

How To Avoid Getting Fired From Your Own Company - chrisyeh
http://techcrunch.com/2010/12/31/how-to-avoid-getting-fired-from-your-own-company/

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tptacek
A few more tips, if I may be permitted to leverage my own experience and the
experience of my friends and acquaintances:

* _Avoid personal drama_. I suspect that in more cases than we realize, management-level changes happen simply because people stop working productively with each other. In particular, you need to be prepared to DISAGREE AND COMMIT; to be able to signal that even in cases where you disagree about the direction of a decision, you aren't plotting behind the scenes for its failure.

* _Stay close to the money_. Most of you are tech people. As a tech person in a moving company, you can basically be doing three things and still be perceived as someone who is executing: you can be shipping product improvements, you can be doing "marketing engineering" (ask Patrick what this means, but, briefly: "things that improve customer acquisition or customer LTV"), or you can be talking to customers/the market. There seems to be a huge trap for techs in startups in the "CTO" and "Chief Scientist" and "Architect" roles; AVOID THEM.

* _Be strategic about roles and hiring_. This stuff about palling around with the board may be important, but from what I can tell, the game is won or lost on the org chart. Don't hire people who are going to ladder-climb around you. This is one aspect of Startup Soap Opera Drama that is not overhyped: the market is lousy with people who, for good reasons or bad, have a primary goal of being one of the key people on the m-team. A simple trap to avoid: if you're the Dir/E, be _very_ careful about who the VP/E is; if she can't be you, aim for your kid's godmother. Similarly, if you're in Product Management, even as VP/PM, be very careful about VP/Marketing.

* _Be careful about demotion_. Clarifying special case of the previous note: in a lot of biz cultures, there's basically no such thing as a "demotion"; usually there's only termination, lateral moves, or "constructive" demotion (hiring SVP/M to oversee and eventually consume raw the VP/M, then EVP/M for the SVP/M, etc). If you allow yourself to be demoted, and your m-team is a bunch of assholes (not an infrequent occurrance), you can be perceived as weak.

* _Keep zeroes out of the m-team_. Human resources doesn't belong in the m-team. The Dir/M in a single-product company where a VP/PM handles 99% of marketing doesn't need a seat at the table just to represent "Marketing". The less vital a role is, the more likely they are to be a magnet for bullshit politics.

* _Be customer facing_. I think I said this already: if you aren't committing code that the company will sink without, you should be meeting customers or partners constantly. Be very careful about getting sucked into the conference circuit. It's easy to convince yourself that a particular conference is important to your business but be perceived by everyone else in your company as a tourist.

* _Be on the same page with your board_. In two of the cases I've been directly involved in, the conflict underlying a planned coup was at the level of "are we going to grow the business or are we going to position the company to get bought". It seems like you need to have an eye for the kinds of decisions that involve liquidity. Early on, your board may be worried that you're tilting the game for an early exit; later on, especially if you aren't on the original founding team, you may be perceived as an obstacle to bizdev when your VC just wants to get rid of a board seat gracefully. You don't have to agree on every decision, but it seems like you really do have to be perceived as having aligned interests.

* _Be extremely cautious with metrics_. Anyone who's ever managed a sales team knows about "sandbagging", where the guy running a region lowballs the numbers so he can sail over them and collect bonus accelerators. A lot of devs have a natural habit of being optimistic --- about schedule, about product adoption, about support costs, about COGS --- all of which gives the management team ammunition down the road.

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JabavuAdams
How do you know this / did you learn this?

I'm constantly trying to counteract know-it-all syndrome. Studying other
fields where I'm not an expert has been very eye-opening, but examples like
your post are even more interesting.

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tptacek
I'm (probably) significantly older than you, have spent my whole career in
startups, and so have many of my friends.

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dedward
Answer: Re-evaluate what the meaning of "yours" is. This should be obvious to
anyone. Once you start selling off ownership of your company to others, it's
not just "yours" anymore.

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kylec
Is it possible to draw up an employment contract for yourself that has steep
penalties if you're terminated? That way, even if you lose control of the
board there's still a strong disincentive to getting rid of you.

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joshkaufman
You certainly can. The real question is: if you do, will you be able to
attract any investors at all?

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cookiecaper
Why would anyone even want investors that didn't believe in the founder
sufficiently to agree not to displace him for X years, or else pay founder
lots and lots of money? While it may turn many investors away, I know I
wouldn't want a group of investors that didn't believe in my ability to run
the company and were just trying to get away with a coup that will allow them
to control the IP.

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Umalu
If that is important to you, you can make it clear to the investors before
they come in, and get them to agree to limit their ability to remove you from
the board and from your position running the company. This can be done in a
shareholders agreement. The problem is (a) if you need the investors more than
they need you, they will not agree to this, and (b) people often think of this
only when they are on the verge of getting the boot, when it is too late to
work something out. Investments usually always begin with everyone singing
"kumbaya" in harmony, and every investor always says they invest in founders,
but when things don't go according to plan, the founder who's sold control is
often going to be the first to go.

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ScottBurson
I think that under some circumstances, getting fired from one's own company
could be cause for celebration. If the company is at least reasonably
successful, it means that someone else has grown to feel a sufficient sense of
ownership and responsibility about it that they're willing to put themselves
on the line. And it sets you free to start the next one. Isn't that what you
really want to do anyway?

\-- Not always, I know. But thinking about various businesses I can imagine
trying to start, most of them I wouldn't be so attached to that I'd want to
keep doing them forever. And I can easily imagine that once I got over the
shock of getting fired, I could come to appreciate the opportunity to move on,
particularly if I got a little cash in the bargain.

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mkramlich
this is yet another reason why I want to always bootstrap and retain 100%
equity (or at least controlling share if I give out grants). So much pain,
hassle, risk avoided. You _might_ have to grow slower, maybe, depending on the
particulars. But I think it's worth it.

~~~
brandnewlow
Fear is a bad reason.

~~~
mkramlich
caution. prudence. applying the wisdom that you want to have as few moving
parts as possible to reduce complications. not fear.

i don't play with dynamite because the upside doesn't interest me and the
downside bites hard. same for playing on highways, jumping out of planes,
juggling swords, etc. is it possible to do all these things and come out
undamaged/unhurt/unhassled? sure. but there are alernatives available to me
that have similar upsides or better, with less downside. YMMV

~~~
gscott
It is hard to dominate a market when your competition has x million dollars.
Even if they last only a few years they have sucked up market that is hard to
take back.

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helmut_hed
Most of the article reads like Power and Politics 101; I was relieved to
discover this part at the end:

 _You should also bear in mind that sometimes, the coup plotters are right._

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Eliezer
If this is a big concern to you, get your money from VCs and angels that
aren't in the habit of firing founders. The Founders Fund, as I understand it,
has an explicit policy of not funding anyone they think they might need to
fire, because they expect that if you have to fire the founders the company is
probably going to tank anyway.

~~~
chrisyeh
VCs rarely go into a deal expecting to fire the founder. The only way that
would make sense is if A) the business is red hot and B) the investors see the
founder as a lucky fool rather than as the person responsible for the
business' success.

That's a pretty rare combination.

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keiferski
Step 1: Don't give up a significant portion of your company.

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staunch
That's not enough. Under most corporate bylaws the board has the ultimate
power. You could own 90% of the shares and still get fired.

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rglovejoy
But if you own 90% of the shares, can't you just fire the board?

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staunch
My understanding is that unless you have provision (in a shareholder's
agreement for example) that gives you that power the answer is no. I believe
that if you sued the company a judge would likely intervene on your behalf
though.

~~~
Umalu
Ultimately the directors are always elected by the shares, and unless there is
something really strange about the voting rights, someone owning a controlling
interest in the shares should be able to control election to the board, which
in turn would allow that person to control the board. Controlling the shares +
controlling the board = controlling the company.

~~~
staunch
The shares do elect, but the owner of the shares can be required to vote a
certain way. You could sell 90% of your shares and add a "ELECTION OF BOARD
DIRECTORS" clause to the agreement.

This is the same way drag along rights work.

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bakbak
"The only way to be totally fireproof is to own a controlling stake in your
company"

I wish the article was on 'how to own, keep and maintain controlling stake no
matter how many rounds of funding you do' ...

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webwright
There will never be an article like that-- because the only way to do it is to
have nearly infinite leverage when raising money (see Facebook and, likely,
Twitter).

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tgflynn
Sounds like a really good argument for doing everything possible to go solo.

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SpikeGronim
This article just covers the downsides of selling equity to raise money.
Obviously there's an upside - having money in the bank with which to grow your
business. Some projects need a team of people and that costs.

~~~
chrisyeh
I'm both the author of the post and an investor. If everyone bootstrapped, I'd
be out of business. But I want entrepreneurs to know the risks they face.

------
known
Plan your career so that you can retire by 40.

