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Crypto Crash Invites Exodus Founder

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Crypto Crash Invites Exodus Founder

Kraken named a new CEO after the founder and current managing director Jesse Powell resigned two days ago, with Powell citing a desire to spend more time on stock market products as the main reason for leaving his post. Powell will continue as Chairman of Kraken’s Board of Directors, while current COO Dave Ripley will become the new CEO.

In and of itself, Powell’s transition away from the CEO role may not make headlines, even if reports suggest his decision has something to do with some political controversies the 42-year-old has fueled recently. However, the transition also follows a string of similar departures from other founders and CEOs in the cryptocurrency industry, with Michael Moro of Genesis, Michael Saylor of MicroStrategy and Sam Trabucco of Alameda Research also resigned in recent weeks.

Combined with a continuous bear market and the suppression of cryptocurrency prices, such outflows suggest that the industry is currently going through some kind of crisis, potentially endangering the companies these founders leave behind. That would be a rash judgment, however, because while there is some available evidence that founder departures are bad for businesses, recent departures can just as easily be seen as a sign of an evolving, maturing, and moving industry.

Kraken’s Jesse Powell joins a growing list of crypto founder-CEO departures

Commenting on his decision to step down as CEO, Kraken’s Jesse Powell explained that he wanted to change his role on the exchange, rather than leave it behind completely.

“As the company got bigger, it got more exhausting for me, less fun,” he said in a video interview on Tuesday. “I still plan to stay very engaged with the company.”

Regardless of his particular reasons (and some reporters have suggested his resignation was related to having previously “started a culture warat Kraken), Powell joins a growing list of crypto founders and CEOs who have stepped down in the past two months. This includes the following:

  • MicroStrategy’s Michael Saylor, who rose from CEO in early August to a new role of executive chairman (he is still chairman of the board). His resignation came as MicroStrategy resisted a loss on its bitcoin holdings that exceeds $1 billion.
  • Genesis’ Michael Moro, who stepped down as CEO in mid-August, amid cryptocurrency brokerage’s attempts to cut costs faced with the losses, which had been largely caused by the exposure to Three Arrows Capital. It looks like he won’t be taking on any other role at the company.
  • Alameda Research’s Sam Trabucco, who resigned as co-CEO of FTX owner in late August, citing the need for “prioritize other things” in his life. He will continue as an advisor to the company, but will have limited day-to-day involvement.
  • Hetal Majithia, then CFO of cryptocurrency mining group Mawson, resigned in early August, after just a year in the role. She left the company for “pursue other opportunities.”
  • Alex Atallah of OpenSea, who left his position as CTO at the beginning of Julythe co-founder of the NFT marketplace remaining on the company’s board.
  • Trust Wallet’s Viktor Radchenko, who stepped down as CEO in late March, with the founder citing the need for “ttake time to unwind.”

There are a handful of other examples that could be mentioned (e.g. Christine Brown, Chief Crypto Operations Officer at Robinhood), but suffice it to say that the cryptocurrency industry seems to be going through some sort of upheaval right now, at least judging by the number of releases.

And in many of the cases mentioned above, it’s interesting to note that those who quit often say they need time off, as if the trials and tribulations of crypto and the ongoing bear market it finds itself in were a few too much.

Instability?

Whatever the specific reasons, the departure of so many experienced people from some of the biggest companies in the sector raises fears of instability. Because of the founders and other senior executives leaving important positions, it can be assumed that they will lack the leadership necessary to guide them through what is a difficult time for the industry at the moment.

There isn’t much reliable research on what happens to companies after a founder leaves or resigns, but what little there is suggests that one of the companies mentioned above can find life. a little harder for herself right now.

For instance, a 2015 management survey survey in the UK by Network ROI found that 33.9% of UK businesses believe they would not survive without their founder at the helm, although it is likely that a fair share of these pessimistic businesses are run by a family.

Nevertheless, a 2013 academic study carried out by researchers in the UK and Norway found that of 341 private businesses less than ten years old, sales fell by an average of 60% four years after the death of a business owner, the employment in the companies concerned having decreased by 17%.

Of course, the sudden death of an owner or founder is not directly comparable to what happened in the cryptocurrency industry, but it does at least give an indication of how companies can suffer without their founders.

On the other hand, some research suggests a more or less opposite conclusion, undermining the sense that there is a clear answer as to whether the cryptocurrency companies affected by the departures will really suffer.

Notably, a 2019 study by the World Management Survey found that companies run by their founders are 9.4% less productive, with consistently poor management scores. Equally important, this same study found that productivity and management scores increased after replacing a founder-CEO.

This matches the resignation of Jesse Powell as CEO of Kraken. Namely, much has been written about Powell’s controversial policy stances in recent months (including comments on gender and race), and it’s arguable that he left the CEO role in part to ensure that such controversy wouldn’t hurt Kraken’s productivity and team spirit.

It’s also worth pointing out that Powell will remain at Kraken in a fairly influential position, while many of the exits mentioned above will also see the Founders/CEOs move sideways. As such, it’s entirely plausible to suggest that the companies involved won’t suffer too much from the absence of important figures and the advice they can offer.

Similarly, there is as much continuity in the cryptocurrency industry as there is change right now. The high-level founding CEOs of Binance, Coinbase, and FTX remain entrenched in their respective positions, undermining any claims that the industry is currently going through undue turmoil.

And when it comes to companies that have seen their CEO step down, these moves can be seen as evidence of company growth and evolution. As the sector aims to break into the mainstream during a tough time, it may not be enough to stick with the same staff and philosophies, so any new CEO – who was mostly selected after internal research stringent – should be welcome.

This is notably the case of Kraken, which although being under investigation for possible sanctions violationsremains the ninth largest exchange in the world by volume (according to CoinGecko). That shouldn’t change anytime soon, even if Jesse Powell is no longer at the helm.

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