How Entrepreneurs Take The Loss — When Startup Leaders Get Forced Out
In my long career as an entrepreneur, I can definitely say I’ve lost more times than I’ve won.
Not in the way you might think. In terms of outcomes, I’m batting well over 50%. But to get there, I’ve had to take a lot of Ls — from losing deals, to losing position, to losing face.
How do entrepreneurs deal with all of that losing? I mean, besides alcohol.
The deepest cut? Betrayal.
So yeah, I’ve had a lot of after-hours drinks with friends and associates, sometimes complete strangers, to hear their tales of having personal defeat snatched from the jaws of professional victory.
I’ve heard every story, from the founder who put every last penny and fiber of her being into an idea only to watch it fail due to a freak external factor, to the cofounder who built something game-changing, only to be forced out by people she trusted.
That last one burns. And I hear it a lot.
Being pushed out hurts more than failure, because at least failure is your own fault.
So let’s talk about how startup leaders get forced out of the company they were instrumental in building.
Startup is not a politics-free zone
One of the great things about starting up is that it’s mostly merit-based.
In the corporate world, there’s enough padding at most companies to allow bad actors to fool some of the people most of the time. They can fake or bully their way through, they can hide in the dark spaces, and as long as the company does well, they can focus solely on doing what’s best for them.
And when the company doesn’t do well, the swath of punishment is usually wide and arbitrary — a chunk of folks get laid off. If the bad actor is close to the decision makers, they’ve got a pretty good chance of survival.
This is politics. In a corporate nutshell.
Politics rarely happen at a startup, for truly mechanical reasons — as in if the mechanics of the company aren’t performing at peak, it takes all hands to make the fix. When a problem is found, it’s jettisoned, because there isn’t enough padding to cover it up or space on the boat to keep it on board.
In other words, most of the time, if you do well starting up, it’s because of you, not because of your allegiances or how good you are at politicking.
Most of the time.
Starting up is also about working closely together, through difficult stretches. And when people work too closely together for too long, relationships can fray. And when relationships fray, both outside and inside influences can cause major shakeups.
It’s almost always relationships
You don’t have to be the CEO or even a company leader to feel the brunt of betrayal. You just have to be working hard enough to get blindsided.
The hammer drops. And it usually goes like this.
After five years, my company flatlined as we tried to target more mainstream customers. Then the pandemic hit as we were pulling up, and we went back to flat. Now my team has lost engagement and I am getting a lot of the blame for that. I know we can rebound, but my board has given me an ultimatum and is questioning my leadership abilities. I’ve been at this over five years now. I am tired, and I do not feel supported. Should I step aside? Or should I play out what feels like an inevitable firing?
Despite conventional wisdom, forcing out a leader is rarely a rip-off-the-band-aid process. Jenny CEO doesn’t just walk into her board meeting to hear: “Jenny, we’ve got some bad news. You’re not performing. We’ve voted you out.”
Actually, I take that back. From Jenny’s perspective, it can seem like this. But there is usually a bit of behind-the-scenes scheming and cabal-ing and a few secret meetings to line up the forcing protocol. Jenny is usually unaware of this, because she’s bleeding effort trying to right the ship.
So yes, Jenny will be blindsided — unless, as alluded to in the above text from her email, she’s kinda already aware that the deck is being stacked.
I don’t know if Jenny is being made the scapegoat. But if she is, here’s my advice for handling betrayal at the leadership level.
Make a decision now and stick to it
The most important thing I can tell Jenny is that she needs to take decisive action immediately. And “decisive” means exactly what it should — she needs to make a decision. That may take a little time, so that’s priority number one.
The mistake here would be to take the situation at face value and see how it plays out. Regardless of whether the board or someone else has it in for Jenny for sure, there is a huge problem. There is a lack of faith, and a lack of support.
Not a lack of effort. Working harder isn’t going to fix this, Jenny.
Now, leaders face crises of faith and support all the time, especially during bad times, and especially during bad times exacerbated by external factors. Your job, as a leader, is to replenish that faith without support.
That said, no magic is going to propel a car that’s out of gas. So that’s where you start. If you’re willing to fight the good fight, I’d be more than inclined to tell to stay in there and fight. Getting fired isn’t the worst thing that will ever happen to you, as long as you get fired with your integrity intact.
Oddly enough, the way to get to your own personal decision is to take yourself and your personal feelings out of said decision. Anger, disappointment, frustration — none of that is going to help you snatch professional victory out of the jaws of political defeat.
Play the game, but not the game you’re being asked to play
As I said before, this isn’t a lack of effort. So even though you’re being asked to double your efforts, it would be a critical mistake — in fact, the definition of insanity — to double those efforts and expect a different result.
This means screw the lack of team engagement, and forget about the lack of support. Attack the lack of faith.
This means going totally transparent, being painfully honest, and having a lot of awkward one-on-on conversations with a lot of people, some of whom probably have it out for you.
But very important to this strategy: You are not trying to call anyone out, you are trying to get them to assess their own personal strategies and motivations. If they’re seeing a side of you they don’t like, show them the side that got the company where it is in the first place. If they don’t think you’re the right leader any longer, understand why and address those reasons. If they truly have it out for you, get them to admit it — to themselves — and hope their conscience does the rest.
That last one sucks, but believe me, it’s all you can do. If you go on the offensive in this situation, you’re playing right into their hands.
Once you restore faith, support and engagement will right themselves. You will live and die with the success of the company, which is exactly where you were and exactly where you should be.
But if the car is completely out of gas, then go to Plan B
There are two scenarios where the tank is empty and can’t be refilled.
If it is truly a lack of effort, you’ve got two options.
- Admit it, apologize for your lack of effort, and bring to the table some quantifiable milestones you should be able to hit over the next quarter.
- Move on. See below
If it’s an insurmountable lack of support, you got one option.
The reason you need to get to your own personal decision immediately is that the longer you wait to take definitive action, the worse it’s going to get, and the less attractive of either outcome.
If you’re done, you’re done. Here’s how you walk away.
Come to terms with the fact that you are no longer the right person to do what you do for this company at this time. Then devise a plan to walk away clean, with your reputation, and most importantly, your integrity, intact. If you can get some additional compensation on your way out, that’s ideal. And in fact, if anyone is indeed working against you, they’re probably not above paying for getting what they want.
The most important thing, from the moment you make your decision to the final outcome, whether that be a week from now or a year from now, is that you don’t let this situation color the rest of your career, or for that matter, your life.
You are not who you are because of your position, no matter how much of it you made yourself. You are who you are because of what’s inside you that got you to that position in the first place.
Do that again. If it’s somewhere else, so be it.
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