In today’s tough macroeconomy, businesses are making tough choices to ensure they survive.
In some cases, that even means sunsetting a company founder to bring in an executive with more experience in shepherding operations through times of broader turmoil.
Digital healthcare platform Oscar Health, rideshare company Lyft, and livestreaming platform Twitch all recently announced succession plans to replace their founder-CEOs with older industry veterans, presumably with the hope that an executive shakeup might help ensure long-term growth and profitability.
Oscar Health announced Tuesday (March 28) that the company is transitioning co-founder Mario Schlosser from the CEO role to president of technology and bringing in the former Chairman and CEO of health insurance company Aetna, Mark Bertolini, a well-regarded industry veteran. Bertolini will step in as CEO effective April 3, per a press release reporting the management change.
“Mark brings invaluable leadership expertise and a track record for driving growth and profitability at scale. He has a long history of pushing the healthcare industry to be more forward-looking about the role of technology. … We are confident he will position Oscar for long-term success,” said Jeffery Boyd, Oscar’s chairman of the board.
Oscar Health’s stock is trading up nearly 64% on the news of Bertolini’s appointment.
Most recently, Bertolini served as co-CEO of the hedge fund Bridgewater. In 2018, he successfully sold Aetna to CVS for nearly $70 billion.
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Rideshare app Lyft is also shaking up its leadership team. The company announced Monday (March 27) that its co-founders, CEO Logan Green and President John Zimmer, have both decided to transition from their full-time executive management positions into non-executive roles.
Current Lyft board member and longtime tech executive David Risher will step into the CEO role. “I am honored to step into the CEO role at such an important moment in the company’s history, and am prepared to take this business to new levels of success,” he said in a statement.
Lyft’s business has been slow to bounce back from the pandemic, failing to branch out into other areas including food delivery, and observers have raised concerns about the platform’s ongoing viability as it continues to trail behind its main competitor, Uber.
Since going public in March 2019, Lyft has never reported a quarterly profit.
“The macroeconomy is tough and the world is full of some uncertainty and that’s a real factor for sure and, then, when you zoom in one click, the competitive environment is tough. We have a very aggressive — very aggressive — competitor,” Risher told The Wall Street Journal in an interview about his appointment.
Elsewhere, popular video streaming platform Twitch, owned by Amazon, has also replaced its last remaining co-founder, Emmett Shear, with a new CEO — 59-year-old Daniel Clancy, an internal hire.
In his first week as CEO, Clancy laid off over 400 employees (March 20), saying that Twitch’s growth was not meeting expectations.
“Like many companies, our business has been impacted by the current macroeconomic environment, and user and revenue growth has not kept pace with our expectations. In order to run our business sustainably, we’ve made the very difficult decision to shrink the size of our workforce,” the new CEO wrote in a blog post.
Read more: Managing for Inflationary Macroclimate Still Highest CFO Priority Post-SVB
Amid historically high inflation, rising interest rates, and broader economic volatility, businesses are increasingly making radical changes across both management teams and long-term roadmaps to ensure profitability and healthy, responsible growth.
Reviewing growth strategies, identifying efficiencies, and managing cash flow better are some important first steps for newly installed CEOs, many of whom are breaking rank from the boom era growth-at-all-costs strategies embraced by their business’s millennial founders.
African eCommerce platform Jumia, as reported by PYMNTS, replaced its former co-founders and co-CEOs with an internal hire, Francis Dufay, focused on making “radical changes” to the company after a decade of losses, with its share price falling nearly 70% since its IPO.
Grammarly, a startup valued at $13 billion, has also swapped out its CEO as it looks to make a deeper strategic push into artificial intelligence (AI), per a report by Bloomberg.
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