Published in UT San Diego, February 17, 2014
Rule No. 115
Lots of powder, skiing with my children, all good. In two days, I will be fired as CEO of my alternative fuel company. This will be the second time over eight companies that I have been removed. I think it “comes with the territory.”
I read the other day that the CEO of Living Social is “stepping down.” Stepping down, spending more time with family, personal reasons, the company needs someone to take it to the next level — it doesn’t matter what you call it, you are getting tossed.
If you want a friend, get a dog.
I founded the company three years ago, took it a long way, raised over $20 million, built the first working plant of its kind in North America, created partnerships, and made good deals. But at the end of the day, my financial partner decided he could run it better than I could. And you all know the golden rule.
The reason I am sharing a personal story is that it is always easy to give advice about not being depressed and something else will appear etc., but when the person you are giving that advice to is you — well, “physician, heal thyself.”
This entrepreneur thing is hard, and the CEO thing is even harder. Statistically, more than 52 percent of startup chief executives get fired within the first three years. I started this company in December 2010, so I am right on time.
And while I am looking in the mirror, I will remind you of one more axiom. As CEO, do not expect the company to thank you. I know you worked hard, made the best decisions you could for the team, created jobs, provided health care, built a strong culture. Don’t let the door hit you on the way out. No thank yous. The people staying with the company need the job and need the money. No one follows you off the Coronado bridge.
The assignment now is to exit gracefully and make the best deal that you can.
Jan. 13: Office of law firm in Carmel Valley
The boys flew in on their jet. They could not have been nicer. Turns out they did fire me but they asked me to stay on the board and help out for the next year or so. Reasonable men and a reasonable outcome. Even some laughter, and I almost liked their lawyer.
And now, as I prepare to exit stage left, here are some sobering thoughts from my favorite Harvard professor, Noam Wasserman. His research shows “that the most successful of founders, the ones who led their startups to completing key milestones the quickest, were actually the first ones to get fired.”
Wasserman calls this “the paradox of entrepreneurial success.” When you are the creator of the company, “you’re increasing the chances that you are going to get fired.”
You start the company, and you raise money. Then you have investors and a board. Wasserman says, “When you have lost control of the board, and the next stage of growth is on the horizon, the chances of getting fired are heightened dramatically.”
Here is the kicker that makes me feel great. “Founders who keep control of their boards and hang on to the CEO position, their personal equity wealth ends up being half as much, as if they give up control to a brand-new CEO with resources to grow the company,” according to Wasserman.
I remain a large stockholder and a big supporter. I feel so good about being tossed, I think I will go out and test-drive a Tesla.