
500px Co-Founder and Former CEO Ousted from the Startup - kenrose
http://techcrunch.com/2014/09/15/500px-co-founder-and-former-ceo-ousted-from-the-startup/
======
throwawayf00px
Ex 500px employee here.

Oleg is a good guy, as in I'd love to be (and have been) his friend, but he
really can't run a company. He's impossible to work for.

Investors put project management in place (more than once) which he
systematically destroyed (firing, pushing so hard they quit, whatever). I'm
not sure why he did this, I think he thought he was more effective in working
with the team. The issue with this is that his measure of "effective" was
seemingly hours spent in the office.

It was not uncommon to get a project (see: portfolios.500px.com, multiple
versions of the IOS app) and have oleg set an impossible deadline. Because of
his management style, just about every rails dev in Toronto has been through
the company. They seem to go through waves of employees (40+ down to 15 and
back again) every six months to a year.

It really sucks to see a founder be pushed out, but I think this can have a
happy ending for 500px, and for Oleg, if he chooses to learn from this
scenario.

~~~
swartkrans
> Because of his management style, just about every rails dev in Toronto has
> been through the company. They seem to go through waves of employees (40+
> down to 15 and back again) every six months to a year.

I don't know and I wasn't there, but this sounds like the Steve Jobs wanna-be
style of leadership. There is this myth of Steve Jobs leadership prowess and
dictator style rule which probably has some element of truth, but everyone of
these founders that try to emulate this myth thinking it will lead them to
success.

You should nice to your employees, you should treat them with respect. You
should give them reasonable working hours, reward them for their work, not
fuck them and their families over for your vision of a how a silly picture
site ought to be. Startup employees make dog shit for pay, and they get a good
dog shit's worth of equity. A fraction of a percent is nothing unless the
company sells for north of $50mil, maybe a nice bonus after that and not life
changing until you're up in the hundreds of millions, a height few start ups
ever reach. So just be nice. Startup employees are there for the experience,
not for the money, unless they don't understand how startup equity works.

~~~
aaronbrethorst
> unless they don't understand how startup equity works.

Which is, in my experience, most of them.

~~~
Smudge
Really? This is definitely not true in my experience. Most startup employees
I've talked to absolutely know that 1%, 10% 30%, whatever, of nothing (or
practically nothing) is still nothing. They're not in it for the rare chance
that their 0.5% or less earns them upwards of $1M.

~~~
arcatek
I work in a startup, and I know that my equity is peanuts, but I have really
no idea about how to use it. Someone should make a talk about it.

~~~
Ixiaus
There's _a lot_ of material you can find and read about online. Please do it.

Your "equity" is most likely "options" which means as you vest them (usually
on a vesting schedule, look at your contract) you have _the option to
purchase_ (or exercise, because some types of equity can be rewarded without
buying them) shares at a specified strike price.

 _In finance, an option is a contract which gives the buyer (the owner) the
right, but not the obligation, to buy or sell an underlying asset or
instrument at a specified strike price on or before a specified date._

I've been a founder, of multiple companies. You're most likely being screwed
but the founders are most likely going to be screwed too; dilution sucks
unless you've got low burn and high revenue (which gives you an upper-hand in
dealing with investors). Generally as a founder too, the number one killer is
running out of money, so when the funding ball starts to roll we (the
founders) typically ride it hard as we can, which unless you're an established
10x-making-founder, means the founders get diluted hard.

One of these days I want to make enough from a venture to build one with an
upper-hand on the investors, I definitely want to create an environment where
people are having fun, working hard, and also are rewarded handsomely with
ownership in the company. Igalia is an inspiring example I think.

------
jacquesm
Wow. That must really suck. The 'people that he trusted the most' clearly
points at some very hard feelings there.

If your co-founder and investors together have a controlling interest these
things can and do happen. In a way this was in the cards when they appointed
(presumably with his consent, otherwise there would have been a confrontation
earlier) a new CEO, after that you're going to have to play ball or leave.
Still, it's tough for this to happen to anybody, especially if you're the one
that led the company to where it is today.

I really hope for the 500px investors and other co-founder that they don't
make any major mistakes in the next year because an ex-CEO minority
shareholder with a grudge is not going to be easy to placate if you mess up.

They will be walking on thin ice.

~~~
3pt14159
Disclosure: My company was bought by 500px, I left after only 9 months of
vesting, and I'm still bound by an NDA.

Andreessen Horowitz is backing 500px, I'm sure (but I have no specific
knowledge of) that whatever paperwork they argued over the months that Andy
was the new CEO was properly vetted.

In my opinion, Oleg Gutsol was _incredibly_ talented in a wide array of things
and has a good heart, but sometimes the CEO that's fantastic for the first 20
employees isn't the one that excels for the next 200. I'm sure this isn't the
last we've heard of him. He'll start something new and succeed with it as
well. He has an incredible ability to figure out how users will actually see
and use your app and what motivates them.

~~~
jacquesm
I think the mistake was to try to stay on. Then you have the 'old captain' and
the 'new captain' on the ship at the same time and that is a recipe for
trouble if the desire for another CEO did not come from the old CEO.

That's a thing I've seen play out in two other spots and in both cases it
ended more or less like it did here (only substantially quicker).

I fully agree with you on the 20/200 matter. I'm like that myself (and even
the '20' is not my ambition but more along the lines of 'somebody has to do
it').

------
coldcode
I'm sure he wasn't tossed out to the unemployment line. Startup founders don't
always make good company CEO's. Steve Jobs sucked the first time around too in
many ways; it took 10 years more time for him to learn how to lead and was a
different person the second time around. Even he is an exception, not all
people learn from their mistakes or even get a second chance. But startup
founders are always able to start another company these days even if they got
removed from the previous one.

------
HorizonXP
I remember meeting Andy on a plane to SFO. I've run into him before at Extreme
Startups. He was on his way to a board meeting at A16Z, and I was on my way to
leave Instagram. They needed an Android lead. After a few meetings, I
ultimately decided to pursue my own startup.

I think one of those meetings was with Oleg over the phone. Intelligent guy
from what I gathered. I'm sure he'll bounce back, though I'm not sure it's
very wise to be so public about this so quickly, when emotions are raw and
high.

500px is definitely one of the better known startups here in Toronto. They
have a great product, they just need to settle on a product direction and
execute. The comments about employee churn aren't surprising to me. And the
unfortunate part about startups is that failure is typically the result of
internal turmoil, so here's hoping they iron it all out quickly.

~~~
will_lam
What's the startup that you'll be working on?

------
derwiki
If he still has equity in the company, isn't he only hurting himself by
interviews and keeping this in the media cycle?

------
rdl
No matter how justified this decision was, this has to be rough for him. I
wonder if it's harder in a smaller startup scene (Toronto) than it would be in
a place like Silicon Valley.

(I love 500px; hopefully this will lead to a more successful company in the
long run.)

------
staunch
This is why you don't give up control of your company no matter how nice
things seem. Founders should maintain absolute control over 3 out of 5 board
seats. The Parker rule.

Whatever his flaws the company wouldn't exist without him. His investors knew
who he was before they invested. They should be forced to negotiate. They
should not be able to fire him.

A16Z is an investor in 500px. They claim to support founders so I'm sure they
will make a public statement explaining how they tried to help this guy but
were outvoted.

~~~
acjohnson55
That's ridiculous. At some point, if you don't have majority share of the
company, that means enough other people have taken large of stake in its
success that it's no longer "yours" alone. I don't buy this idea that just
because someone started a company, they deserve to be dictator for life.

~~~
staunch
Founders are dictators at day one. The question is whether they should give up
control to an investor run committee. Remember that most investors no ability
to run a company and have a portfolio of companies to fall back on.

~~~
wpietri
I look forward to seeing your stats on that, because that's not my experience.

I guess if you're a solo founder who doesn't take much money, you can try to
remain some sort of generalissimo. But almost every company of substance is
controlled by an investor-run committee; it's called a board.

Being a dictator at day one is kinda boring: you're the admiral of a fleet
that fits in your bathtub. Most interesting things take collaboration: shared
ideas, shared labor, shared capital. And that generally means sharing control.
Good people rarely want to work for dictators.

~~~
staunch
All being a dictator means is having absolute power. It says nothing about how
the company is run. Zuckerberg would almost certainly have been replaced like
Steve Jobs was if he hadn't maintained board control.

~~~
derwiki
I think this distinction may have caused the disagreement in this thread. A
dictator as a "call all the shots" is very different than "maintains board
control". The latter can mean you don't even work on product at all, but have
the assurance you can't be kicked out of your own company.

------
rahilsondhi
Don't worry Oleg. Jobs got ousted from Apple at one point too...

~~~
bdcravens
Everyone loves the Steve Jobs example, but remember that Apple was a few
quarters away from implosion, and he founded a second company that was highly
successful. They took on massive investment from a company most considered
their largest enemy.

~~~
aaronbrethorst
> he founded a second company that was highly successful.

NeXT was a commercial failure.

> They took on massive investment from a company most considered their largest
> enemy.

$150mm wasn't a very big investment for Microsoft. Just compare their market
caps at the time for a sense of the different in scale between the companies:
[http://www.wolframalpha.com/input/?i=apple%2C+microsoft+mark...](http://www.wolframalpha.com/input/?i=apple%2C+microsoft+market+cap+on+august+7+1998)

It also wasn't that much for Apple. Just five months earlier, they reported a
$740mm quarterly loss, or 5x what Microsoft invested in them. The purpose of
the investment was primarily to help bolster credibility in Apple as an
ongoing concern. Microsoft's reason for doing this was to try and keep the DoJ
at bay.

~~~
awad
> NeXT was a commercial failure.

Pixar, however, was not.

~~~
aaronbrethorst
Apologies, you caught me at a crabby, pedantic moment. Who cares if Pixar was
a commercial success or not? It doesn't have anything to do with the topic at
hand.

I'm going to dissect what I was replying to:

    
    
        Everyone loves the Steve Jobs example,
        but remember that Apple was a few quarters
        away from implosion, and he founded a second
        company that was highly successful. They
        took on massive investment from a company
        most considered their largest enemy.
    

First:

    
    
        Apple was a few quarters away from implosion
    

puts you in the frame of mind that we're not discussing Steve Jobs' post-Apple
entrepreneurial experiences in general, but, instead, examples from the
computer industry, which would imply that we're talking about NeXT.

Furthermore, NeXT was founded in 1985. Pixar was founded in 1986. So, even if
you set aside what I wrote above, and just take an entirely literal view of
the following:

    
    
        he founded a second company that was highly successful
    

You still have to come to the conclusion that the GP was discussing NeXT, not
Pixar.

~~~
Rapzid
What's your definition of successful?

Here's mine. NeXT and its technology were acquired by Apple for $429m and 1.5
million Apple shares. This technology was was used in the creation of OSX. The
acquisition brought Job's back to Apple and into the CEO chair where he lead
the company on the path to becoming the most cash rich in the world.

#winning

~~~
wastedhours
The _acquisition_ was successful, but was NeXT as a company successful? (The
latter being the point that's being made).

~~~
deciplex
Well, if the benchmark for success is "write a bullshit app and get acquired
by megacorp" that is pretty common these days, then yes they were successful
as a company.

