Founder Friendly
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Founder Friendly
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Re: Founder Friendly
#2VCs used to oust founders and bring in experienced operators as soon as a company started scaling. Cisco is one of many high profile cases of founders getting kicked out [0]. With the success of Google and Facebook, VCs pattern matched and became enamored with the founder.
The pendulum swung too far with and things started going wrong. When things go wrong in founder controlled company, things can go really wrong. Uber is the poster child.
The question is how VCs can take back some control without being painted as founder hostile. You can see that happening with Benchmark. I am impressed that USV is speaking up. It is easy to hide in the shadows.
[0] http://www.businessinsider.com/how-ciscos-founders-were-oust...
Re: Founder Friendly
#3VCs used to oust founders and bring in experienced operators as soon as a company started scaling. Cisco is one of many high profile cases of founders getting kicked out [0]. With the success of Google and Facebook, VCs pattern matched and became enamored with the founder. The pendulum swung too far with and things started going wrong. When things go wrong in founder controlled company, things can go really wrong. Ub…
I have no inside information but from my vantage point it looks like benchmark just wanted to get out but under isn't ready for an IPO. Maybe Travis isn't a good guy but I can't see how benchmark is any better.
Also I think Google did bring in adults: notably Eric Schmidt.
Re: Founder Friendly
#4This blog proves the point of the initial tweet.
VCs are founder-friendly until they have to side with the company.
VCs are company-friendly until they have to side with their LPs.
Re: Founder Friendly
#5> But there is another important participant in the VC/entrepreneur relationship and that is the Company the entrepreneur creates and all of its stakeholders; the employees, the customers, the suppliers, and even the community around the Company.
The stakeholders are - the employees! The customers! The suppliers! The community!
He makes it sound like that anarcho-syndicalist commune in Monty Python and the Holy Grail.
I guess it slipped his mind to mention - the VCs! The LPs! The LPs looking for their exponential unicorn returns within ten years.
Benchmark is alluded to, and Benchmark has a long history now where you can look into their machinations on boards - Uber. Twitter. Epinions.
An LP is an LP. VCs have a few decorative ones for PR, but ultimately the LPs are just the LPs - the real ones.
There are those who work and create wealth. There are also those that do not work - like LPs. Rentiers who expropriate surplus labor time from those of us who do work. Since the dawn of civilization there has been a tug of war between those who do work and those rentiers who do not. This is yet another occurrence of the tug of that rope from one side to the other. Today it is Uber, but it has been a host of other companies before, and if they have the ability they will be pulling the rug out from those who built the company again in the future.
Wilson's doggerel here is a transparent apology for what is ultimately rentier parasitism. Parasitism on those of us who work by those who do not.
Re: Founder Friendly
#6For those wondering about the allusion to Hatching Twitter, it describes in detail how, when Ev was CEO, Fred and the board told him he was doing a fantastic job and while secretly meeting with Jack and coming up with a plan to push Ev out and bring in Dick Costolo as CEO (with Jack under him).
Here's a quote from the book after Ev was told he was out with a vicious quote from Fred:
Williams, stunned, picked up the phone and began dialing. Bijan Sabet was apologetic and insisted that they wanted to keep him on in a product-advisory role. According to several people at the company, Fred Wilson, however, said he thought Williams had always been a terrible C.E.O. “I never considered you a founder,” he said. “Jack founded Twitter.”
Other portfolio investments of Fred's have followed a similar pattern of having the original CEO pushed out once they get to a certain level of success.
Re: Founder Friendly
#7For those wondering about the allusion to Hatching Twitter, it describes in detail how, when Ev was CEO, Fred and the board told him he was doing a fantastic job and while secretly meeting with Jack and coming up with a plan to push Ev out and bring in Dick Costolo as CEO (with Jack under him). Here's a quote from the book after Ev was told he was out with a vicious quote from Fred: Williams, stunned, picked up the p…
> Other portfolio investments of Fred's have followed a similar pattern of having the original CEO pushed out once they get to a certain level of success.
And honestly, they should. Managing a company through 50, 100, 150, 500 and 1,000+ employee milestones requires very different leadership skillsets. There are very few founders who (1) understand this (2) are willing to party ways with their company (3) can navigate through each stage without help and (4) would pull a Zuck and surround themselves with more established/senior people (e.g. Sandberg) as they hit those milestones.
I'm all for young entrepreneurs challenging the status quo by thwarting an old guard of seemingly "old people" (a la Jack Barker), but this is one area that traditionally has a lot of "old people" simply because experience is incredible valuable to scaling companies.
I haven't read "The Hard Thing About Hard Things", but my understanding is that it basically touches upon all of the intricacies of how to navigate business challenges that typically more experienced senior individuals possess.
Re: Founder Friendly
#8For those wondering about the allusion to Hatching Twitter, it describes in detail how, when Ev was CEO, Fred and the board told him he was doing a fantastic job and while secretly meeting with Jack and coming up with a plan to push Ev out and bring in Dick Costolo as CEO (with Jack under him). Here's a quote from the book after Ev was told he was out with a vicious quote from Fred: Williams, stunned, picked up the p…
This is a great example of how a company was undone by greedy VCs. A little history lesson. The founders of Twitter really believed in a vibrant ecosystem for Twitter. They gave the developer community a slew of APIs, gracious quotas, and support.
The ecosystem thrived and created dozens of major companies that made Twitter truly useful. The user numbers grew as well because those very same companies marketed their new and innovative solutions. Then Ev was fired. Dick was brought in and month of after month they lay waste to the ecosystem. Dozens of companies died and hundreds of millions of dollars in VC money was lost.
Why? Fred wanted to cash out with a lot of other VCs. They wanted to turn Twitter into a media company. Run up the revenue and go IPO to dump their shares. Sure, if Twitter went along with their founders vision it could have been much bigger over time but going that route didn't help Fred cash out his 100x return and report back to his LPs.
The reality is founders spend years even getting off the ground. The "board", represented by VCs, rarely add value to the operation and vision of the company. They invest because they believe in the vision. Make sure that reality is in writing so people like Fred don't stab you in the back so they can cash out early.
Re: Founder Friendly
#9For those wondering about the allusion to Hatching Twitter, it describes in detail how, when Ev was CEO, Fred and the board told him he was doing a fantastic job and while secretly meeting with Jack and coming up with a plan to push Ev out and bring in Dick Costolo as CEO (with Jack under him). Here's a quote from the book after Ev was told he was out with a vicious quote from Fred: Williams, stunned, picked up the p…
> Other portfolio investments of Fred's have followed a similar pattern of having the original CEO pushed out once they get to a certain level of success. And honestly, they should. Managing a company through 50, 100, 150, 500 and 1,000+ employee milestones requires very different leadership skillsets. There are very few founders who (1) understand this (2) are willing to party ways with their company (3) can navigat…
Zuck was about to be fired as well. The board realized they could not fire him because he had a very iron clad founder friendly legal construct. That's when Sandberg came into the picture. Also, Zuck made Sandberg promise she would never go after his position before she came on.
Re: Founder Friendly
#10For those wondering about the allusion to Hatching Twitter, it describes in detail how, when Ev was CEO, Fred and the board told him he was doing a fantastic job and while secretly meeting with Jack and coming up with a plan to push Ev out and bring in Dick Costolo as CEO (with Jack under him). Here's a quote from the book after Ev was told he was out with a vicious quote from Fred: Williams, stunned, picked up the p…
> Other portfolio investments of Fred's have followed a similar pattern of having the original CEO pushed out once they get to a certain level of success. And honestly, they should. Managing a company through 50, 100, 150, 500 and 1,000+ employee milestones requires very different leadership skillsets. There are very few founders who (1) understand this (2) are willing to party ways with their company (3) can navigat…
> (4) would pull a Zuck and surround themselves with more established/senior people (e.g. Sandberg) as they hit those milestones.
Please recall the entire context:
Thiel stated early and often (as Facebook's earliest investor) that he would stand behind Zuck retaining majority control. Based on this support there was no other option than to provide Zuck with all the support, mentorship and education he would need to scale along with FB.
Zuck had unflinching VC support :)