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The "No BS" version of how startups are really built, taught by actual startup Founders who have lived through all of it. Hosts Wil Schroter and Ryan Rutan talk candidly about the intense struggles Founders face both personally and professionally as they try to turn their idea into something that will change the world.
Welcome back to their episode
of the Startup Therapy Podcast.
This is Ryan Rutan,
joined as always by my
friend, the founder,
and CEO of startups.com.
Will Schroeder, will we answer
a lot of questions about like,
what about this and what about
that in, in the founder world,
because there's so many of
these things that you just
don't face ever in life outside
of this space, and you're not
even likely to hear about it
until the moment it happens
to you, and then you just go.
Huh.
So today I wanna walk through
like, how does a founder
get a promotion when they're
already CEO and founder?
When things aren't going
well, how, how is that like
we see people get promoted.
Can you gimme some of
the titles we might get?
Promoted to As as
CEO and Founder,
we usually get promoted at
exactly the time that someone
else just took our job.
And so now we have a new title.
We are now the Chief
Vision Officer, we're the
Chief Culture Officer.
Uh, if things go really our
way, we're now the chairman.
And all of those are
just a different way of
saying we just got fired.
And we were given
a bullshit title.
Yeah.
Special, yeah, yeah.
Director of strategy.
Right.
You know, like director
of, uh, please don't have
anybody report to me.
And, and I, and I gotta tell you
the reason I know this space so
well isn't because I've coached
countless founders through it.
It's because I dealt with it.
Right.
Except the difference is, yeah.
I tried to fire myself over
and over and over and I
couldn't get it to stick.
So let, lemme give you
just a quick backstory.
So early in my career, uh, we're
growing this agency and it's
growing really fast, and I'm
clearly over my skis, right?
Like I'm clearly over my skis.
And, and mind you, I'm like.
23, I mean like again, like
not that old, maybe 24 maybe.
And all of a sudden, you
know, agency hit stride
and we're hiring hundreds
of people and I'm like, we
gotta find someone with any
level of qualification to
actually do this job properly.
Right?
Because I don't know
what I'm doing.
And now I was very,
someone who can no
longer still legally be on
their parents' insurance plan.
Somebody who could rent
a car, somebody who
could rent a car, right?
It's pretty important
in the agency world.
And so, uh.
I sat down with, with
my business partner
who is phenomenal.
I also was, was only, I
think he was only four
years older than me.
But had a much better pedigree.
And uh, I was like, look, um,
I want to go do other stuff.
Like, I had like 90 other
companies I wanted to start.
Yeah.
And I was like, and I've like,
I don't know that I'm gonna
really add that much value here.
So let's, uh, let's bring
somebody else in with, um,
with some more maturity.
Sure.
And you gotta understand
I'm 24 years old.
I look like I'm 14, right?
I had what we call the
Gary Coleman Effect, right?
Yeah.
Uh, in fact, one of my
old business partners
actually coined that.
He says, uh, life only works
for you because you have
the Gary Coleman effect.
I was like, huh?
He goes, here's what happens
when you walk in a room
because you look so young
and you look like a child.
Everybody's mesmerized
by what you have to say.
If you say anything
smart whatsoever.
You sound like the
smartest person alive.
Yeah.
And for those of you that aren't
old enough, uh, to remember who
Gary Coleman was, he was a, a
tiny kid from different strokes.
Uh, he's probably like.
15 when he was on that
show, he was supposed
to be like an 8-year-old
or something like that.
Yeah,
yeah, yeah.
He never got bigger.
Yeah.
Never, never did.
Yeah.
I don't think it helped
that your LinkedIn photo
at the time was probably
you in front of that giant
wall of Star Wars toys that
you had in your office.
Right?
You, you weren't
exactly punching back
against that reputation.
I was not.
Uh, but so to, to,
to play it forward.
So we go out and, and we, we
find A-A-C-E-O replacement.
Some guy with gray hair
that, you know, like
that looks the part, and
I'm like, cool, I'm out.
And so.
We promote me, quote, promote
me to chairman, which was a
bullshit role because like
we, we didn't have a board,
like not a meaningful board.
So being chairman
didn't mean anything.
Right.
It just meant that like, I
owned half the company at the
time, so like, it just meant
that I was still involved.
And so I'm on my way out.
Okay.
And I'm, I'm, I'm already
starting other companies and the
guy that we put in backfired.
Ugh.
So hard.
So hard, so hard that like
the whole team mutiny on 'em.
They came to me and they're
like, please come back.
And I'm like, dude, I'm
literally in the middle of
starting another company.
Right?
Yeah.
Don't wanna be back.
It's like getting pulled
outta witness protection.
You're like, you're, you're
returning to your egg.
No.
No, I can't go back there.
It's not
safe.
And again, I love the
company, I love the people.
So it wasn't one of those cases
where I hated being there.
I just felt like I had done
my time and I wanted to go do
other stuff, and it was like
the height of the internet.
So I was like, man,
there's so many other
things we could be doing.
But in that time, I'll have
gone back and forth from that
role, from being the CEO to
the chairman, my bullshit title
three different times over the
course of probably four years.
Right, so I've actually
come full circle on this
role over and over and over.
Yeah.
Most people only get
one version of this.
They only get the version
where they get the bullshit
title and they get like.
Quietly and comfortably
pushed out the door.
Yeah, I, to be fair,
there's usually somebody
else doing this for them.
Right.
In this case you were Oh, yes.
It's usually definitely
not voluntary.
You were actively seeking this.
Yeah.
Yeah.
This was, yeah, most of the time
That's the very
different goes down.
Yeah, very different.
But, but the other
side of it was.
I'm thinking back and my
memory isn't stellar, but I
also remember thinking when I
proposed this to my business
partner, he had zero pushback.
Will, uh, were you CC'd on
that secret board meeting
that we had last week?
Right.
Right, right.
It's like, Hey man,
I'm thinking about
Yes.
Okay.
But here's what
typically happens.
It's just kinda like, like
unpack a little bit what this
looks like when the founder
essentially gets fired by way of
being given another job title.
Yeah.
And there are some number of
founders that are gonna be
listening to this right now
that either are in the middle of
this, and this is gonna be maybe
the most important episodes
we've ever done for them.
Yeah.
Or they've lived through
this and their entire
response is just gonna
be like, motherfucker.
Yeah.
I know exactly what
that feels like.
You know this one?
Yeah.
Yep.
Yep.
So.
Let's, let's open up at
the beginning, Rina, and I
wanna hear it from yours.
When the board, it's
usually investors' board,
somebody has leverage over
you that they're telling
you this is gonna happen.
They're not asking you.
Why wouldn't they
just fire somebody?
Oh, I don't know.
Equity, math, moral optics,
brand risk, knowledge,
transfer, litigation,
fear, like, dude, there's
like, that's, I can go on.
I can go for the rest of
the, you can go around for
the rest of the episode.
There's so much downside
to just like, let's dig
into a couple categories.
It's not, it's not the place
we rip the bandaid off.
'cause that's not
ripping a bandaid off.
That's like ripping the
surgical clamps off, right?
That doesn't end the same way.
Right.
That ends up with a huge mess.
And look, the boards
wanna avoid splash damage.
They want an air lock,
not an air strike.
Right?
They want this to be like,
yes, tactical, but like well
contained with as little
collateral damage as possible.
So that's why they don't
just outright fire you.
Let's dig into some
of those buckets.
Okay.
Yeah, so I, I'll just
throw these out randomly.
Bucket number one I'm probably
going to say is they fear
that there's some sort of
retaliation, escalation
blow up moment, right?
Yeah, yeah.
Yep.
They need to shut you up or just
basically keep you contained in.
A better way to do that
in some cases is to
actually keep you here.
Right Now, you gotta figure
if you're a board member,
and I've been on the other
side of this too, where
I've been working with
board members and investors.
And talking them through like
how to deal with this with
with founders, and I tell them
the same thing every time.
I was like, remember, this is
99% emotional and 1% financial.
You are taking someone's baby
from them and you're asking them
to do it with a smile, right?
Like, so understand
the scope of the ask.
You may be looking at it
as well, it's for the good
of the company and blah.
Yeah.
They don't give a shit
about any of that, right?
No.
You just ripped away
everything they built.
You gotta be tactful.
And so the first thing I said
is, let's say there's, there's
a bunch of different ways we can
approach this, but one of them,
one of the reason we're not
just gonna fire this person is
because it could go really bad.
Because unlike an employee that
may have stock options, but it's
fairly portable, this person is
usually significantly hard coded
into the DNA of the cap table.
Not easy to extract.
Yeah, no.
The unwinding that is
significantly harder and and
can get really contentious.
And so I think that's why
it's easier to just kinda.
Put 'em to the side, right.
In a way that doesn't always,
isn't always necessarily obvious
to, to the founder, right?
Like, and I've seen it come
in some really funny forms,
which is like, the founder will
start talking about like, you
know, wanting to get back into
like more product focus and
all of a sudden they're like,
let's make you chief innovation
officer so you can just focus
on product, whatever, whatever.
And like.
Then, then, then you're not
hearing from the product
team for some reason.
You are hearing from the
legal department a lot.
They seem to be
very HR department.
Yeah.
Friendly with you.
All of a sudden HR is
talking to you a lot.
Yeah.
Yeah.
It's, it's really, really
weird.
Right.
There's another version too,
so we'll, we'll explore a
few different buckets because
for some folks that think,
Hey, this might happen to me,
it may also be important to
understand where, where those
buckets are in case you might
be approaching one Another one
is the team actually likes you.
Everybody likes you.
You're, you're a
good dude, right?
No one wants to lose you, but
the company has outgrown some
for like force function that
they need to, to, to, to push.
And so this often happens
with like a CFO or a CTO or
something like that, where
you were the smartest person
on technology when you had
four people in the room.
'cause no one else
knew how to code.
But now you have 400 people
and you are by far not
like, you know, the, the,
the sharpest person, or
you suck at management.
You're really good.
Go.
Yeah.
That happens a lot.
Market management, right?
Have time.
Great
technical person, great builder.
All of a sudden you're managing
a team of 30, 40 people,
which you might also hate.
Right?
And that's again, I think
that's where smart boards,
smart investors take advantage
of this kind of stuff.
They're like, you really
seem to hate running
that team, don't you?
We've got something for you
over here in the closet.
Over here?
Yes.
In the supply closet over here.
The other side of it is
usually, by this time there
is a substantial amount of
friction in the company.
'cause things aren't going well.
No one's like, well I take
that back every now and again.
There's an outside case where
it's like, well, we're on
an IPO path and we just need
like a bigger name, like,
you know, bigger CEO to like
fill the shoes to, uh, to
take this in the next level.
That's actually
what we also did.
At the agency at the time.
A couple years later, my
business partner, uh, also
replaced himself as the CEO.
We brought in a guy who was a
super big wig, had an incredible
resume with the intent that he
was gonna take us public, and he
turned out to be an empty suit.
But the point is, it
happens right now.
That's a very small use
case, and that's usually
more voluntary by the
CEO, but again, typically.
This is an investor
driven thing, right?
It's very rare that anybody
else would have the power
to force this upon you.
So when we're talking about,
why didn't they just fire
me, that implies that someone
has the power to do that.
And let's pause for a second.
'cause I, I, I think we need
to talk about, um, board
mechanics for a second.
A lot of founders going
into this world think,
well, I have 60% of the
stock so nobody can fire me.
Ryan, you wanna explain why
that's absolutely not case.
The case whatsoever.
Stock and, and voting
rights don't always align.
In fact, they, they
very rarely do.
When you start taking on other
people's money, regardless of
how much equity you give up, you
give up lots of control, right?
Yep.
Look into those contracts that
you signed and you will likely
find that yes, you still own
the majority of the company.
No, you don't have the majority
of the decision making power.
It's just the way
nor you have a job
for life.
Usually your employment in
your SOC are two totally
different things, things
they don't tell you.
The mercy
of the board and the investors.
Correct in all those provisions
that your attorney was going
through and you were ignoring
when you were raising money,
um, those are exactly the
ones that, that are coming
back to haunt you right now.
Read me the line with the
dollar sign on it again,
like it's the only
one I wanna hear.
Hey, Joe.
Yeah.
What's the amount,
what's my valuation?
Good.
I don't wanna hear
about the rest of it.
So we get to this point where
the, the, the investors are
like, okay, we got a problem.
This person is, is up.
Problem in some way.
Maybe like, uh, not generating
revenue, can't raise more
money, whatever it is, the
board has decided in their
infinite wisdom that you
are the problem and they
need to get you out of here.
Now again, they can just
fire you, but it's, it's
an expensive decision.
At a lot of ways, and I'm just
talking about financially, but
the other side of it is, look,
if we just take this person,
if we take Shelly and we just
give her a new title, she's
chief vision officer now, and
we, we put her on some like
exile planet in the org chart.
So nobody's actually, uh,
what's great about that, I mean,
great, not great for founder.
What's great about that is by
the time we actually get rid of
her, nobody's heard from her.
Like she went from being the
CEO and she had like that photo
op moment, that social media
moment where she, she talks
about how incredible this new
CEO is gonna be, which is all
you want as the, as the board.
And then they put you into
this bullshit title and
then they could have that
conversation with you six
months or a year from now.
Hey, it's not working out.
We don't really need a
chief vision officer.
Uh, sorry about your luck.
That's why they don't
just fire somebody.
It, it's so
expensive to do that.
You know what I mean?
Yep.
No, it's easy to just wind you
down, wear you out, and then.
Let you fade away, right?
Yeah.
From the investor stand.
Let's talk about that.
Let's talk about what
the investors are
trying to accomplish.
Sure.
So you understand why these
things unfold the way they do.
First thing the investors
want is they've gotta make
sure that if they're clearing
the lane for a new CEO, let's
say I'm just using CEO as an
example, that they haven't set
a trap from the outgoing CEO.
In other words, like if
outgoing CEO is like, I'm filing
lawsuits, I'm doing this, I'm
gonna make it a public stink.
All these things.
Yeah.
Think of what that means.
If you're a board trying to
recruit somebody into what's
likely a struggling company.
Yeah.
It's, I said there was
already a struggle.
Then, then, then you, you
decide to blow the bottom
out of the boat by, by
riling up the current CEO.
Now you've got double
the trouble at least.
Yeah.
If, if you can even
get anybody to walk
into that.
It doesn't just stop there
because that CEO is also
tied to all the people
that work in the company.
'cause they recruited
all of those people.
Okay.
Yeah.
So now I am pissed off
outbound, CEO, the founder
getting, getting booted.
And now I'm gonna go on the
campaign trail to everybody
internally and, and I'm
gonna start, it's, it's
called coalition building.
I'm, I'm gonna start
coalition building, right?
Saying, oh my God, aren't
these investors stupid?
And I'm really just trying
to protect my ego, but
regardless what a nightmare.
Yeah.
For the investors?
Yeah, for the, for the
investors, for the inbound.
Yeah.
It's, it's, it's
absolutely untenable.
Right.
And so for the investors,
they're like, dude, we gotta
make sure that does not happen.
So if, if we put will off in
office exile and have no one
report to him, but he still
feels like he has his job,
he's still getting paid, he
still feels like he has a voice
in everything, then that's
a best case scenario for us.
And that's why we
didn't just fire him.
A million other legal
reasons and everything.
But I mean, the optics really
matter in this case.
You know what I mean?
It does.
I mean, especially, I mean
with, again, depending on
how well liked or not the
CEO, the founder was that
internal politics even.
Even without the CEO, the
founder, the outbound.
Trying to rile things up, even
without them trying to to cause
trouble, it still can, right.
I guess said differently if
they're, if they're not there
as a peacemaker and trying
to ease that transition and
supporting all of that, it's
gonna go at least suboptimally,
if not extremely poorly.
Um, and so in the case where
they actually do make the
attempt, then even worse.
Smart investor understands
the value of this.
You only have to go through
a blown up CEO one time
to realize why you never
wanna do that again.
And every now and again, you
see this every now and again,
you see the CEO just like
firing hot lead back at the
investors publicly, et cetera.
And it's an absolute shit
show because remember.
It's not just about preventing
that the next CEO from being
recruited, et cetera, think of
all the potential employees that
see this, customers that see
this, investors that see this.
'cause you probably
need more dough.
No one wants, wants to do
with that hot, steaming piece
of shit, which is something
we're gonna talk about a
little bit later in this chat
about kind of how that gives
you a little bit of leverage.
But if someone comes to me,
the founder comes to me.
And says, Hey, someone on
the board seems, uh, wants
to, uh, pulled me aside,
and it seemed like they were
floating this crazy idea
that they're thinking about.
Maybe find another CEO Ryan.
What would you tell
them in that case?
Uh,
yeah, they're, they're not
thinking about maybe, um,
they've already probably
identified the candidates,
like by the time they, by the
time, you know, all right.
It's, it's done for, right.
That that is not an
early warning sign.
Right?
That's that, yeah.
The expiration date is already
passed at that point you're
on and it's hard to wrap your
head around somewhere else.
It is, right?
Like, yeah.
It's, it's a huge, it's a huge
surprise because then all of
a sudden it feels like the
company, at least the investors,
the board, somebody's been
conspiring against you, right?
And that, that can, which sucks.
It does.
It, it feels awful.
And to be fair, even if
they're good people, they have
been conspiring against you.
That's exactly
what they're doing.
Right.
And maybe to be fair, maybe
for the right reasons,
like maybe like you're the
only person that can't see
what's going wrong here now.
Ryan, you and I have a, a
different opinion of founders.
Like we believe founders
should lead companies.
Yes.
I'm not saying that they're
infinitely qualified, no one's
ever more qualified, but I
think that the, the, the old
investor thing where we gotta
bring in season management,
I'm like, yeah, no,
we gotta throw a new
quarterback in mid-season.
Right.
Have they ever thrown
this ball before?
No.
It's a different,
it's hard like.
I think it rarely works out.
That doesn't mean that it
doesn't happen with some
frequency though, right?
So think that's, the two
things have to separate.
Does this ever work?
Not really.
Do they still try it a
lot?
Yeah, all the time.
'cause it, it sounds like,
Hey, this person's 24,
let's get the person who's
54 and show everybody how
management should run.
And it's like, yes,
they can do that.
And again, we've done
whole episodes on this.
Yes, we can bring in someone
with more experience.
It doesn't
necessarily make them.
Better.
Right?
There's something very unique
about the founder running a
company that we've seen time in
time, in time again and again.
I'm, I'm not saying there,
there, like you said, Brian,
that there aren't cases
otherwise where someone brings
in a very capable, not founder.
You, you could point to
Tim Cook, you could point
to, uh, Dara at Uber.
Like there are cases where
there clearly are people,
but I would argue that by the
time it got to that point,
the company was that big.
It's just big company
at that point.
Right?
Yeah.
Put whomever in it.
I'm not saying it's
very, very different.
Yeah.
I'm not knocking
their capabilities.
I'm saying that's where
the founder isn't as
important anymore.
Right.
Isn't as
important.
And, and like in that case,
the founder wasn't bad.
The company outgrew what,
what that founder was, was
great at, or what the, the
company needed at that point.
Right.
Yeah.
Yeah.
Also, like you have to, you
have to recognize, like when
we've said this before in
the podcast, he wouldn't have
taken Apple from zero to one
or zero to 50, but he can
take it from 90 to a hundred.
He's a great ops guy,
fantastic operator.
Right?
But like, it's
not, not a founder.
So, but let's go back
to, I just got this call,
I just got this text.
Investors just sent me something
that seems a, a little.
Off.
Right.
I know things are a little
bit tense, you know, in the
last board meeting, but I
just got this, this message
and they said, Hey, we need
to talk to you about, see
if there's another option to
bring somebody in as a CEO.
Just gonna pause right there.
No, like we said, no
one tells you that.
Unless they've already decided
that they're going to do it.
Okay.
No one trial balloons
that one, okay.
Yeah, yeah, yeah.
So let's fast forward
through this a little bit.
By the time you're getting
that message, you can fight
it and, and hopefully you win.
You probably won't,
but hopefully you win.
Okay?
But at which point the
situation's gotten that bad,
at which point someone's
written up divorce papers.
That's because they plan
on getting divorced, right?
Yeah.
You can fight it, but you gotta
understand how it got here,
just in case we
ever needed these.
I'm gonna stick them in the safe
next to the birth certificates,
but just, just in case we
ever needed these things.
Right?
Like, you know, there's
a reason that happens.
Yeah.
And so at that point, the
hardest thing for a founder to.
Accept what just happened.
Yeah.
Yeah.
I'm divided on this, Ryan.
'cause part of me thinks you
should fight it and part of
me is like, I already know
you're probably going to lose.
So let's accept it in a way
that's beneficial to us.
What's your thought?
Yeah, I think it's one of
those where like as per usual,
I'd want more information.
Like I'd want to be
able to understand.
Like what's actually
going on, right?
Is, is there some
deficit in what the CEO
EO and founder's doing?
Um, is this really just opinion?
Is there really any chance,
I think this is what you and
I are always gonna come back
to the same point, which
is that is there actually a
likelihood that whoever comes
in next is going to be able
to do a better job of this?
Maybe the one thing you're
fixing, I think we talked about
this in other episodes, I'm not
gonna beat this up too much, but
yeah, they might like, whatever
that one deficit is that you're
replacing that person for.
What about all the other stuff
that they were really good at?
Is this new person gonna
also be great at those?
Are you picking somebody
who does the one thing?
Let's just say, I'll go sports.
I'll go sports.
You can't throw a slider.
They bring in somebody.
Absolutely.
You know, crush a slider.
Can't throw a fastball,
can't throw a curve.
Can't.
Right.
And, and Right.
So like, are you giving up
more than you're getting?
And so, yeah.
I think to your point though.
You're fighting from your
back a hundred percent.
'cause at that point, by the
time you know about it, the
conspiracy is already happening.
You are probably
so far behind that.
Mounting an offense
at this point is gonna
be nearly impossible.
You're just gonna wear
yourself out further.
And as you said, and I think
we'll, we'll get to it a
little bit later, but there
is some possible leverage for
the founder in these cases.
There can be some
outcomes that get created.
You know, something that's
really funny about everything
we talk about here is
that none of it is new.
Everything you're dealing
with right now has been done a
thousand times before you, which
means the answer already exists.
You may just not know it.
But that's okay.
That's kind of what
we're here to do.
We talk about this stuff on
the show, but we actually
solve these problems all
dayLong@groups.startups.com.
So if any of this sounds
familiar, stop guessing
about what to do, let us just
give you the answers to the
test and be done with it.
I think step one is, let's
call, call it what it is, right?
Let's call it what it is.
The board had enough of
you and they fired you.
Yeah.
Uh, they're gonna call
it something else because
again, they don't want
you to create a stink.
They're, they're gonna say,
Hey, wouldn't it be great if we
just focus that you're, you're
part on strategy or product
or whatever you're good at?
And that's just a different
way of saying, here's how
we're gonna get rid of you.
And like, I'm not
demonizing the investors.
This is what they have to do.
This is their job.
I'll wake up in the morning
and say, I can't wait to
like, you know, create this,
all this consternation.
Um, some 'em are better at
doing it regardless, but it
sucks for them too, just like
it sucks to let someone go.
That said, there has to be a
version that some point for
us for as founders, where
we go out like a gentleman.
Yeah.
That's a big deal.
It's a big deal, man.
It's, but I think all
of that leverage that
we'll talk about later is
predicated on that, right?
Because you, you either, you
either choose to leverage
this at some point, or you
choose to fight it now.
And if you fight now,
the leverage later is,
is largely gonna be lost.
I, like you said, you gotta
call it what it is, man.
Uh, polite, firing,
or, or reassignment.
You still got fired, right.
I call it what?
It's, it's it's firing your
comeback fantasies, um, are
nothing but a liability to
the, the board, the investors,
the new, the new CEO.
Right.
None of
this stuff, any reasonable
founder Ryan, is going to
have a comeback fantasy.
A hundred percent.
But it, it's just, just like
a relationship where someone
broke up with you, where
you're like, oh, they'll see
what the mistake they made
and they'll have me back and
everything will be great.
Yeah.
Okay.
That happens.
Almost never.
Okay.
And, and, and I wanna
cite a few examples.
You could say it happened to
Steve Job, he, he gets replaced,
uh, by John Scully, right?
Uh, they, they bring
him, I think it was
from Pepsi at the time.
Scully fucks everything up
and they bring jobs back and
he creates one of the most
valuable companies in history.
Yes, that happens.
Yeah.
Howard Schultz had a different
version from Starbucks.
Right.
But they brought him back.
Uhhuh, uh, Jack Dorsey, they
brought back when t Twitter
was a huge shit show and then
just became a bigger one.
Um, yeah, my sure
actually worked out.
There are star founders
that get brought back.
Okay.
I'm not saying you have
to be a star founder.
I'm saying even here.
Here's what I'm trying to say.
Yeah.
Yeah.
Even some of the biggest names.
Went through some
version of this.
So, so bear in mind this
isn't just a, you know, I,
I'm not fit for this game.
No.
Those people were
very fit for the game.
Yeah.
And had very similar
kind of paths.
But the problem is we sit there
and go, well I'm just gonna kind
of stew here until I can figure
out how to like, you know, mount
my, my Napoleonic comeback.
Yeah, yeah,
exactly.
And I'm like, that's a bad idea.
Yeah, because it, it's
exactly what, why nobody
wants you there.
You know what
I mean?
Yeah.
I mean, look, if, if your
return plan requires the
company's failure, you, you're
not planning, you're, you're
cursing, you're dooming the
company, you're plotting,
you're, you're plotting, right?
Like Yeah.
You don't want to be, that
happens all the time.
Yeah, it does.
Happens all the time.
'cause emotionally
we feel invalidated.
How could we not?
Yeah, I, I, I get it.
How could you not?
And we look at it as, you
know, we don't feel like we
were respected, you know, in,
in the, the, the way we felt.
Like we put so much
work into this.
And there's a, this big
giant hole where sometimes
embarrassed, sometimes
humiliated, sometimes all,
all these emotions, right?
And if you're listening to
this and you're like, Hey,
I was feeling some of that,
here's what I'm gonna say.
How could you not?
Right.
Yeah, that that's
the actually thing.
I just got divorced.
Right.
And man, I feel bad about it.
Of course you do.
Yeah, yeah, yeah.
It's not about how
you feel in this case.
Yes.
You have those feelings.
How you act based on those
feelings is what's going to
dictate what happens next.
Right.
So let's talk about
how to make the most of
it.
Right.
Let's talk about how,
if you're going through
this, what can we do?
What can we do to actually
make like a little bit
of silver lining here?
And by the way, the path
we're about to go through
isn't a emotional, just
make you feel better.
We're talking about like,
how does this actually
work in your favor?
Like what are some
things you can do?
What leverage do
you have, right?
To actually get something
out of this transition.
So, so hold onto that thought
for a second, because this
is an interesting point.
What's your opinion on this?
If, if you find yourself in
this situation, let's say
you've been given, you haven't
been outright fired yet.
Maybe they're not even
saying that they're, they're
playing the COI game and you
have now been made chairman
of the east wing of the
building, we don't even own.
Right.
Whatever it is.
Like you've been, you
clearly, like, you're like.
I've just been put
out to pasture.
Do you address it head on?
Do you go at them and
you say like, let's turn
this into a negotiation,
and how do you do that?
Like, do you confront it
directly or do you say like,
how do I make the most out
of what they're handing me?
Great setup.
Here's how to walk out
like a pro, right?
Here's how to walk
out like a pro.
First things first, say,
listen, I understand the
challenges are what they are.
You know, some of it I,
I don't agree with, but
from this point forward.
I wanna be on your
side of the table.
Okay.
This is such a
critical positioning.
Yeah.
Okay.
From this point forward
investor person who you
thought we were gonna be
enemies in this, I wanna be
on your side of the table.
I wanna do what's
best for the company.
And what's best for our outcome?
'cause I wanna make sure
we're in perfect alignment.
Okay.
I love this so much because
this also feels like feeding
them back some of their
bullshit lines from early on
when they're like, let's sit
on the same side of the table.
Right?
Yeah.
This is, I, I'm telling
you man, I this, this is, this
is money in the bank feels like
sweet justice
it.
Well, okay, so, but
it does a few things.
Okay?
Now this is where
it gets interesting.
Once you're on their side
of the table, then you can
say things like, well, what
should the CEO's comp be?
Or you can, and again, what I'm
saying is like, you can say.
I don't wanna look at it
from, what didn't I get?
Or, or, or whatever.
I wanna look at it as, Hey,
I know a lot about this
business as you do what
is best for the business.
And what, what I would
say openly is, look, my
job continues to be what
is best for the business.
It sucks that I don't
have the CEO job.
Honestly.
That hurts a bit, right?
I'm just, you know, being
vulnerable, it hurts.
But I'm a big boy and
this is, this is, it's an
important moment for me.
And, and I tell founders
in that, in that
moment, by the way.
This is one of the single
most important moments
of your life, right?
Like as critical
chapters go, this today
is a critical chapter.
Do not fuck this up.
Yeah.
Right?
And, and here's
how you fuck it up.
You fuck it up by going
ape shit and you just,
you lay into everybody.
You, you lay into the board,
you start doing the coalition
building where you get all,
all your cronies that are
in the company and tell them
like what a bunch of idiots,
the, the, uh, the boards
are and like, et cetera.
And you basically
poison the well.
Worst case scenario.
Now, let's go back
to the leverage.
The board.
Best case scenario is that
you walk out with a smile.
Best case scenario is that
here's what you don't do.
You don't piss off
everybody that works there.
You don't piss off potential
customers, potential investors,
and most importantly.
CEO
O, who they're
trying to replace you
with.
Yeah, look,
they want peace.
So this is how you have to
figure out how do you send
an invoice for peace, right?
What's the price of peace?
What is the price of peace?
Is the price of peace
right now?
And that is a real thing.
Yes.
Now everybody's situation's
a little bit different.
Okay, so like if you just
got caught embezzling,
probably not the time to
bring up on my Less leverage.
Less leverage.
Yeah, exactly.
Less leverage.
But if you're not being fired
for like, you know, like
extreme cause like that Yeah.
Malfeasance or
complete ineptitude.
Yeah, absolutely.
Uh, what you can do is you can
say, look guys, I've put in
seven years with this company.
I've given this
company everything.
Let's talk about severance.
That's the position
you wanna talk about.
You wanna talk about
your exit as severance.
Okay.
The reason you, you isolate
it as severance is because
everyone understands severance.
Yeah.
Right.
Even shitty employees
get severance.
Right.
Sometimes.
Most of the time.
Right.
You're also sort of saying
at that point, but you are
saying very clearly, you're
saying, I'm going away.
Yeah, I'm going away.
And there is a cost, right?
The cost to it must be paid, but
there will also be some terms
to it,
which is what
they want, the terms you want.
But founders often think in
terms of severance, Ryan,
because we're used to giving
other people severance.
It never occurs to us.
We get severance.
We get severance.
Okay.
Yeah.
Now, there's a number of
of categories where levers
that, that we can use mm-hmm.
When severance, uh,
comes into play.
Number one is cash.
Just, you know, I've been
here this many years.
This is, you know what?
I think this, the
severance should be that.
That's one.
Okay.
And everyone kind
of understands that.
Number two is stock.
I have 28% of the company.
I am no longer in
control of my own destiny
here as I was before.
I'd like to be able to
cash some of those chips
in, and that does happen.
Just so folks understand,
that does happen.
Again, it's a shut you up
payment, but often worth
it to the investors, right?
So you're not saying, I
want a million dollars just
because I want a severance.
You're saying I'd like to
sell back some portion of
my stock for this amount.
Under terms that we think are
reasonable for the company.
Yeah.
Gimme some liquidity because
at this point, holding equity
is like being a ghost in the
cap table doesn't help them
Having a bunch of equity
tied up in a company that you
no longer run doesn't feel
good to you and so Correct.
I think that that's a,
that one's probably more
common than people think.
Correct.
And, and, and the other side of
it is you're basically saying,
I, the, the key here is I no
longer have control of this
outcome the way I did before.
And so I'd like to be able to,
to, um, convert some of that,
you know, lack of opportunity,
if you will, into, into cash.
The third bucket is
whatever version of
your new job there is.
Now, I, I wanna just build
on this a little bit.
You get to kind of call
your own shots here.
Again, it depends
on the relationship.
Whatever.
If, if, if they are so sick of
you and they hate your guts,
then obviously this doesn't
apply in quite the same way.
But if you're gonna say,
Hey, I'm gonna be chief
vision officer, here's
what I'd love my job to be.
Here's what I think that job
should be compensated as.
Here's what I think the
bonuses should look like.
Here's, you know,
like basically.
Take a shot at crafting
your dream job.
Yeah.
Yeah.
That isn't CEO.
Yeah.
What's reporting look like?
What's budget look like?
'cause there's a whole
bunch of things there.
'cause like if you, yeah.
You get, you get the
strategy role without any
budget, you're scrapbooking.
Right.
Strategy without budget
is just scrapbooking.
Right.
You're, you're not
actually doing anything.
There's a huge spectrum of
where the The board wants you.
Yeah.
Okay.
Somewhere between we never
wanna see your face again
and somewhere between,
you're a key person in
this company, we actually
can't afford to lose you.
Right.
Yeah.
So like, yeah, you can't, and
both of those things happen.
Right.
And of course,
the full spectrum.
Yeah.
Yeah.
And
so your mileage will vary.
That said, I think that in order
to make the most of it, there's
another side of this that has
nothing to do with the board,
which is calling it what it
is and being like, you know,
I'm gonna wake up tomorrow.
This is going to be
someone else's problem.
Mm-hmm.
And for someone who's been in
the shit, especially when you
get to this point for who's
been in the shit for this
long, Ryan for this long to
wake up tomorrow morning and
being like, huh, that's not
my problem, is like a billion
pounds off your shoulders.
I gotta tell you, by the
time anybody gets to this
point, they absolutely
deserve and need that break.
I don't know of anybody
that gets to that point
that's like, oh no, I had
so much gas in the tank.
I'm just looking for
10 more things to do.
Right?
Yeah, yeah, yeah.
No, yeah.
I would say, well, even if you
were energetic right before
that situation occurred, how
many founders do you know that
get that call from the boards
and they're just like super
energized after the fact?
Do you know what happened today?
Man, finally the board
has decided to fire me.
Now they're gonna call it
something else, but I'm
actually getting fired.
I couldn't be happier.
Right.
I Right, right, right.
I'm sure there was somebody
out there where that did
happen once, but it's
definitely not the norm.
You've also, you've gotta
use a tremendous amount of
diplomacy, which is hard to do
because you're so emotional.
Okay.
Yeah.
So everyone in the company
is gonna know what happened,
and that's humility.
So your subordinates are gonna
know that you got fired, right?
Yeah.
They're always worried
about you firing them.
All of a sudden, you
know, you got fired.
That's, uh, that's very
tough for a lot of people.
Super.
So a big part of it too is
you're trying to save face.
You're going out of your way to
try to make big announcements
or, you know, like kind of flex
what's left of your authority.
And the reality is you're,
you're dead man walking.
Yep.
Right.
I actually had the president
of our company, um, who I
had hired when I walked into
a meeting and she was like,
will, what are you doing here?
I'm like, I'm sitting
on the meeting.
She wasn't trying
to be offensive.
Yeah, yeah, right.
She actually meant like,
everyone knows that.
Like, you're done.
Whatcha you doing here?
And I was like, damn,
I didn't get the memo
right.
I thought I was needed
here and I'm not.
And I didn't have to
be told that twice.
I just went off and had fun.
But, but I guess what I'm saying
is there is a version where,
where the, the benefit here,
the silver lining is a respite.
It, it's just like a break man.
It's like.
Damn.
I could use them and
I go on a vacation.
Who?
Who'd guest, right?
Like I can do.
Maybe a million other things to
just try to like, just recompile
myself and I just need, uh, I
shouldn't be cool about this.
Here's the opposite of that.
The opposite of that is, let me
go totally atomic, let me stir
up tons of shit with everybody.
Let me get in legal battles
and HR battles and personnel
battles and all this other
stuff that is the polar
opposite of what you wanna do.
Yeah, yeah.
You win really bad,
unfortunately happens.
Play that game.
Really, really bad prices.
Yeah.
Yeah.
Now look, there is no future.
And the chief vision officer.
The chief vision officer is the,
if anybody should be able to see
that it should be the
chief Vision officer.
Right.
Like the irony of that
fucking, yeah.
Yeah.
The irony.
But this move is not
a promotion, right?
Correct.
This move is you're
being put to pasture.
Yeah.
And if you're not sure of it,
ask yourself, how much control
do I have at this point?
Right.
How much control do
I have at this point?
How many people report to me?
That's usually a a, a big sign.
Yeah, that's a great one.
Yep.
And if I leave tomorrow.
Will anything
change meaningfully?
Like will this
thing just be fine?
Right.
Not for you, for the company.
Yeah.
Yeah.
That's what I'm saying.
Right.
So I think for a lot of us,
there's this postpartum.
That comes with this, right?
Where we have to just
wrestle and live with
what just happened.
And it's hard, super hard.
There's no version where,
where you're just such a pro
and you're so divorced from
motion where you're just like,
oh, I guess that happened.
I guess I'll just move on
to the next thing, right?
Like I know who that
person would be.
It's impossible to see it in
the moment, but I think like
if we go back to some of the
examples of people that we
know that this has happened
to, it isn't the worst outcome.
The worst outcome is that.
Nothing happened and that
statistically what happened
to your startup happened,
like most of them don't
work right like that.
You just, the company just ends
up failing as a result, and
you walk away with nothing.
Like that is one
of the potential.
Now, of course, like maybe
that isn't what happened,
but let's call it what it is.
Like if you can play this
right and you can get
something out of it, is it the
exit you always dreamed of?
No.
How often do we get that one?
Anyways, it's something.
So I think if you can get to
that point, right, like of
course the, the feelings might
be what the feelings are.
If you get to that point where
you're like, look, let's land
on some severance, right?
Let's figure out
what that looks like.
After that, I'm happy to help
If we can lock in scope, budget,
and a runway for handoff,
I'll enable the handoff.
But I'm not gonna stick around
for a two CO experiment.
You don't want that.
I don't want that.
Like, let's, let's
make this work.
It can be a decent
outcome, right?
To your point, you get some
money, you get some rest, you
get to shirk and shed a whole
bunch of responsibility that
has been absolutely nobody but
yours for a long damn time.
Yep.
It's not the worst thing
that can happen to you.
The worst thing that could
happen is that they, they
show your ass the door and
they publicly humiliate you.
Like that's the worst
thing that could happen.
And they sue you.
Right?
And, and by the way, you,
you, you could go from a,
it could have been good
to that outcome a hundred
percent based on your own.
That's it, right?
Yep.
Like if you go nuclear,
you'll just get nuclear back.
Yeah.
And you're like, I don't care.
I'm fighting for this company.
I built this company.
I get it.
And I'm not saying, saying,
you don't have any option
at that point because
you've, you've taken
away the cool, you've
taken away the cool path.
Right.
They're like, well, right.
If you would've gone quietly, we
could've worked out some stuff.
But at this point, now it's
actually in their interest,
they have to make you look like
a giant asshole at that point.
Yeah.
So that they can fully justify
getting rid of you and move
on as quickly as possible.
Total disaster.
Best case scenario would
go something like this.
You get that call late at
night from an investor that
just wants to have a chat.
You quickly understand what
they're actually saying.
'cause again, at which
point they're saying,
Hey, maybe we should look
for some other options.
It means that they've already
looked for other options.
And while they may, it may sound
like an ask, it ain't an ask.
And by the way, if you wanna
keep a CEO, the last thing
you would ever say is maybe we
should look at other options.
Right.
Like that'd be the last thing
you, you would ever say to them.
So again, perfect path.
You catch this quickly, you
see the writing on the wall,
you go back to the board after
you process your own shit
and you say, Hey listen, I
wanna be on your side of the
table through this, right?
I want to create a
severance for me that is,
um, that is equitable.
Um, that's fair, that's
fair to both you and, and
tam me 'cause I've put
a lot of time into this.
But I wanna work with you
to Carver path forward
where I can add value.
So we can both get the
outcome that we both work
so hard to achieve, and
I can help support the
organization, uh, however I can.
Those are the dream words Yeah.
That an investor wants to hear.
Yeah.
By the way, say them even
if you don't mean them.
That's
what I was getting
at before, man.
It's like.
Even if this isn't exactly
what I mean, if you feel
completely different, right.
You know?
Right.
Go fight for a title, fight
for terms, and then figure
out how you're gonna move
on and build something else.
I always tell my wife that if I
ever told people how I actually
felt, I'd have no friends.
I, I always say like,
there's a version of how
you feel and there's a
version of what you say.
Right.
And this isn't about being
disingenuous, it's about
understanding that the
words that come out of your
mouth have a consequence.
Yes.
And just because you
feel them doesn't mean
you get to say them.
You, you sanitize it for
everyone's sake, right?
It's, you're not,
yeah, yeah, yeah.
Just we're not telling
you to just stuff it down.
We're saying, look, turn some
of that angst into a little
bit of back pressure and,
and make it into something
that actually works for you.
Right?
Um, but if you just uncage
the lion from minute one, do
you just get a blood bath?
That's
it.
That's all that's
gonna happen.
Most people don't have
that self-awareness
and or self-control
to be able to do that.
So that's usually where
our coaching comes in.
We're like, like, dude,
I know you're, you are
raging pissed right now.
If you stay this way, you
are about to engage in the
worst possible outcome.
Well, I think that's why
this is such an important
episode, because I think that
most people win faced with.
Call.
Yeah.
Don't know.
The rest of what we just
described as even an option.
They think Correct.
It's it's fight or
roll over and die.
Right.
They don't assume that
there's any middle ground,
any path forward that doesn't
involve either humiliation
or some sort of victory.
Right?
Yep.
Where they're like, I
will fight until, right.
Yeah.
No, you won't.
And
every now and again.
It comes full circle.
Yeah.
Okay.
Every now and again, it
comes full circle and
the board realizes that
you were the best person.
And they call Steve Jobs back.
They call Howard Schultz back,
they call Jack Dorsey back.
Right.
I actually just
saw this last week.
Shit.
It, it wasn't Zillow, it was
some company in that space.
And they just brought the
founders back and they
said, well, now we're
back in founder mode.
Right.
And you know, because
that, that's, uh, cliche
founder mode reactivate.
Oh,
yikes.
Yeah.
But, but they brought back
in the founders and like,
you know, that's supposed
to change some things.
That's a publicly
traded company, so
the stakes are higher.
My point is there could maybe
tiny percent chance be a chance
that mom and dad get back
together, but it's fairly low.
So we don't plan for that.
We're saying it could happen,
but the way it doesn't
happen is you set fire to
everything on the way out.
The way it does happen is
you are a good soldier.
You say, look, not
an ideal outcome.
I'm gonna maximize my upside
here, but most importantly,
I'm gonna maintain my
relationships and reputation,
which by the way, speaks
volumes to all the people
that work for you as well.
Hundred percent just being
able say, Hey, uh, I've got
the humility to be able to
say sometimes, you know,
I made the wrong move.
I'm going to just
sit on the board, uh,
like I normally would.
And I'm, I'm not gonna
be an a-hole about it.
Like, every time the CEO
e does something wrong,
I'm gonna, you know, like
call 'em out about it.
I'm gonna, I'm basically just.
The best answers I can get.
And if it looks like there's
an opportunity in the future
where, where, uh, folks have
warmed up and they wanna call
me back in, great, not planning
for it, it could happen,
uh, but not planning for it.
I think when we get what
we call the severance with
a smile, we just kind of
have to call it what it is.
But here's what I would say.
If this happens to you or
if you see this coming, take
the hint early, process it
early, take the leverage early
while, while things are still
positive, put on that positive
face, but more importantly.
Take this opportunity to reset,
reevaluate, and takes your next
shot, because for many founders,
this isn't the end of something.
It's the start of something
else, and all that
has to do with how you
deal with it right now.
Overthinking your startup
because you're going it alone.
You don't have to, and honestly,
you shouldn't because instead,
you can learn directly from
peers who've been in your shoes.
Connect with bootstrap
founders and the advisors
helping them win in the
startups.com community.
Check out the startups.com
community@www.startups.com
to see if it's for you.
Could be just the
thing you need.
I hope to see you inside.