How dysfunctional Ceo’s/founders destroy great companies

I have been taking time to extensively evaluate what makes companies tick. Besides the central idea, that there is either an amazing product or service; that solves a need at scale there is more to it. It took me just shy of working for 2 decades to really figure it out.

You might be thinking that I ran of topics to write about, But having spent a week at a global accelerator program; meeting startup after startup, I couldn’t but help focus away from the idea/service and on to the founder(s). The ideas were solid, many before me had evaluated them to be at a stage where they were getting advice from tier one mentors who are at the top of their game globally.

Hence I kept on mentally classifying each founder, albeit based on my own experience, if they were going to amount to some thing or not? meaning would I read about them in the papers? I had a bench-mark, a fantastic CEO who built a great company then ran it in to the ground compared to the potential of the company. As I applied my template to each of those conversations based on the experiences I have had, I could literally see who Id read about in the papers. You can see them from a mile.

Founders who are lucky get to live scale, founders who are really lucky get to live scale and make money and founders who exceptionally lucky get to live scale, make money and retain their core team or their co-founders. The really unlucky founders f**k up and loose every one along the way as they explain to them selves that change is inevitable and people move on.

They are also the same ones who are operationally hands off, because, scale is new to them, they try to hide behind people to make key decisions.

This(the people need to move on concept) has to be the biggest founder lie known to man. I agree some times its needed, most times its not. Most times founders just hide behind it when they make emotionally underwhelming decisions. Its self actualization for them. They tell them selves, “hey I made a great company, I raised funding. I have so many people working for me. I must be doing some thing right”. This is where CEOs/Founders put on a reality distortion field. I call it “i’m all the shit syndrome” it eventually leads to making the startup into shit.

I have lived through my share of startups. Once as a funded founder (what they now call pre series A) and other times as an early stage employee or at leading turn-arounds at struggling startups or corporations.

Every situation has been different. The common thread for success has been only if the CEO was not a prick, selfish or insecure, every time there was a mix of this. The scale took a hit.

I worked with a founder, who had a great idea, made a great company, but was a fuc**ing train wreck when it came to dealing with emotional depth of decisions. Some people are good at ideas, some are good at sales, some pare good at starting companies some are simply great at being lucky. He was a mix of luck and perseverance.

The same people are not good at leadership or getting their hands dirty and getting into the weeds. They do have one fantastic quality, they pick amazing launch teams, they know who to empower but never learn to let go. They confuse empowerment with ownership and that’s when it breaks down. I have seen it one too many times.

Some times the same people should be replaced as the CEO, as they destroy the very company culture they wanted to build. Its actually not their fault. Their investors must be shot as must their board members for not seeing though this.

If you are an investor; let the CEO go, good shit happens when you do. Know a company called Apple? They once let their founder go. (Agreed that kind of stuff is once in lifetime but it does happen and then they make movies about it.)

If they stay they destroy the essence of growth and scale with their own insecurities and immaturity when dealing with scale. The co relation of ones title vs real experience and on ground expertise is not the same thing. Lots of CEOs get delusional with they first become millionaires. Boards get it wrong daily. So do investors. Its really not the CEOs fault. Typically it’s the first time, a founder is such a role and they royally s*rew up.

Research has shown that when you take some one who lives in a 1200 sq foot apartment and move them to a luxury suite of a hotel with full turn down service, they still continue to clean up after them selves. This holds true even weeks in to the change of their surroundings.

Initially its about the guilt of “being middle class”, its almost surreal to have people wait on you. Worse, judge you? Its naturally difficult for the brain to take on scale or change in scale. In this case the scale of ones surroundings changed, yet the brain is still living in the 1200 sq foot apartment. This is what it distills down to.

They may have grown from a 2 person or a 10 person company to a 1000 person company but some times they still cant deal with turn down service. This is when the CEO completely f**ks every thing up.

The good news is, there is always time to fix it.

They are in a dark place, every time there is investor pressure, they want to tweak stuff and they cave in to making bad decisions. Their mind is flourishing in the luxury suite, which is their new scaling business, but their soul is stuck in their 1200 sq foot apartment and their body is deteriorating.

Tweaking is the worst thing that happens as an outcome of board pressure. If you see your founder doing stupid shit, call them out. Some tell tale signs are being passive aggressive, lack of trust, gradually firing the teams that helped build the company, under the guise of “change”.

Its typically a death warrant when CEOs hire “buffer” “adult” staff to fire the other founding team members. Its like the Mafia, the God Father has others doing their dirty work. Sadly the dis-connect is, that in the Mafia you only make God Father after you have been personally responsible for making “people offers they couldn’t refuse” not hire Capos to do the dirty work and make God Father. You have to pay your dues to society. But in the tech/startup world, you can have the illusion of doing this back words and making it work. Typically it does not.

The change is already under way, it’s the founder who cant deal with it. A lot of good people and good companies get fu*ked over by a founder who cant distinguish between fear and the need to execute.

Also with your first few million $ you feel invincible as a consequence, I’ve seen most founders family lives take a turn for the worse after a liquidity event. Their lack of emotional maturity destroys the fabric of most relationships they had prior to being “wealthy”.

Whilst Key Man clauses are all the rage, some times it’s the Key Man who is no longer required. Let them hold on to their shares, let them be Chairman of some audit committee or a comp committee, but get them out while you are still ahead as the investor. Ive seen great companies loose their hockey stick scale when the key man was acting like a key a** hole.

Such CEOs and Founders are in a bad place, they are going through the best and the worst time of their lives, they need every ones compassion and true advice. The ones that deal with it, lead awesome companies. There ought to be syndrome similar to imposter syndrome but not really the same; that the founder is going through so that they get the care they need.

They are victims of their own success. Help them, help them selves and save great companies. **

 

 

 

**investors and board members the only people who can influence this are you guys.

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