Top 10 Lessons on How to Keep Your Founder Job

By Dana Harris

Last week I attended another interesting MassTLC unConference session called “Firing Founders is VC-101: How to Keep Your Founder Job.” The session was run by Russ Wilcox, President and CEO of E Ink and Chip Hazard, General Partner at Flybridge Capital Partners. 

This session was of particular interest to me. I have been working closely with small tech companies and directly with CEOs and founders for many years now and have seen some lose sight of what’s important and others listen to those around them and put the company first. In most companies, it is the founders that exude the most passion and typically have the clearest vision on where the market is headed and how their technology fits into this vision. But they are also the ones that can unwittingly keep an emerging company from becoming successful.

There is saying in the VC world – “It is never too early to fire the founder.” This session provided valuable insight on why founders “flounder” and what they can do to succeed. Here’s the Top 10 Lessons on How to Keep Your Founder Job gleamed from the session:

1.     Be coachable and listen: This is a key success factor. You need to be self reflective, step back and look at the personality types within your organization. Listen and learn from others around you. Solicit recommendations and feedback and incorporate this into how you change yourself to be a better leader. Also, leave ego and politics out when making decisions because if you don’t, you will get into trouble at some point.  Nobody “knows-it-all” and you can learn from other’s experiences.

2.     Hire in areas where you are weaker: Surround yourself and fill in your management holes with people who are smarter than you in the areas that you are weaker. Change your management team if necessary. Demonstrate you can build a team of people that are very qualified for their jobs. In my experience, the most successful tech start-ups have hired strong VP of Sales and Marketing people within the first year of launching their products and have developed partnerships and relationships that have been instrumental to their survival and success.

 3.     Develop good working relationship with your board: Take the time to make sure you choose the right people on your board, from their skill sets (look for solid operating experience to fairly judge your efforts) to their personality types. About 25% of your job is to be aligned with the board and yes, you will be judged on how you run board meetings as they reflect how you run the company. If there are differences of opinions, ask “WHY” to facilitate conflict resolution and call your VC testimonials before you partner up with them. 90% of founder/CEOS don’t take the time to call previous companies to get a feel for the VC marriage they are about to enter into for a very long time. Understand that it is not a marriage of equals and you will not be in the primary position of power.

 4.     Hit Your Targets and Be Thoughtful at Setting Your Valuation: Be thoughtful when setting your targets and have realistic expectations as you will earn and build trust this way. Don’t get too ambitious, especially around for B or C round, and jump for wanting a high valuation as it is not always necessarily the best. Avoid valuation “overhang” and don’t think you need the highest valuation in the middle of the process – you want it at the end. If you get two term sheets, run the scenarios and do the math (many founder don’t do this!).

 5.     Assess goals upfront with fellow co-founders: Think long and hard at the personalities of your fellow co-founders and make sure you all have the same “end game” in mind. Make sure they are personalities you can work with in the long haul. As my ex-client and founder of Viaweb Paul Graham clearly states in his 18 Mistakes That Kill Startups article, fighting between founders can kill startups.  And contrary to popular belief, VCs never want to fire founders as they are usually the passion and drive behind the company and a lot is lost without them involved.

 6.     Put the company first: Many founders start out running their companies and then bring in more experienced CEOS and take different roles within the company. Be honest in assessing your strengths from the start and put certain criteria in place when interviewing for your new CEO (i.e. – looking for a good mentor).  After hiring the new CEO, make sure you and your fellow co-founders put employment contracts in place for all of you.

 7.     Know your business: Make sure you know your technology intimately and develop tight relationships with your customers and partners.  As a communications PR professional, I wholeheartedly agree with the point made here as it can be the key to success when you work to leverage your customers early in your company lifecycle. 

 8.     Take your vacation time

9.     Get support from home 

10.   Join a CEO group, especially if you are a first time CEO.

And last but not least, congratulations! It is very difficult to launch a company in these tough economic times.