Despite the fact this situation has played out before, the departure of Bush leaves many business leadership experts shaking their head. Joel Shulman, PhD, CFA, Professor of Entrepreneurship at Babson College in Boston, is Managing Director of EntrepreneurShares LLC, which owns shares in Athenahealth (more than a $1 million in stock), says his company started investing in Athenahealth because of Bush himself. He says the firm’s investment strategy centers around founder/CEOs, such as Bush, who tend to have more skin in the game.
“We got in because he was a founder/CEO and has been there from the beginning. If you look at the way they’ve run the company, the company has improved and made progress over the last few years,” Shulman says to Chief Executive.
Contrary to the complaints coming from Singer and Elliot Management, Shulman was a firm believer in the company’s financial direction. In the last few years, he notes that under Bush’s leadership, Athenahealth has improved the company’s margins, decreased SG&A, and oversaw a revenue growth of 13-20%.
“As an investor, this is good. Who doesn’t like that? We didn’t have a problem with him, we thought he was making good progress.” Shulman says Bush had a small ownership stake, which left him vulnerable to the interference of Singer and Elliot Management.
“We didn’t have a problem with him, we thought he was making good progress.”
Shulman says his firm’s motto is when the founder goes, they go, and they’ll sell the Athenahealth shares. He notes that financial buyers often underestimate “the cultural impact’ that a founder/CEO like Bush brought to the table and that the long-term impact of losing someone like this is not in the company’s best interest.
Sonnenfeld agrees that founders are “those with the greatest strategic insight and cultural credibility to redefine an evolving business.” He says Bush had done a “done a magnificent job in creating, building, and redirecting this company.”
But not everyone is universally in praise of Bush. Williams says the former CEO’s dynamic and unconventional style, had definite pros and cons. While he was able to take action and act decisively, Williams notes his comments to a female employee are intolerable, especially in the thick of the “Me Too” movement.
In this regard, CEOs need to moderate their behavior when necessary, Williams says. “Jonathan was, let’s say, an outlier in terms of his public persona and his willingness to do unconventional things,” he says, adding that this can eventually blow up in someone’s face, as it has with Bush.
Williams also recommends for those that have a dynamic personality, such as Bush, it may be best to pair up with someone who is the quiet, capable type. In the early days of Athenahealth, Bush had this relationship with Park, his cofounder.
In terms of dealing with someone like Singer, Sonnenfeld says CEOs can’t be frightened by the threats and character attacks of activist investors. “None of us are angels or saints who never made a bad call in our careers,” he says.
He also says to not let activists “lead you to separate and run for cover out of individual self-interest,” and not overly rely on lawyers. “The lawyers are not business people and driven by risk aversion not entrepreneurship,” he notes. Finally, Sonnenfeld advises CEOs find “directors who have the fortitude to withstand malicious outside attacks, while still able to ask tough independent questions themselves.”