The world's all about greed now, and the higher up and abstracted out the people are from the passion of the company's founder, the more the more they're going to fuck everyone over for a shark bite. We're just brilliant animals at this point.Reply
After all these years I still don't understand the rules about replacing the real titles of articles with an editorialized versionReply
I’ve got an opinion that may not be a majority here. And I can see how it could go wrong sometimes, especially from the perspective of a founder CEO.
But, IMO boards should be dangerous to CEOs. In the long run it is good, and in some cases necessary, for a company’s long-term health.
There are tons of examples where a CEO change was necessary to resolve distractions, right the corporate ship, and allow a company to pass through a crisis into a new period of growth. And whether the CEO resigns or is literally fired, the locus of pressure is almost always the board’s power to fire them.
Imagine being CEO without that—you’re in charge of everything, with no accountability or consequences for anything. There is no way to maintain perspective and focus over time. Everyone wants to please you or at least avoid your displeasure. The company gets distorted over time by your personal preferences and preoccupations.
I would argue this is the core of the problem at Facebook. That company would be much better off if there was a way to change leadership there, or at least threaten to.Reply
I like this article, nice to see this type of advice without all the usual fluffReply
Surely the author meant, "Your Board of Directors Will Probably Fire You', or some other statement that makes sense in English.
I know the horrible grammar comes from the original article.Reply
Selling equity is one thing. Selling control is another.
When the founders have control, they're the leaders and directors have to follow. When the directors have control, they lead and the founders have to follow.
Generally, founders are more successful leaders of their own companies.Reply
1. Avoid going public if at all possible. 2. Avoid outside investors if at all possible. 3. Avoid having a board if at all possible. 4. Control the shares or the shares will control you.Reply
This article is absolutely terrific. I think this advice can be used for any type of high stakes meeting at work.Reply
This is something you should really understand if you're starting a company. The board isn't your "friend" while individual board members may be, as an entity it probably isn't. The understanding that individuals can be "good" and the composite can be "bad" is usually encountered by most people when some government is doing something "bad" but the people who live where that government is in power are known to be "good." We see a lot of companies that have "good" employees but act in a "bad" way as a company.
So with that in mind, you have to understand that none of your "friends" would fire you, but the "board of directors" (even if composed of people you consider friends) could easily decide to do that.
Tom Lyon used to joke that it was only on your third startup that you funded yourself that you are really in control. The wisdom of that took a while to sink in for me.Reply
I always thought stuff like this happened to OTHER founders, but would never happen to me. But my board fired me six months after closing our series A.
The advice in this article is 100% spot on. I didn't know any of this. I was totally focused on building my company. But if you raise money you can't do that anymore. 50% of your time will always be occupied with working on your next round of funding or managing your board of directors.
I noticed super early that VCs were not "helpful" at all like they had claimed during the fundraising process.
So I got fired, and I thought, "well, at least I still have my founders stock!"
Then a year after I got fired the series A investor led the next round of funding and decided to value the company at $0, so I got diluted by 99.99%. Sounds illegal, right? Well, it probably was, but what am I going to do about it? They have billions of dollars and I had no money.
I just let it go and started something new - bootstrapping of course. On the bright side, the new CEO ran the company into the ground. Meanwhile my new company is doing well and I love my job.
Anyway, do what this guy says to manage your board and just plan on being fired at some point if you raise VC money.Reply
Great read & certainly seems like sound advice. Also, the author seems like a fun individualReply
The meeting management tactics in this post are highly applicable in other situations as well, whenever you are presenting to a group of approvers/overseers. For me, that's launch reviews or program reviews. It takes a lot of time, but a smooth review pays it back many times over.Reply
> founder often gets to write a press release about how they replaced themselves with someone better suited to take the company to the next level or something like that.
This is so common that when I have replaced myself I’ve had friends “comfort” me thinking I really was fired.
In my life I’ve been fired once, though I should not have been. I have also not been fired in two cases where I should have been (early in my career).Reply
Never stand between people and a pile of money.
Your Board doesn't fire you when you're the best guide to a pile of money. Your Board will fire you if they think you're slowing their progress toward a pile of money.
If you think your skills as a guide to piles of money are imperfect, don't put your life in the hands of people who need you to rapidly increase their pile of money.Reply
Stellar advice and completely agree.
My Series A was freshly inked and six months later I was removed. The company’s fundamentals never improved and the company was later acquired-hired.
Here’s the question to ask yourself as a founder:
What am I doing all this work for?
There is only one job an investor board member has - to enable you to raise the next round. All their advice boils down to that.
Yet the most common case is that an unknown investor will lead your next round, not your current.
So all this massive overhead on your time & attention is just the cost of capital.
Your team needs you. Your customers need you. Your mission needs you.
Your investors do not need you. They just need an outcome.
Even this article is tame. I routinely hear that board members do not read prep materials, fail to understand how the business is evolving, and pontificate. It’s a living nightmare when time is of the essence.
Read Blueprint to a Billion. Companies with too many investor seats die.Reply
“ They will each feel like your special confidant. They will also see the other board members reacting calmly to the news and start to think that perhaps you actually have it under control. This will calm them down in the future.”
This seems like obviously good advice. But also begins bordering on what feels like manipulation. And that makes me uncomfortable.
In fact, this whole thing feels like manipulation. If nothing happens in a board meeting because it’s scripted, why do they exist? It seems like the solution to not getting fired as CEO is to control the whole thing and manipulate everyone.Reply
Reading this title gave me a headache.Reply
This brings memories. I also got „asked to leave“ after raising our first round.
I was young (25) and naive, with no experience in business within the family. But what was really crucial back then was that I lacked a mentor who’d make me aware of the risks before letting the sharks in.
It took me three years to bounce back and start something new. On the positive side, I learned a lot.Reply
It felt like reading a tutorial for handling vassals in crusader kings.Reply
So with crowdfunding cap now at 5 mil. in US sounds like a good way to avoid this whole thing?Reply
I worked for a startup for several years, as the fifth hired software developer and got to see our CEO fired within the first eighteen months. They were not the founder, but they had hired the VP of Sales and the entire sales team who were also all let go on the same day. Luckily the core product wasn't impacted and our primary clients probably didn't care.
The company hired two more CEOs over the next three years, each of which lasted less than six months. I'm not convinced that the new CEOs ever actually did anything, although that is possibly due to the board running interference.
My two takeaways from this experience are that if you are a founder you don't want to be CEO, and CEOs are basically useless.Reply
Similar advice applies also to Open Source non-profit foundations, in my opinion :^)Reply
The article itself is titled "Your Board of Directors is Probably Going to Fire You", why has the title of the post just now changed?Reply
It may be gauche to express this opinion on HN of all places and I hope it doesn't come off as tonedeaf disrespect, but does anybody notice VC is falling out of favor unless absolutely necessary?
I am noticing a lot of bootstrappers that are emerging with the ethos that VC isn't what it used to be for some markets, and often a poor choice of the right VC can be a detriment to a project's longevity, with some teams choosing to avoid it at all costs.Reply
Ooh, this is spot on.
> The fact that early-stage founders continue to take their money has to be some sort of delusional grandiosity, in my humble opinion. “Well yes, they fire half the CEOs they back, but surely not me.”
Having started companies, delusional grandiosity is almost a requirement, especially if you're going to take venture capital. I mean, just look at the odds. So it makes perfect sense to me that the VCs happily take advantage of it.Reply
Great article, I really enjoyed everything about this piece. Nice insight into the realities of the boardroom.Reply
Once upon a time, I helped a group of friends start a company, and as we were going over the parts of the LLC agreement that outlined what would happen if the company dissolved as part of a fight, the entire group treated me like I was ridiculous for suggesting that they would get in a fight. I told them that if they were planning on staying friends forever, they didn't even need the LLC agreement, they could just promise to treat each other fairly.
The company imploded amidst a massive falling out something like a year later...Reply
That's one of the most useful, practical, open and realistic advice pieces I've read.Reply
Bootstrap or get fired...Reply
Boards are necessary too
Are they? I've run my own company without a board for 9 years (bootstrapped) and several friends who were CEOs of funded companies had board-driven horror stories ranging from getting the boot to forcing dissolution of the company.Reply
> The advice here is pretty basic: nothing happens in your board meeting. Your board meeting is scripted. The board members should have seen the information presented before the meeting (and not just because you sent the deck—half of them won’t read it beforehand—you must talk to them.) And you should know beforehand how each board member will react to the information presented. If there are decisions to be made, you already know how each board member will decide, because you told them about the decision to be made and they told you what they will decide. No surprises
This is, honestly, how one should aim for pretty much any -formal- meeting to run - as a high trust means to make a pre-existing consensus common knowledge to all the participants.
(things like design brainstorms are a completely different category, hence the 'formal' qualifier to try and make that clear)Reply
What's interesting is this, which speaks to a level of entitlement that's kind of bonkers:
"I imagine you believe that the decision to stop being CEO of the company you started should be your decision, not someone else’s. But the fact is, it often isn’t. Often, it is the board of directors’ decision."
The CEO serves at the pleasure of the shareholders. If the founder wishes to maintain control until he or she decides to walk away, there is a very simple choice that will absolutely ensure this: maintain control of 51% of the voting shares.
The interests of the owners of a firm trump the interests of an employee of the firm. A minority-shareholder founder-CEO is an employee with equity, and can absolutely be fired.
The tl;dr is that if you dilute your ownership, you're not in control anymore. This is often part of the deal. But don't act like it's some huge injustice. It's literally the deal the you made.Reply
What an article. It's rare you find something that has such practical and straightforward advice for managing people (even if those people are your board members).Reply
when you get thrown off of the board you still have your shares.
so the trade is still successful by my rubric. I consider all things to be trades, whether I invested in a publicly traded equity, or whether I created a bunch of $0.00 par value shares to sell to a bunch of other people.
the rule is the same: don't get married to a company.
a board removing you doesn't need any fanfare. you still have the shares.Reply
If you give up your 51% share, sure.Reply
Reading things like this and how common it is for investors to take over, I just wonder how it is possible that a young - and presumably naive - Mark Zuckerberg avoided the typical VC pitfalls and board guillotine / "CEO replaces themselves to help transition company to the next level" path?
Was it just because Facebook's growth was so unprecedented they had no need to replace him? Or did he have a very good mentor or early investors that believed in him or helped guide him without taking advantage of the situation? Or was he actually just extremely shrewd at navigating board politics?Reply
What an incredible essay. Top 5 I've ever read in insight.Reply
Boards themselves have conclusively proven to be extremely dangerous to all of society, not just founders, since it’s dominated by CEOs deciding the salary of other CEOs…
Adam Smith literally warned against this two fucking centuries ago:
> People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
We are all paying a double price, first for insanely inflated executive salaries and second since us normal workers actually have to face the consequences of a business going down, while the CEO, who’s actually responsible for the destruction of the company, drifts of on their golden parachute to a new executive position.Reply
I'm happy and appreciative that this advice exists, but as a tech person who just wants to build new things, it makes running a company sound like a massive drain on the psyche.Reply