Parting ways with a founder

While such situations can potentially be handled fairly for all concerned, I have seen all too many instances where the motives of the persons handling the termination were less than pure, leading to harsh outcomes for founders who deserved better.

I've seen this play out few times now and have been personally affected once. In the worst case a non-technical manager replaced his CTO and doubled the size of the tech team on getting funding, only to end up firing the entire new team for non-performance about eight months and several hundred thousand dollars later. The business has yet to recover and probably never will.

I'm sure Union Square Ventures serves a purpose in helping some companies grow, But I hope those considering taking funding from them will read Fred's post and realize that when push comes to shove, Fred thinks he knows how to run and manage their business better than they do.

"My investors know when they invested that I have strong ethical views including remembering who was there from the beginning.

Not everyone believes in Milton Friedman crap that maximizing shareholder value is the sole purpose of a company."

Once again, I find myself thinking that I'd love the chance to work with Chris.

He always felt like he did more than his share of work and received less than his share of money (he had half the share of capital, 20%, but as a compensation he always had a higher salary).

I stepped down from technical manager so that he could build the team at his will. Later, I sold him 10% of the shares for a tenth of the price (so we both had 30%) but he still felt like he was cheated.

I think that the hard times during crisis broke him down finally. I'm pretty sure it was a bad move financially for him (he wouldn't work for anyone else, and by himself he can't earn that much), he even tried to "steal" our biggest customer...

We had quite a hard time, particularly because the whole team left after him (unsurprising, it was his team after all) but we got through and everything's fine again now (though on product development we've lost 6 months at the very least).

What else? If we hadn't full coffers at the time crisis hit, the company couldn't have survived such bad times.

One major point people have been making is that "All the top tech companies of today have had their founders intact." as the author puts it, and he later discusses examples. I'd be interested in any counterexamples; no one has come up with any except possibly Bob Miner at Oracle, who people are asserting wasn't fired.

My take on this is that firing a co-founder may be necessary but very few companies will become big hits if it comes to that. Which argues that you want to do a really good job on selecting your co-founders and early key hires.

And, how would this work with a bootstrapped startup where there are simply 2-4 founders with equal shares?

That's like saying divorce is almost inevitable.

Come on, Fred, did they really need to show a founding team member the door or did they just take the easy way out? In businesses, like marriages, sometimes you just gotta work on it.

One of the few lessons I remember from business school was a consulting engagement we did as an internship. One of our recommendations was to let the office manager go. This was such a gross violation of acceptable business practice, that the project didn't even merit an "F". We were forced to redo to recommendations without letting anyone go before we could submit the project. Needless to say, this wasn't easy. It took a lot of work to find an acceptable solution.

Looking back many years later, this was one of the most valuable lessons I've ever learned. I have never fired anyone and I have vehemently protested the firing of anyone in any of my related work. And my complaint has always been the same, "You're not trying hard enough to solve the problem while keeping the people intact."

Same thing here. I wonder how many business/employment relationships and marriages would survive (and even thrive) if people just took the time and effort to make it work. But all too often, short term thinking wins and we take the easy way out. What a pity.