Founders are what I call “tech athletes”. Founders are the warriors who take the chances and big risks that no one will dare to take. Founders create value by combining brut force, vision, intelligence, and creativity to build something of value or fail trying.
Either way entrepreneurs are special individuals. They are the heartbeat of the companies that they create.
Founders are the captains of their ships and are often being replaced by investors – a old school method (trick) to bring in “adult supervision” because the so called founder doesn’t know any better. This is the topic talked about today by the New York Times in regard to Mark Zuckerberg at Facebook who is being targeted to be replaced. I think the conversation that Mark should be fired is total nonsense.
This is the topic of a recent NY Times has a story called Why Everyone Wants to Fire the Founder, by Cliff Oxford.
It happens all of the time with entrepreneurs who are successful enough to hire experts to help them move their companies to the next level. The problem is that the bankers and consultants often show up right in the middle of the hyper-growth stage and sometimes the next level is where the growth starts to level off into reality.
At this point, the bankers and consultants really can’t help, but they want to stick around and the only way to do that is by firing the guy who hired them and bringing in a white knight to “save” the company. You’ve seen this movie before: the founder steps down and is followed by a carousel of unsuccessful chief executives for years to come. If this kind of talk can happen to a founder like Mark Zuckerberg, who has produced billions of dollars of revenue, it can happen to any founder. But given how poorly the strategy often turns out, it’s tempting to ask why people are so quick to fire the founder.
Marc and Randy are some of the “hardest charging” entrepreneurs and investors that I know. They should know a thing or two. Marc and Randy have been “around the track a few times”. They understand what I’m talking about. Randy Adams is the classic Silicon Valley entrepreneur. He is one of those “crazy ones” that Steve Jobs refers to. Randy can bang out a new company in his sleep and make it look easy. Marc Andreessen is a “crazy smart”, a visionary, experienced inventor, and company builder. He is leading the charge with his partner in crime Ben Horowitz at venture firm Andreessen Horowitz. They are shaking things up in #siliconvalley by building what some are calling the most founder and early stage friendly venture capital firm in the world.
The trend of getting rid of the founder (or as we refer to it as the VC investor take control of the company playbook -page 23) is coming to an end. Founder centric startups and founder friendly angel and VC investors are stepping up to lead this new important new generation of entrepreneurship.
Founders of companies are invaluable. They can act fast and often faster than the market is moving. The founders need to be in charge. Even more important is a founder in charge who has with vision, product skill, and deal making ability. This multidiscipline skill is not only “gold” it’s ideal for today’s tech entrepreneurship landscape.
Investors and venture capitalists need to let the founder to run the ship. If investors run interference with the founder then the entire venture slows down. Building a startup from zero stage is difficult and navigating the market landscape with imperfect information is key to success for any venture even big growing companies. Entrepreneurs are good at dealing with ambiguities.
Being fired as a founder hurts. I was fired from my last startup by the investors it sucks. Can you imagine that even Steve Jobs was fired after founding Apple Computer. When Steve came back to Apple he rebooted the dying computer maker. Steve recognized that founders are innovators and they change things. Experienced entrepreneur Randy Adams points this out to me on Facebook. Randy says “I’ve been fired three times. Every time the new guy totally f**ked up the company. Greed always meets its just reward.”
Here is what Steve Jobs said in his first Apple turnaround message to the public when he took back Apple after he was fired.
Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. While some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.
Why Founders Are Valuable
Once a venture enters the market the venture plan has to be in a constant state of reinvention to ‘hit’ the tipping point in order to hit that “growth curve”. To me it’s about letting the founder stay in control until the venture hits calmer waters. Investors shouldn’t just replace founders because a few waves crash on the ship. Founders know best in the early stages. Creative, product, sales, and deal making skills matters the most.
If investors want a return remember that the founders know best. Don’t replace the founder to early.
My advice to entrepreneurs: try to maintain control for as long as you can (control > 50%) at all costs. Only go over 50% dilution if you need to scale and never run out of money.