The off again, on again, off again news about Steve Jobs has been sending the Apple stock on a roller-coaster ride for the past few months. Investors are nervous and that is clearly reflected in the volatility of the company shares. With tonight's news on Jobs' leave of absence, Apple has taken a dive in after-hours trading, down over 7%. No doubt more volatility will follow when it opens tomorrow.
This brings into question the degree by which the value of a company should be tied to one person. When Jobs retook the helm at Apple in 1997 he achieved the incredible feat of turning a moribund company into a behemoth. Few expected that kind of success, but the price has been that Apple's fortunes were forever tied to one person. Apple without Steve is like Seinfeld without Jerry, or the Honeymooners without Jackie, or Van Halen without Diamond Dave. Ok, the last one was a bad example, but you get the picture.
The point is that companies are supposed to thrive for a long time, but people's lifespan are just too short - we're all mortals. For a company to survive its founder or star leader, it must have a solid succession plan and skilled people who can navigate the ship long after the lone captain has left the deck. GE did it without Edison, AT&T did it without Bell, and Exxon did it without Rockefeller.
As for the bad examples, look at GE today. It has floundered since Jack Welch signed off, even with all the grooming for its current leader. Martha Stewart Living Omnimedia never recovered after Martha Stewart got into legal trouble and served jail time.
But Microsoft and Oracle have done a decent job of decoupling themselves from their leaders. These companies will probably be fine even after Gates and Ellison are gone. Yahoo has learned that lesson with Yang abdicating yesterday in favor of a new leader. Google has also done it right by not keeping its founders in the limelight all the time and allowing an outsider to lead the company.
I suppose the ultimate example of a company inexorably tied to its leader is Berkshire Hathaway. Warren Buffett is no doubt a genius who has transformed an unknown textile company into a $150 billion giant. But he is also 78 years old and investors must wonder about how much longer he can perform his magic. There is little question that at the first sign of his deterioration, the stock will sustain a heavy blow. Of course I hope that's a long way off. The market is a soulless beast, but I admire him for his thrift and his charitable trait.