500px Co-Founder and Former CEO Ousted from the Startup
techcrunch.com
techcrunch.com
Oleg is a good guy, as in I'd love to be (and have been) his friend, but he really can't run a company. He's impossible to work for.
Investors put project management in place (more than once) which he systematically destroyed (firing, pushing so hard they quit, whatever). I'm not sure why he did this, I think he thought he was more effective in working with the team. The issue with this is that his measure of "effective" was seemingly hours spent in the office.
It was not uncommon to get a project (see: portfolios.500px.com, multiple versions of the IOS app) and have oleg set an impossible deadline. Because of his management style, just about every rails dev in Toronto has been through the company. They seem to go through waves of employees (40+ down to 15 and back again) every six months to a year.
It really sucks to see a founder be pushed out, but I think this can have a happy ending for 500px, and for Oleg, if he chooses to learn from this scenario.
I don't know and I wasn't there, but this sounds like the Steve Jobs wanna-be style of leadership. There is this myth of Steve Jobs leadership prowess and dictator style rule which probably has some element of truth, but everyone of these founders that try to emulate this myth thinking it will lead them to success.
You should nice to your employees, you should treat them with respect. You should give them reasonable working hours, reward them for their work, not fuck them and their families over for your vision of a how a silly picture site ought to be. Startup employees make dog shit for pay, and they get a good dog shit's worth of equity. A fraction of a percent is nothing unless the company sells for north of $50mil, maybe a nice bonus after that and not life changing until you're up in the hundreds of millions, a height few start ups ever reach. So just be nice. Startup employees are there for the experience, not for the money, unless they don't understand how startup equity works.
Which is, in my experience, most of them.
Your "equity" is most likely "options" which means as you vest them (usually on a vesting schedule, look at your contract) you have the option to purchase (or exercise, because some types of equity can be rewarded without buying them) shares at a specified strike price.
In finance, an option is a contract which gives the buyer (the owner) the right, but not the obligation, to buy or sell an underlying asset or instrument at a specified strike price on or before a specified date.
I've been a founder, of multiple companies. You're most likely being screwed but the founders are most likely going to be screwed too; dilution sucks unless you've got low burn and high revenue (which gives you an upper-hand in dealing with investors). Generally as a founder too, the number one killer is running out of money, so when the funding ball starts to roll we (the founders) typically ride it hard as we can, which unless you're an established 10x-making-founder, means the founders get diluted hard.
One of these days I want to make enough from a venture to build one with an upper-hand on the investors, I definitely want to create an environment where people are having fun, working hard, and also are rewarded handsomely with ownership in the company. Igalia is an inspiring example I think.
* http://avc.com/2010/10/employee-equity-options/ * http://avc.com/2010/11/employee-equity-how-much/ * http://avc.com/2010/11/employee-equity-vesting/ * http://avc.com/2010/09/employee-equity-2/ * http://www.atguy.com/2012/04/employee-equity-by-fred-wilson....
His basic point is that a lot of founders come from dysfunctional families. This gives them the skills and attitudes necessary to survive the incredible chaos of an early-stage startup. But the problem comes when the company needs to become more orderly: used to chaos, some founders just keep recreating the situation they are used to.
I of course have no idea what Oleg's story is. But I've definitely seen founders blow themselves up like this. And I've seen entire companies hooked on heroism: insane hours, last-minute hail-mary fixes, demanding ultimate commitment from everyone.
Win-at-all-costs heroism and insane dedication are great when, say, there's an actual fire. But when you're building a website to make some small aspect of the economy modestly more efficient it a) is loony, and b) often blows up like this.
> Over the last 5 years I’ve asked over 500 of my students how many of them grew up in a dysfunctional family (participation was voluntary.) I’ve been surprised at the data. In this admittedly very unscientific survey I’ve found that between a quarter and half of the students I consider “hard-core” entrepreneurs/founders (working passionately to found a company,) self-identified as coming from a less than benign upbringing.
So... between half to three quarters of the students he considers hardcore entrepreneurs come from non-dysfunctional families. If he had asked students for their favorite ice cream flavor, chocolate would probably have gotten similar numbers- so chocolate lovers make better entrepreneurs!
It's hard to face the data when you're in love with your narrative.
(Considering that there's a 50% divorce rate in the US, it seems likely that the percentage of "dysfunctional families"- whatever that means - is also between 25 and 50%)
Also, he gave a pretty clear description of what qualified as a dysfunctional family, so I think your "whatever that means" is unnecessarily snotty. Start with the bit about, "an environment where fighting, abusive or drug/alcohol related behavior is the norm" and go on from there.
Doesn't do the people justice who worked hard every day to make that business work while also dealing with a prima donna such as him.
This is a case where the original founder should have been wise enough to step down from a situation that was too big for him.
I do think he had big ideas and good intentions, and he deserves lots of credit for making 500px what it is. But attempting to spin this story in his favour by using the press and putting other 500px people in a bad light leaves a sour taste.
If your co-founder and investors together have a controlling interest these things can and do happen. In a way this was in the cards when they appointed (presumably with his consent, otherwise there would have been a confrontation earlier) a new CEO, after that you're going to have to play ball or leave. Still, it's tough for this to happen to anybody, especially if you're the one that led the company to where it is today.
I really hope for the 500px investors and other co-founder that they don't make any major mistakes in the next year because an ex-CEO minority shareholder with a grudge is not going to be easy to placate if you mess up.
They will be walking on thin ice.
Andreessen Horowitz is backing 500px, I'm sure (but I have no specific knowledge of) that whatever paperwork they argued over the months that Andy was the new CEO was properly vetted.
In my opinion, Oleg Gutsol was incredibly talented in a wide array of things and has a good heart, but sometimes the CEO that's fantastic for the first 20 employees isn't the one that excels for the next 200. I'm sure this isn't the last we've heard of him. He'll start something new and succeed with it as well. He has an incredible ability to figure out how users will actually see and use your app and what motivates them.
That's a thing I've seen play out in two other spots and in both cases it ended more or less like it did here (only substantially quicker).
I fully agree with you on the 20/200 matter. I'm like that myself (and even the '20' is not my ambition but more along the lines of 'somebody has to do it').
I think one of those meetings was with Oleg over the phone. Intelligent guy from what I gathered. I'm sure he'll bounce back, though I'm not sure it's very wise to be so public about this so quickly, when emotions are raw and high.
500px is definitely one of the better known startups here in Toronto. They have a great product, they just need to settle on a product direction and execute. The comments about employee churn aren't surprising to me. And the unfortunate part about startups is that failure is typically the result of internal turmoil, so here's hoping they iron it all out quickly.
(I love 500px; hopefully this will lead to a more successful company in the long run.)
Whatever his flaws the company wouldn't exist without him. His investors knew who he was before they invested. They should be forced to negotiate. They should not be able to fire him.
A16Z is an investor in 500px. They claim to support founders so I'm sure they will make a public statement explaining how they tried to help this guy but were outvoted.
I guess if you're a solo founder who doesn't take much money, you can try to remain some sort of generalissimo. But almost every company of substance is controlled by an investor-run committee; it's called a board.
Being a dictator at day one is kinda boring: you're the admiral of a fleet that fits in your bathtub. Most interesting things take collaboration: shared ideas, shared labor, shared capital. And that generally means sharing control. Good people rarely want to work for dictators.
NeXT was a commercial failure.
> They took on massive investment from a company most considered their largest enemy.
$150mm wasn't a very big investment for Microsoft. Just compare their market caps at the time for a sense of the different in scale between the companies: http://www.wolframalpha.com/input/?i=apple%2C+microsoft+mark...
It also wasn't that much for Apple. Just five months earlier, they reported a $740mm quarterly loss, or 5x what Microsoft invested in them. The purpose of the investment was primarily to help bolster credibility in Apple as an ongoing concern. Microsoft's reason for doing this was to try and keep the DoJ at bay.
Pixar, however, was not.
I'm going to dissect what I was replying to:
Everyone loves the Steve Jobs example,
but remember that Apple was a few quarters
away from implosion, and he founded a second
company that was highly successful. They
took on massive investment from a company
most considered their largest enemy.
Apple was a few quarters away from implosion
Furthermore, NeXT was founded in 1985. Pixar was founded in 1986. So, even if you set aside what I wrote above, and just take an entirely literal view of the following:
he founded a second company that was highly successful
Here's mine. NeXT and its technology were acquired by Apple for $429m and 1.5 million Apple shares. This technology was was used in the creation of OSX. The acquisition brought Job's back to Apple and into the CEO chair where he lead the company on the path to becoming the most cash rich in the world.
#winning
Even without NeXT, Apple could well have brought back Jobs as CEO. I'd say that everything subsequent to Jobs returning to Apple was Jobs's success, not NeXT's.