Removing the CEO

37 points by digitallogic 5 years ago | 44 comments

js2 5 years ago |

Let’s not beat around the bush. This is about the Nov 3rd election. Here’s a couple posts on firing that were not written with the election in mind:

https://a16z.com/2017/05/24/on-firing-why-when-how/

https://a16z.com/2011/08/24/preparing-to-fire-an-executive/

joshmanders 5 years ago | |

How do you gather this is from the Nov 3rd election?

Sure you can replace "The CEO" and "The Company" with "The President" and "The Country" but I don't see how you got that correlation.

BryanBeshore 5 years ago | | |

F. Wilson’s reply to a thread on his Twitter indicates as such: https://twitter.com/fredwilson/status/1320706427091111936?s=...

mmastrac 5 years ago | | |

From Twitter: "Our national decision that is upon us" [1]

[1] https://twitter.com/fredwilson/status/1320706427091111936

itsoktocry 5 years ago | | |

>How do you gather this is from the Nov 3rd election?

If it isn't about the election, then it's SV fluff. "It's hard to fire a CEO, but it must be done sometimes" isn't terribly insightful stuff.

zachrose 5 years ago | |

“I am not a fan of removing the CEO until and unless it is abundantly clear that it must be done.”

Presidential terms are four years. It seems demented to make a comparison to firing as a last resort.

dave5104 5 years ago | |

Maybe I'm missing some context here, but why is this political? I don't really see anything obvious in the actual text of the post.

commandlinefan 5 years ago | | |

FWIW, I read it the same way OP did.

jyu 5 years ago |

The article suggests that the VC is in an infallible position and the CEO maybe the one who is failing at his job. A common trope is founders getting fired, stepping aside for some socially acceptable reason, which brings their fantastic journey to an end.

Here's a fun thought exercise: When is the VC the problem and not the founders? How do you even go about firing a VC? Have you ever read VC's "fantastic journey" blog post?

Macha 5 years ago | |

The VC is rarely as visible to customers/partners as the CEO which means that they can quietly sell off their holdings (I've heard of cases on HN where it goes to the founder for a "just take this off our portfolio" price when it's clear it's shaping up to be a lifestyle business) and don't need to publicly provide a introduction to the new face or reassurances about the business the way an outgoing CEO does.

beambot 5 years ago | |

While Fred Wilson might be a VC, he's speaking in his capacity as a board member. Boards are critical to corporate governance, and one of their biggest responsibilities on behalf of all shareholders is to hold the CEO & management team accountable.

BryanBeshore 5 years ago | | |

FIFY: While Fred Wilson might be a VC, he’s speaking in his capacity as an American citizen. Voting is critical to democracies, and one of your biggest responsibilities on behalf of all Americans is to hold government officials accountable.

* Referencing Fred’s own post/replies on twitter https://twitter.com/fredwilson/status/1320706427091111936?s=...

setgree 5 years ago | |

Yes, https://news.ycombinator.com/item?id=24793170 goes into great detail about removing a problem person from the board. (From the CEO of CircleUp.)

Benjammer 5 years ago | |

>The article suggests that the VC is in an infallible position

I'm not sure where you get this angle from? I read it as several points of evidence that the author uses to identify a bad CEO, that don't seem to have much to do with the VC at all, let alone comparing the VC as superior in any way against the CEO directly.

From the article:

>the CEO has failed to manage numerous important challenges, when the senior leadership team has been a revolving door, when the CEO has messed up important relationships with customers, employees, and other important stakeholders, when the organization has become toxic as a result of the CEO’s abrasive personality

jyu 5 years ago | | |

Why is the CEO failing? The answer is written from the perspective of the VC. Maybe it's a bad founder-CEO. Could there be another side to this story? Let's try and approach this from the CEO's perspective with an open mind.

CEO has failed to manage numerous important challenges... Why is the VC is fixated on X/Y/Z when I'm trying to corner a bigger piece of an expanding pie? The VC believed in my vision when they invested and are now micromanaging me as soon as I hit a couple speed bumps.

Senior leadership team has been a revolving door...Senior leadership is typically installed by the board majority holding VC. What happened to all the sweat equity built when this startup concept and industry was very uncertain and the company went from default: "dead" to default: "alive". All these MBA grads want is to slow down growth and clutter up the site with a ton of garbage ads.

CEO has messed up important relationships with customers, employees, and other important stakeholders, when the organization has become toxic as a result of the CEO’s abrasive personality.

Could you imagine dealing with egotistical (but correct) 20-something Steve Jobs or Mark Zuckerburg making you gorge down humble pie as a white haired well credentialed VC? Would FAANGM be recognizable today if the founders got booted early and replaced with a highly credentialed buddy of the VC?

foobiekr 5 years ago | |

If one of your VCs goes rogue, you are probably going to face very, very serious problems depending on where you are in the business. Early on, simply put, a bad VC will kill the business.

ci5er 5 years ago | |

The VC, on the board, has a fiduciary responsibility to the shareholders: directly, his firm; the other shareholders, including the founders (!); and indirectly his LPs.

It is the board's responsibility to hire and fire executive management and as both a significant shareholder and board member, has the leverage to do so IF the other board members agree. It is almost never unilateral. Now - in the early-ish days of a company (say,pre-D series), the board is pretty small and pretty acquainted, so the guy who wants to fire you (the CEO) just places about 4 phone calls, and if everyone is on board, gets the ball rolling. Legally, it is a lot easier than it is with a public company or with someone with one of those weird split-stock-right things like Facebook.

angrydev 5 years ago |

I wonder who this is about

benjaminjosephw 5 years ago |

> It is an even harder decision to make when you don’t have an obvious replacement, or when you are not 100% confident that the obvious replacement will be an improvement over the current CEO.

When the stakes are high and the cost of keeping current leadership are potentially harmful to a dangerous degree and the only possible replacement isn't an obvious choice (as is the case with the obvious allusion to the US presidency) then this is true.

In reality, do VCs really go so far as to make the call to replace someone with someone else who has the potential to be equally bad? Isn't the risk of two consecutively bad CEOs worse than taking a little longer to find a reasonable replacement?

aaisola 5 years ago |

It would interesting to see some data on CEOs that were fired, at what stage and the eventual outcome for the company. My guess is that firing a founder-CEO before the Series B stage rarely leads to a positive long-term outcome.

vladmk 5 years ago | |

Great thought here and agree, more data would be interesting

fractionalhare 5 years ago |

Is the timing of this post meaningful? Could it be pointing at someone in particular?

jonny_eh 5 years ago | |

Trump

fractionalhare 5 years ago | | |

Oh...wow I thinking maybe a tech CEO. I totally missed the political angle then.

demarq 5 years ago |

This is like those social media status updates after someone is heart broken.

"You give your heart to someone and they break it"

we are all now supposed to figure out there has been a falling out of some sort, with some CEO somewhere.

who is he? what did he do?

ponker 5 years ago | |

I’m sure Wilson has fired gobs of CEOs in his career. Probably happens to at least 1 of 10 VC funded startups.

kordlessagain 5 years ago | |

> who is he? what did he do?

Someone's neural network is biased.

demarq 5 years ago | | |

to have seen that bias, surely requires ...another bias

tehjoker 5 years ago |

Boards hesitate to remove CEOs but CEOs don't hesitate to remove employees. Elite culture requires social niceties and soft treatment while everyone else gets scored, disciplined, and underpaid.

ska 5 years ago | |

Very few individual employee firings will have broad impact on the company the same way a CEO firing will. The whole process is disruptive by nature, so a board needs to be sure.

This isn't just "elite culture", although there is probably some of that in many scenarios.

edit: responding to a couple of comments - yes this is a feature of how we choose to structure these companies, it is not unavoidable. However, given the distribution of decision making and responsibility in a typical American corporate structure, removing the CEO is inherently difficult.

One can imagine situations where it is less disruptive, but those companies would look and operate quite differently.

tehjoker 5 years ago | | |

Cultural practices exist for a variety of reasons. This is one of them. The people in the ownership class need each other for various reasons because they have control over substantial resources than can disrupt the plans of other members. For lower level employees, their only strength is numbers and unless they realize this they can be treated much worse for arbitrary reasons.

postalrat 5 years ago | | |

It's disruptive by design. Does it need to be that way?

tenebrisalietum 5 years ago | |

It sucks but to interface with elite culture and get them to give you money, it helps to have members of that culture as your leadership. Otherwise the non-elite wouldn't even have jobs (which are not needed so badly by the elite).