For those who don't know, Fred is a VC with a reputation for pushing founder CEOs out. Most famously when he conspired behind Ev Williams' back while Ev was on paternity leave to bring in Dick Costolo as CEO of Twitter.
I used to read Fred's blog years ago. Since then, I've realized nothing is less useful in the business world than the thoughts of VCs.
At best, the advice is something obvious. More often, it's transparently self-serving and/or based on extremely skewed anecdata.
Fred Wilson lost my respect recently when he was cheerleading a company’s decision to move to single year stock grants instead of the traditional 4-year grants on the basis that employees should “not stay for the wrong reasons”. Never mind this is yet another way for the investor class to take all the upside from the folks who actually do the work. Funny how no one complains about investors staying a company for the monetary upside Fred.
How is 1-year vesting worse than 4-year vesting?
I stopped reading VC blogs when I realized how self-serving they are.
Fred is a fantastic writer and really pulls you in. However, he also uses his platform to do things like shill a shady ICO from one of his portfolio companies:
My first job out of college was as an analyst for a mid-level VC firm, and it is through that experience that I can whole-heartedly agree with you. Admittedly, I was just doing basic filtering of business plan submissions and validation of market and technology claims...but I had an up close and personal interaction with the partners of the firm as well as partners at other firms.
Three things in particular stand out to me:
* Most of them have had one success as an entrepreneur, and somehow think that everything that applied to their one success also automatically applies to every other company on the planet. This makes their "advice" almost completely worthless.
* Most of them have absolutely monstruous egos. One of our partners would start every meeting with the founders of a potential investment with "Well, you've got two founding partners of a $200M investment fund sitting here with you, let's not waste any time". They literally treat everybody like it is a privilege to just be in their presence.
* The incredibly vast majority of them are sheep...they refuse to lead rounds, and only commit to "maybe" decisions just to not lose out in case some other VC decides to jump the gun. They talk a big talk about taking big risks, but almost all of their decisions are "we will if you will", because they don't want to be the only one that investors can point at when something bombs.
There are exceptions to each of those points, BTW...but I've never met one that was an exception to all of them. And consequently, I can't help but roll my eyes whenever one of them decides to spread their "wisdom".
> Fred is a VC with a reputation for pushing founder CEOs out
Fred is a prolific VC with a lot of investments. At scale, eventually any investor is going to have companies that have outgrown their CEO.
I think two things are simultaneously true:
1) Founder-run companies are, on average, better performers than companies that have replaced their founders with career CEOs. This only works if the founder can grow into the CEO role as the company scales.
2) Not every founder is capable or even interested in transitioning to the CEO role of a growing company. If the founder is unable or unwilling to grow into the CEO role, it’s better for everyone to replace the founder with a more qualified CEO.
I’ve worked at two startups where it was obvious that the founder only retained the CEO title because they wanted to remain top dog at their own company, but they didn’t really want to do the work of being a CEO. In both cases (one <$100m startup, one >$1b unicorn) it was painfully clear to everyone that their was a leadership vacuum at the top. Other C-levels and VPs were constantly exiting the company because they were forced to do the jobs of the CEO while someone else took the credit. In one case, the CEO was ignoring important business meetings to come work alongside the engineers, “just like the old days”. But he had long since fallen behind the technology curve and was trying to force engineers to do things like he did 10 years ago. It’s not fun to be forced to choose between obeying your CEO or doing things the right way. We all wished he’d just let us do our job and go back to filling the leadership void at the top of the company.
> We all wished he’d just let us do our job and go back to filling the leadership void at the top of the company.
Honest question: why didn't you tell him directly? I feel like for the right person, this could turn things around? Or maybe I'm just naïve
He was clinging to the CEO position because he wanted to be in charge and call the shots. Anyone who got in the way of letting him do whatever he wanted was excluded from future meetings and then quietly let go in the next round of layoffs.
Disagreeing with him meant the end of your employment. One of several reasons why most of us left.
That's only a possibility if you have an appetite for increasing the risk of being fired from your job.
Further color for folks who aren't familiar: he's also one of the most prolific and highly-regarded early-stage VC's in NYC (if not the most) with a longstanding and popular blog.
Not disputing (I hadn't heard that before) just adding.
Though I will note that the chances a good founder won't make a good CEO are probably higher at earlier stages, and getting "pushed out" isn't always the wrong thing for a founder who isn't a good fit as bigco executive.
Yeah, I will support this. I've been at multiple startups where the founding CEO was not at all the right person to manage an organization of more than 5 people and the right decision for the business was to remove them.
In one case, the founder was simply a rich kid who started the company with his family's money, fundraised from VCs, then everyone involved realized this person was luckier than skilled. It makes complete sense in this scenario for the VCs to remove the CEO but still like the business idea.
Yeah, but it's not always the right thing either. If a VC wants to give a buddy a CEO position and they sense the ability to push out a founder, they'll do it and still say it's for the good of the company. It's hard to tell what really happened without knowing the people involved.
That's the whole point of the charade, of course, but it makes reputational information valuable, especially when a founder is deciding whether or not they want to get in bed with a particular VC.
This means reacting well to the news that an executive would like to move on.
What if the executive doesn't want to move on? I'm not talking about people who have vested and are ready to bolt, but those who have founded the business and want to grow it further ... but are now no longer wanted by the venture capitalists.
The post strikes me as something that a VC or appointed board member might show an inexperienced CEO or CTO before they get shown the door and are replaced by "professional management." Don't make a fuss, and accept our less-than-ideal severance terms. It's for the good of the company.
Reading this and before that your sister comment from @thesausageking I can only agree.
Looks like a self serving argument coming from a VC.
Not that it would be good, if we had cultures, were processes and cultures were in place that handle such transitions well. Companies and employees would profit from good transition handling.
But I am yet to see a company that does this in a half decent way.
"This means reacting well to the news that an executive would like to move on." -- I took this section to be talking about accepting it when an executive quits. Some people handle this really well, and others don't.
I don't know about other countries, but here in Brazil I often hear about the opposite being done, but against common employees.
What happen is that, usually, the employee is not satisfied with the work, pay or just wants to change job descriptions and start applying to interesting positions. If the company advertising the position has any sort of relationship with the current company the employee is working at, it will notify the employee superiors causing serious repercussions internally. Note that none of this is described in any non-compete clauses. Those are unspoken pacts between companies.
I think companies believe that making their lives miserable in the process will reduce the resigning rate, but it only creates a culture of distrust. Because the alternative, making employees lives better, paying better salaries and implementing quality of life programs takes effort and costs money in the short run.
In the long run however, I believe everybody would benefit from a culture of cooperation, not only executives.
Why would company B tell company A that person from company A applied to them and make him/her kinda less likely to join e.g by company A offering salary raise or smth?
it makes no sense
Company A reciprocates, so wages are being kept down. Not that different from https://www.engadget.com/2014-02-19-apple-google-and-other-t...
This situation can lead to even more negative impacts on the employee down the line as a company can use your employment verification step to confidentially say anything they want about you. Employers have entirely too much power over your reputation and career even when you are long gone.
Quid pro quo strongly tied to the balance of power. Tiny Co. will probably not only refuse to hire people coming from Huge Co. but may may go the extra step and give Huge Co. a heads up in an attempt to gain favors with them. Plenty or such small companies got burned by getting on the wrong side of much larger companies, and ended up crippled by being denied contracts, or having their best people poached.
The rest is the classic collusion between companies who see no reason to compete over people because this only drives salaries higher and raises payroll costs.
Class identity and broad social ties can be much stronger than an individual's ties to any single corporation.
> Cultures that allow for open honest transitions are better places to work and easier companies to manage.
Executives and board members often talk the talk of openness, transparency, honesty, and directness. But it is usually one way. They will not stand for having honest feedback directed at them.
If you are an executive or board member, think about the last time someone directed critical feedback in your direction, asking you to take responsibility for a failure mode reverberating throughout an organization:
- Did you listen, or did you lash out?
- Did you think about your role, or did you blame someone else for being a bad leader?
- If you pushed someone out, were you open to discussing the debate that led to it? Or did you actually prefer for everyone to just stay heads down and move on?
What's missing for me here is the company's side of the responsibility. It's one-sided to depend on employees to give up opportunities for advancement in favor of a company that would not be as loyal to them.
There are two things I think companies should do:
1) Make sure people have sufficient opportunities for growth. Honestly look at each person and make sure they're getting what they want for their career and their life out of it. Hopefully, a company can find ways to make sure people are always advancing in knowledge, skill, and capability. When they can't, they should be open about that and either find another way to make it up to them or help them find something that's a better fit.
2) Always be planning for succession. An important job of managers is to make sure employees are growing according to their capabilities. They should know who the best fit is to replace them and be grooming that person to be able to step into their job.
My SO has always done this for her people. Consequently, she has an amazing professional network. Sales & marketing.
For my part, I've done what I can for my direct reports.
I've never had a boss or worked at a place that has followed your advice. Tech sucks.
Minor counterpoint: My wife left a responsible position at an organization where she had worked for fifteen years or so, and gave a good deal of notice. People dropped her out of their calculations, and in the end she thought she might as well have given two weeks' notice. They did briefly bring her back for some consulting.
I have given 2 months notice before, even as an engineer. I agree with this assessment. The standard 2-3 weeks is good enough.
A lot of people here are justifying why from an employee's perspective it makes sense for a company to fire their founder CEO. But it's worth noting that a material percentage of HN readers are also current or future founders, and from their perspective it's 100% valuable to know the track record of VCs. As you build your company and go through multiple rounds of funding, you are going to occasionally have to make a choice between two or more VCs. While I have been lucky to have never been on the receiving end of VC shenanigans, I know enough people who can't say the same thing. It usually starts very innocently, like: "hey, look at this COO candidate, wouldn't they be amazing to help you build this company?" Except that the COO has a long relationship with the VC, and you can pretty much assume that every little thing that happens at the company will be immediately telegraphed. Another VC favorite is to be "helpful" in building the company and meet a bunch of your staff (or, worse, take them out for coffee). Again, thanks but no thanks. One more: 360 reviews that are shared with the board (why don't we get the board members' 360s from their previous CEOs?). And then the most damaging and highly unethical one: a CEO coach with loose lips (a very close VC friend has told me that he's successfully using one that works with many top companies - no, I won't share any details). In all these instances, I fully expect the employees to say - why not? But if you've ever been in the hot seat, you'll understand what you're up against, and if you're smart you'll say no to all of these (assuming you have the ability to choose, which often times you will not).
Here's another tip for making leaving graceful: Get rid of cliffs and discontinuities in your compensation.
When I had a bonus that paid out yearly, I had to wait a few months to leave my job. You can bet that I was less focused on my work for those few months, and left as quickly as possible when I hit the bonus day. A friend was looking to leave their job, but discovered that the 401k plan had some bizzaro vesting cliffs. They had to wait to give their resignation on exactly their 3-year anniversary, just in case the company decided to terminate them early.
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