That's a relationship that you will have to manage, that's for sure but if you see him as your boss you imply that he has the right to throw you out or sanction you and that isn't the case, as majority share holders you and your co-founder should be in control of the company and the board should have an advisory role. If the company goes public, hires an outsider CEO who is not a part of the founding team or if the founder-CEO is not seeing eye-to-eye with the other founders then the board can become more dominant.
That's also in the best interest of that investor. Structuring and managing relationships is one of the things a CEO should be good at if the company is to become successful. This goes for the relationships with the rest of the company management, it goes for outsiders and it goes for the board.
If a CEO is hired by the board then that changes but if you found it you should be in charge and you should make it clear - in a respectful way and if necessary by educating your board members - why that is the case.
> If you depend on that outside investor to support (take pro-rata, say upbeat things etc) your next round
He or she will say upbeat things regardless (because they're already in it is in their own interest), whether or not they will take pro-rata shares with a next emission will depend on the price and their ability to purchase as much as anything else so I would not count on it regardless and take it as a nice-to-have but not a must.
If you behave like someone else is in control they are in control. Don't do that.
Even a hired CEO has a mandate and the board can fire him/her but they can't unduly influence that person beyond supplying (possibly unsolicited) advice. Otherwise no CEO would ever be able to do their job. Ultimately, whatever happens is the responsibility of the CEO and the board is a source of advise and makes sure the CEO does a good job. If the board is backed by the shareholders they can fire the CEO, but if the shareholders (and in this case that meant the original founders) don't agree by simple majority to get rid of a CEO then he/she can continue to do their job. Whether you still want to is another issue entirely.
Anybody in a CEO position would do well to make sure they understand their rights, obligations and their relationships with the various other entities they are dealing with. If you don't understand those then it is a recipe for frustration and potentially disaster.
This is the reason why you'll see board members leak to the press (see for instance Yahoo! recently). They can't win the argument in the boardroom and they can't/won't fire the CEO (maybe because they only have a minority share and the rest of the board and/or shareholders do not see their way).
This is also why founder disputes are extremely risky for a company. Founders typically hold large blocks of shares and if some those suddenly align with of non-founders then it can really break your stride or cause serious trouble.
Say a company has two founder that still hold 60% of the shares, 5% is in an option pool and 35% is held by an outside investor. If the founders no longer see eye-to-eye the board suddenly holds the tie breaking vote and this could lead to the departure of either one of the founders depending on with who the board sides. In such a case I hope your shares are vested if you're the founder that is forced to leave (and if not I hope you have a vesting acceleration clause in your contract).
Y combinator is a real game changer in many ways, and one of those ways is that founders now find themselves with a support group of others who have been in similar situations and who have a lot of knowledge about subjects like these. But there is a large group of founders currently not in YC and for those especially it might be advantageous. As a small time investor I'm sometimes in the role of the procedural jerk who makes sure that from the founders perspective all the i's are dotted and the t's are crossed. Usually this is not without friction but I've yet to hear a founder not express (sometimes many years later) that they're happy we went that route. Experience - even a little bit - can be worth gold if there is a power asymmetry and such asymmetries are more the rule than the exception where founders meet capital.
You had a very different experience from normal people, so why would you think you can relate to them...
I also really want to say how much I appreciate the fact that he wrote this. One of the bigger problems with C-Level people is that they try to act infallible. This seriously hurts there ability to grow. Being able to have conversations like this is beneficial to everyone involved, but it takes a certain amount of bravery to start that conversation.
Critical quote: "I think, to be frank, I was also deeply selfish. I wanted Moz to be the kind of place I wanted to work, not the kind of place most likely to succeed with the team we had or were hiring, not the kind that fit best with what Sarah wanted, but my own little creation where things were weird and different and Rand-like."
I really really appreciate this. I think if you want to become a CEO you have to first (critically!) a) figure out what makes a successful culture and then b) become a person who enjoys and thrives in that kind of culture.
Do you have be born that way for "b"? I don't think so, though it probably helps.
I don’t know if I see this as much value add. Finding out what makes a successful culture doesn’t seem trivial, much less easily repeatable. Different cultures can succeed in different circumstances and many different types of cultures can succeed. I also believe cultures evolve more than they are created. To me your argument sounds like saying “to succeed in starting a business you need to figure out what it takes to make a successful business and become a person who thrives doing that.” Working at Google is no more likely to teach you how to start a business than to create a culture. Sure you can learn things that worked there, but only some will work for you and some will likely work against you. The best I’d say you can do is recognize culture is important, try to learn what decisions leadership can make that affect culture, and understand how those decisions impact the business both short and long term. There’s no magic formula for business or for culture.
I'm left wondering - "Why do you still need your own Executive Admin"?
The sad truth is that, as hard as he might work, a man can't add a single hour to the day: every hour he spends dealing with one matter is an hour he doesn't spend attending to another. Leaders, despite being in many cases quite remarkable, aren't so remarkable that they can perform 15 minutes of manual labour in 15 seconds. That's where a good secretary can add so much value: he's a leader's right hand man, his second self. He can cut through or deal with the paperwork, the waits, the scheduling &c. and free the executive up to lead. An EA is an enabler in the best sense of the word.
I've never had a secretary, but I've had the opportunity to work in that role. It's exhilarating to see someone one respects able to do his job that much better because of what one has been able to do.
Obviously, in an ideal world almost anyone would have a deputy. Sadly, that's not numerically possible (and what about the assistants: surely they would benefit from having their own?). But I think it's close to vital that anyone whose value consists of meeting, connecting, travelling and so forth have a lieutenant to help smooth the way.
In fact, he's hitting the nail on the head with his insight that CEOs that tend to re-make the company in the image they'd like to see can do active harm if that image is sub-optimal (and it probably always is).
That has nothing to do with how much money he has or with the fact that others are living paycheck to paycheck.
I don't think it is related to the employee condition, but more with sub-optimal top-down communication.
I never worked without knowing the purpose of what I was doing, in my professional life. And I think that I will quit my job if this happens — I didn't choose to work in a startup to work blindly on tasks without context and being able to participate.
Why was this posted on moz.com?
Who is the target audience for this story?
What's the tl;dr?
I empathized with Rand's struggle to square his selfish/quirky desires with what was good for the company, but those questions above made me wonder: how does this blog post help Moz?
I am imagining that these kind of heartfelt posts draw more attention to the marketing firm with such impact that the current CEO thinks its worth dealing with the negatives...
..And how their founder became the champion of Feminism simply by updating his twitter bio.
You are supposed to learn from his experience, and Rand's openness gives us that learning opportunity.
The high pressure, make quick decisions, life or death mindset that is necessary for a startup is not compatible with a company that has matured. In fact, in my experience CEOs/founders of companies that are growing successfully will throw bombs in to the building. I'm sure many of you have read about VCs removing founders from growing businesses. Founders simply aren't compatible anymore.
I'll leave the psychology of why they do this to somebody else, but in my personal experience I decided to move on from the CEO position because I found myself having to do work, make decisions and partake in meetings that were no longer a reflection of the business I wanted to create 10 years ago. In fact, I can recall the exact moment when I realised it was my time to get out of the way. I was sat in a disciplinary meeting with a member of staff who was under performing. At the end of the meeting I said to the woman running the meeting with me who is now the CEO "This isn't why I started a business, what am I doing here?". A few long chats later and I had made the decision to handover to her and the business is already performing better under her command.
Like people, businesses evolve and mature as they grow, and good founders need to know when to get out of the way. Rand clearly feels he did unnecessary damage to Moz; I wonder if he could go back in time if he would have given up his CEO position a few years earlier?
Apparently one of the things precipitating Rand leaving the ceo job was mismanaging a major project with an initial budget of 6-9 months and targeted release date of July '12 that slid to Oct '13 -- not only a slip of 15 months, but a very buggy release even after major feature triage. Though Rand doesn't say it, I'm guessing this was pretty hard on their engineering staff.
As an engineer who's worked on a similar death march with a major schedule slip that turns out to have been totally unnecessary, it was nice to see some accountability passed upwards for a change.
I somewhat to a degree found the posting to be a bit in bad taste... a bit too 'honest' in his feelings that the company is being run 'wrong'...
This was an excellent article whether or not you know anything about moz.com, and finding out is easily remedied.
Regardless, what Moz does is about as far away from my day-to-day work (or even my interest) as you can get, and even I know what their business is. Doesn't matter, plenty of postings here are about companies I've never heard of, so I go look them up. Takes less time than it took you to type your comment.
Lastly, what Moz does has little bearing on the content of the article. They could make oil filters for cars and the content would stand on its own (well, mostly).
Otherwise, enough people voted for this submission to be relevant.