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Reasons Startup CEOs Fail

20 points by JayNeely 18y ago

jodrellblank 18y ago
the founder CEO can become caught up in the initial “vision” and stick to it regardless of external market input that would indicate changes to the initial value proposition are needed to capture broader market adoption This bugs me like the idea that public companies are legally obliged to maximise shareholder value. Aren't you supposed to build something you want? Build something you're passionate about? Isn't the current economic collapse and markets overflowing with a slurry of average products a symptom of companies focused on growth and money and market capture instead of doing a good job?
- tjic 18y ago
  > This bugs me like the idea that public companies are legally obliged to maximise shareholder value. ... Aren't you supposed to build something you want? Yes ... if YOU OWN IT. If you are the EMPLOYEE of a company OWNED by other people (i.e. "CEO of a publicly traded company"), then you do not get to be a prima donna with other people's money (i.e. their retirement hopes, their investment for their kids' educations, etc.). You buckle down and you do your job. And that job is "trying to grow the investment".
  - jodrellblank 18y ago
    And that bugs me. Check out Engadget.com on and off. See the churn of shite products. See how they "maximise market capture" and "shareholder value" by choosing "everyone" as their target market. See how much missed opportunity to make groundbreaking standout devices or cult niche items there is in the dreary ongoing clone wars.
  - deleted 18y ago
    [deleted]
- cwaterfall 18y ago
  When I was writing this blog post, what I was trying to get across was the circumstance where a founder CEO sticks to a vision, despite lack of market traction, customer validation. What's critical is to iterate the idea. Rarely does the first iteration win the day, but multiple revs, multiple tweaks, and a host of test-and-learns are required to get the success formula to a point where "kindling temp" is achieved.
kolya3 18y ago
Interesting point: "At some point, it may be required that the rest of the team that started the company with the CEO may need to be changed out for an executive team with experience at the “growth-stage” versus just the “start-up” stage." While I've definitely worked with founders who weren't fit to run a big company (lack of focus, lack of common sense, blind to customers' needs - you name it...), the "experienced executive team" that replaced them seemed to go out of their way to run the company into the ground. I have now seen this happen 3 times (both at companies I've worked at and friends' companies).
- teej 18y ago
  > the "experienced executive team" that replaced them seemed to go out of their way to run the company into the ground I've seen this, as well as seing the -same- executive run two different companies into the ground.
- Brushfire 18y ago
  I've seen this as well. This seems to happen more prevalently in newer industries and software based businesses, where the team coming in may be extensively briefed, but still does not really 'get' it. It may be a disconnect with customers wishes, with the market, competitors, or even with the existing employees/staff. It seems much better to hire awesome advisers than to replace founders. Good founders also know when it is time to give up the reins as well.
  - krav 18y ago
    You nailed it: "It seems much better to hire awesome advisers than to replace founders. Good founders also know when it is time to give up the reins as well."
- alain94040 18y ago
  You don't run a $100M business like you run a $1M business. In the $100M range (and before), you start obsessing about gross margins, tax issues, renewal business, reduce on-going discount practices, etc. When you are in the $1M range, you are focusing on gaining your first customers and it doesn't really matter if the deal is profitable or not, each sale makes you grow by leaps and bounds. If you are detail-oriented, you'll enjoy the $100M business. If you are a born-entrepreneur, you may prefer the 0-to-1 adventure. I know where I stand.
fnazeeri 18y ago
Great post!

20 points by JayNeely 18y ago

the founder CEO can become caught up in the initial “vision” and stick to it regardless of external market input that would indicate changes to the initial value proposition are needed to capture broader market adoption This bugs me like the idea that public companies are legally obliged to maximise shareholder value. Aren't you supposed to build something you want? Build something you're passionate about? Isn't the current economic collapse and markets overflowing with a slurry of average products a symptom of companies focused on growth and money and market capture instead of doing a good job?

tjic 18y ago
> This bugs me like the idea that public companies are legally obliged to maximise shareholder value. ... Aren't you supposed to build something you want? Yes ... if YOU OWN IT. If you are the EMPLOYEE of a company OWNED by other people (i.e. "CEO of a publicly traded company"), then you do not get to be a prima donna with other people's money (i.e. their retirement hopes, their investment for their kids' educations, etc.). You buckle down and you do your job. And that job is "trying to grow the investment".
- jodrellblank 18y ago
  And that bugs me. Check out Engadget.com on and off. See the churn of shite products. See how they "maximise market capture" and "shareholder value" by choosing "everyone" as their target market. See how much missed opportunity to make groundbreaking standout devices or cult niche items there is in the dreary ongoing clone wars.
- deleted 18y ago
  [deleted]
cwaterfall 18y ago
When I was writing this blog post, what I was trying to get across was the circumstance where a founder CEO sticks to a vision, despite lack of market traction, customer validation. What's critical is to iterate the idea. Rarely does the first iteration win the day, but multiple revs, multiple tweaks, and a host of test-and-learns are required to get the success formula to a point where "kindling temp" is achieved.

kolya3 18y ago

Interesting point: "At some point, it may be required that the rest of the team that started the company with the CEO may need to be changed out for an executive team with experience at the “growth-stage” versus just the “start-up” stage." While I've definitely worked with founders who weren't fit to run a big company (lack of focus, lack of common sense, blind to customers' needs - you name it...), the "experienced executive team" that replaced them seemed to go out of their way to run the company into the ground. I have now seen this happen 3 times (both at companies I've worked at and friends' companies).

teej 18y ago
> the "experienced executive team" that replaced them seemed to go out of their way to run the company into the ground I've seen this, as well as seing the -same- executive run two different companies into the ground.
Brushfire 18y ago
I've seen this as well. This seems to happen more prevalently in newer industries and software based businesses, where the team coming in may be extensively briefed, but still does not really 'get' it. It may be a disconnect with customers wishes, with the market, competitors, or even with the existing employees/staff. It seems much better to hire awesome advisers than to replace founders. Good founders also know when it is time to give up the reins as well.
- krav 18y ago
  You nailed it: "It seems much better to hire awesome advisers than to replace founders. Good founders also know when it is time to give up the reins as well."
alain94040 18y ago
You don't run a $100M business like you run a $1M business. In the $100M range (and before), you start obsessing about gross margins, tax issues, renewal business, reduce on-going discount practices, etc. When you are in the $1M range, you are focusing on gaining your first customers and it doesn't really matter if the deal is profitable or not, each sale makes you grow by leaps and bounds. If you are detail-oriented, you'll enjoy the $100M business. If you are a born-entrepreneur, you may prefer the 0-to-1 adventure. I know where I stand.

fnazeeri 18y ago

Great post!