Removing the CEO

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.

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.

“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.

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.

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.)

>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

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.

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.

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.

Yes. I don't know how regular it is, but Austin Ventures used to regularly kill founder CEOs after Series B (maybe (probably?) correctly), but replace them from a bunch of bench-players (we used to call them "the Boys Club". They would generally wreck the company, but AV played enough shell games that they, the LPs and their friends always made out OK.

EDIT: They (AV) have more recently (not super-recently) moved into mostly PE, and the incubator seems to be gone (?), but given the VC penchant to syndicate, and AV's penchant to not be nice to work with, even as the big-fish in a small pond, the number of people at places like Interwest or Sevin Rosen to work with them (Central Texas VC types), maybe they felt constrained? Or maybe they shot enough entrepreneurs in the back? Their 5-year-ago-fund was big enough to qualify for PE activity - maybe their new-new partners (the old ones retired about that time) decided they would prefer to apply their Wharton MBA skills/talents to PE? IDK.

Great question, that I am going to answer badly, based on my environment.

AV (Austin Ventures) was always known as the big fish in the little pond, ever since I moved here from Japan - and I guess that isn't wrong, but they seemed to have moved onto their version of PE.

But one thing that always irritated me and my "executive" friends was how much they liked to put somebody on their back-bench into your job.

If it's the right choice - nice. If it happens once-or-twice - nice. But If they do it 9 months after every Series A every time, it starts to make a (n aware) founder wary).

I generally don't think founders should be CEOs. Certainly as a founder I should not have been But that doesn't mean youo bring out the brick-bat. It means that you sit down and say something: "Don't you think we should hire the new CEO together and figure our your ongoing role in the company (esp. since you still own 60%)?).

I don't know - I just found them heavy handed.

I don't know that I ever hit at them hard or that they hit at me hard, but I do know that they came in hard and triggered a hard response. At this point, I don't think they like me much (which is sad, because I was just getting to like them), but there are a lot of personal relationships (apparently) in this business

Great thought here and agree, more data would be interesting

Trump

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

> who is he? what did he do?

Someone's neural network is biased.

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).

The language in the post doesn't seem too soft. My reading of it is a pretty blunt enumeration of failures on the part of the CEO.

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.

My immediate thought is that this is due to visibility. You can churn through the lowest level positions for a while before questions are asked, but you can't do that for CEOs. Its also the case for other prominent positions. If someone with a big following joins and then leaves very quickly someone will comment on it and if its big enough an article will be written. No company wants to be noticed for people leaving, but they'll make a big song and dance when big wig from X company moves to them.