One Way a Founding CEO Can Survive Their VC

SurvivorMany (most?) founding CEOs don’t survive their VCs.  As Galen Moore states in his Mass High Tech piece, “Venture capital investors are notorious for investing in a startup, then replacing its founder with a more-seasoned CEO from their network.”  Galen highlights four founding CEOs that have survived, though the article is a bit light on specifics as to how each achieved their success.

Here’s one way: In the last decade, I’ve seen first-hand a number of companies where a founding, first-time CEO heads the VCs off at the pass by bringing in a seasoned COO, on an interim basis, to help them through a rough patch.

It’s true that half of my ten interim assignments have been as CEO, where the VCs wanted to replace a founding CEO.  In each case I was asked to take over from a fired founding CEO and “right the ship” before an executive search for an industry-specific CEO could be undertaken.

But the other five interim assignments have been as COO, where the founding CEO themselves decided to head their VCs off at the pass by calling me in to help for a short period of time.

How’s this done?  Because each company is unique — with it’s own set of problems, strengths, and market constraints — each company requires a unique set of actions.  But in an earlier post, I did describe a consistent process for the first week; a process that helps determine the real problems and possible solutions.

As Steve Hafner notes in Galen’s article, founding CEOs often find the “firing” process difficult, so that’s often one of the first actions I take.  But my strangest first action was at a $20+ million, unprofitable software company; the first thing I did was clean the company kitchen!  Here’s why this very odd “first action” may have been my most effective.

Oh yes…as in other interim COO assignments, in this case the founding CEO did survive!


2 Responses to “One Way a Founding CEO Can Survive Their VC”

  1. Apolinaras "Apollo" Sinkevicius | Says:

    I’ve read almost all of your articles so far. No I understand you are a huge fan of interim, since that is what you do.
    But I am having a bit of a challenge with a statement that organization only needs an interim COO. Are you saying you can achieve the affect of a dedicate operations person by creating bunch of policies/procedure and teaching CEO who wasn’t good at “nuts and bolts of the business” or execution to start with?

    I am just going from my own experience, some of the most visionary and best CEOs I have worked for hated the nuts and bolts of the business, therefore they relied on their operations person (in those cases it was yours truly) to make sure everything ticked like a fine Swiss watch, Operations making the day-to-day of the business not an issue made it possible for founder to think big and know someone would make sure details of the “blueprint” will be there too.

    That all said, looking forward to your future posts. I always enjoy communicating with my fellow ops people. Never met an ops guy I could not get along with.

  2. Change Agent Des Says:

    Apollo, I’ve enjoyed reading your posts and I appreciate your comments. And I agree with what you say. Yes, some of the best CEOs are the “visionaries” who struggle with the “nuts and bolts.” In those cases, before my job is done a strong, permanent, dedicated operations person needs to be in place. Often, in my role as interim COO that operations person is one of the folks I need to hire.

    But my roles as Interim COO are really much broader than just operations; I am asked to worry about everything from sales to engineering to finance. Such a broad role is really interim CEO, but in those cases where the goal is to save the founding CEO, it’s politically easier if I go in with the title of interim COO.

    In the last 10 years, five of my interim assignments have been as COO working for the founding CEO, and half as CEO, when the founding CEO has been replaced.

    Thank you again for your thoughtful comments.

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