How Founders Get "Fired by Promotion"

How do you fire a Founder without having them leave the startup?

You give them a bullshit title.

The moment you hear about a new CEO being anointed at a startup, and you learn that the previous Founder/CEO is now the "Chief Vision Officer," or "Head of Strategy," or in some cases even "Chairman" — you pretty much know they got canned.

It usually means things have gone horribly wrong and from the outside you may not see it. But short of a company preparing for an IPO, the Founder rarely voluntarily relegates themselves to some arms-length title. It's almost always foisted upon them by someone else in the organization (typically investors) who are pushing hard for regime change.

So yeah, it sucks. But the way to make it less sucky is to understand how to deal with it.

Why Not Just Fire Me?

While every situation is a bit different, the common thread tends to be that there's some sort of consequence to giving the Founder the boot. Sometimes it's because the Founder is still the largest shareholder. Other times it's because they are loved or respected by the team, so it would be a loss to send them home. And in some cases, it's because they pose some sort of threat to the company if they get canned altogether.

But not every "Founder failure" directly translates into losing a job. Sometimes the company simply outgrows the capabilities of the Founder, so they haven't done anything wrong, they just can't manage that position anymore. That's the best case scenario.

The more likely scenario is that the Board or Investors want to create a friendly transition. In many cases it's better to move the Founder to a role that no one gives a shit about and move them out of the org chart later so that their departure doesn't create any waves. There are a lot of ways to get fired — this is a slow one.

Call it What It Is

And that's the rub here — calling this what it is. The natural tendency for Founders is to get really angry, then eventually come to terms with it, and then quietly let it happen. Although that acceptance isn't necessarily a bad thing (we're not dying for more consternation at that point), we also can't overlook what just happened.

We were fired (maybe politely) but the job we had before was taken away from us. Someone else is now doing our job, rightfully or not, and the probability that we'll ever get that job back is near zero. Ironically, the only time a Founder gets called back into that role is when things go even worse than they were when it happened! (See Steve Jobs, Howard Schultz, Jack Dorsey).

The mistake is trying to pretend things will revert to what they were. We sometimes build these comeback fantasies which are a massive liability for the new CEO and the Board. The last thing you want when you're trying to rebuild the company as new leadership is the old leadership planning your downfall. Whether we do it consciously or subconsciously, it's real.

Make the Most of it

While I don't want to sugarcoat this outcome, because it's painful at a lot of levels, there are ways to make the most of it and be happy that you did. The first is in how you approach it. It's natural to have a healthy level of defiance when it's coming, because it's a job you worked hard for. I'm all for a Founder defending their turf. But there is also a point where you are going to lose this battle, and you're better off extracting as much value as you can instead of fighting to the death.

The second is to realize that there is some value in leverage in "going quietly." This is a little tricky, because on the one hand you're being fired because you failed in some capacity. But on the other hand there is some value on behalf of the person trying to send you away to do so without creating a fuss. It's not uncommon here to ask for a little bit of "severance" for your effort, which could be anything from cashing in some stock to getting some cash comp improvements. Again, if it keeps you quiet, it's got value.

The last is to take that time to re-evaluate your next move. Maybe you just hang back and enjoy a year of actually going home at the end of the day and not working weekends. Or of letting major problems be someone else's problem for once! There's some period of time where you're going to be able to take a breath for the first time in a long time, and it's worth taking advantage of the respite.

On to the Next One

Post "promotion," as Founders we really need to reset our expectations completely after this move. We can't look at it like "what do I do now?" based on the previous trajectory. That never ends well. It's a great time to step back and say "If I never had this new title, what would I be doing next?" Let your own vision guide you, like you did the first time.

But look — when you get handed a fake title, don't kid yourself — it's not a promotion. It's "severance with a smile."

The best we can do is take the hint, take the leverage, and then take our next shot. It's what we do.

In Case You Missed It

Founder Legends Are Less Fun When You Are Living Them Legendary Founder stories are great — unless you're the poor bastard who had to live through it.

Being Leveraged Means Having Zero Choices 99% of the startup Founders I know are totally leveraged and have very few if any of these choices in the real world. We take what we can get, when we can get it, and guess what? It's not awesome.

Who's Qualified To Be A Founder? Being a Founder is a job that anyone can get and no one is qualified for.