, social, big data to organising all corporate enterprise data whether internal or external.

And because Nick is Nick he wasn’t content with just helping enterprise organise internal data & integrate it with public big data — he also decided it was best if he could build a machine-learning engine that would learn to recognise, interpret and integrate data-types without the need for data analysts and scientists to create and maintain schemas, tables and mappings.

He called this initiative VEDO and launched it quietly to some of our bigger customers.

So, the next chapter of DataSift is underway. You’ll see more news from the company over the coming months. With Topsy purchase by Apple and GNIP by Twitter we remain the only independent public provider of real-time data streams. With Nick as the CTO we have created an enterprise-grade data management platform that we believe could be transformational in how large companies process, store, retrieve and make sense out of large volumes of big data.

And with this new phase — and with the fruits of Rob’s efforts that led to our 120-person organisation — Nick is ready to step back into the driver’s seat and lead us to the next level. I’m excited to see what Nick can product. I remain as childishly giddy at Nick’s vision as I did in our conference hangout we had in 2009.

And, of course, I’m grateful to my good friend Rob Bailey who stepped into the role of CEO at a crucial time. He performed his role phenomenally well and now that he will become part-time (as a Board member) I look forward to finding more ways to work with him in newer capacities.

Onward & upward DataSift, with the right combination of technical founder and CEO.


[This post by Mark Suster first appeared here and has been reproduced with permission.]

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