Did I Just Get Promoted or Fired?

Welcome back to their episode of the Startup Therapy Podcast. This is Ryan Rutan, joined as always by my friend, the founder, and CEO of startups.com. Will Schroeder, will we answer a lot of questions about like, what about this and what about that in, in the founder world, because there's so many of these things that you just don't face ever in life outside of this space, and you're not even likely to hear about it until the moment it happens to you, and then you just go. Huh.

So today I wanna walk through like, how does a founder get a promotion when they're already CEO and founder? When things aren't going well, how, how is that like we see people get promoted. Can you gimme some of the titles we might get? Promoted to As as CEO and Founder, we usually get promoted at exactly the time that someone else just took our job. And so now we have a new title. We are now the Chief Vision Officer, we're the Chief Culture Officer.

Uh, if things go really our way, we're now the chairman. And all of those are just a different way of saying we just got fired. And we were given a bullshit title. Yeah. Special, yeah, yeah. Director of strategy. Right. You know, like director of, uh, please don't have anybody report to me.

And, and I, and I gotta tell you the reason I know this space so well isn't because I've coached countless founders through it. It's because I dealt with it. Right. Except the difference is, yeah. I tried to fire myself over and over and over and I couldn't get it to stick. So let, lemme give you just a quick backstory. So early in my career, uh, we're growing this agency and it's growing really fast, and I'm clearly over my skis, right? Like I'm clearly over my skis.

And, and mind you, I'm like. 23, I mean like again, like not that old, maybe 24 maybe. And all of a sudden, you know, agency hit stride and we're hiring hundreds of people and I'm like, we gotta find someone with any level of qualification to actually do this job properly. Right? Because I don't know what I'm doing. And now I was very, someone who can no longer still legally be on their parents' insurance plan. Somebody who could rent a car, somebody who could rent a car, right?

It's pretty important in the agency world. And so, uh. I sat down with, with my business partner who is phenomenal. I also was, was only, I think he was only four years older than me. But had a much better pedigree. And uh, I was like, look, um, I want to go do other stuff. Like, I had like 90 other companies I wanted to start. Yeah. And I was like, and I've like, I don't know that I'm gonna really add that much value here.

So let's, uh, let's bring somebody else in with, um, with some more maturity. Sure. And you gotta understand I'm 24 years old.

I look like I'm 14, right? I had what we call the Gary Coleman Effect, right? Yeah. Uh, in fact, one of my old business partners actually coined that. He says, uh, life only works for you because you have the Gary Coleman effect. I was like, huh? He goes, here's what happens when you walk in a room because you look so young and you look like a child. Everybody's mesmerized by what you have to say. If you say anything smart whatsoever. You sound like the smartest person alive.

Yeah. And for those of you that aren't old enough, uh, to remember who Gary Coleman was, he was a, a tiny kid from different strokes. Uh, he's probably like. 15 when he was on that show, he was supposed to be like an 8-year-old or something like that. Yeah, yeah, yeah. He never got bigger. Yeah. Never, never did. Yeah. I don't think it helped that your LinkedIn photo at the time was probably you in front of that giant wall of Star Wars toys that you had in your office. Right?

You, you weren't exactly punching back against that reputation. I was not. Uh, but so to, to, to play it forward.

So we go out and, and we, we find A-A-C-E-O replacement. Some guy with gray hair that, you know, like that looks the part, and I'm like, cool, I'm out. And so. We promote me, quote, promote me to chairman, which was a bullshit role because like we, we didn't have a board, like not a meaningful board. So being chairman didn't mean anything. Right. It just meant that like, I owned half the company at the time, so like, it just meant that I was still involved. And so I'm on my way out.

Okay. And I'm, I'm, I'm already starting other companies and the guy that we put in backfired. Ugh. So hard. So hard, so hard that like the whole team mutiny on 'em. They came to me and they're like, please come back. And I'm like, dude, I'm literally in the middle of starting another company. Right? Yeah. Don't wanna be back. It's like getting pulled outta witness protection. You're like, you're, you're returning to your egg. No. No, I can't go back there. It's not safe.

And again, I love the company, I love the people. So it wasn't one of those cases where I hated being there. I just felt like I had done my time and I wanted to go do other stuff, and it was like the height of the internet. So I was like, man, there's so many other things we could be doing. But in that time, I'll have gone back and forth from that role, from being the CEO to the chairman, my bullshit title three different times over the course of probably four years.

Right, so I've actually come full circle on this role over and over and over. Yeah. Most people only get one version of this. They only get the version where they get the bullshit title and they get like. Quietly and comfortably pushed out the door. Yeah, I, to be fair, there's usually somebody else doing this for them. Right. In this case you were Oh, yes. It's usually definitely not voluntary. You were actively seeking this.

Yeah. Yeah. This was, yeah, most of the time That's the very different goes down. Yeah, very different. But, but the other side of it was. I'm thinking back and my memory isn't stellar, but I also remember thinking when I proposed this to my business partner, he had zero pushback. Will, uh, were you CC'd on that secret board meeting that we had last week? Right. Right, right. It's like, Hey man, I'm thinking about Yes. Okay. But here's what typically happens.

It's just kinda like, like unpack a little bit what this looks like when the founder essentially gets fired by way of being given another job title. Yeah. And there are some number of founders that are gonna be listening to this right now that either are in the middle of this, and this is gonna be maybe the most important episodes we've ever done for them. Yeah. Or they've lived through this and their entire response is just gonna be like, motherfucker. Yeah. I know exactly what that feels like.

You know this one? Yeah. Yep. Yep. So. Let's, let's open up at the beginning, Rina, and I wanna hear it from yours. When the board, it's usually investors' board, somebody has leverage over you that they're telling you this is gonna happen. They're not asking you. Why wouldn't they just fire somebody? Oh, I don't know. Equity, math, moral optics, brand risk, knowledge, transfer, litigation, fear, like, dude, there's like, that's, I can go on.

I can go for the rest of the, you can go around for the rest of the episode. There's so much downside to just like, let's dig into a couple categories. It's not, it's not the place we rip the bandaid off. 'cause that's not ripping a bandaid off. That's like ripping the surgical clamps off, right? That doesn't end the same way. Right. That ends up with a huge mess. And look, the boards wanna avoid splash damage. They want an air lock, not an air strike. Right?

They want this to be like, yes, tactical, but like well contained with as little collateral damage as possible. So that's why they don't just outright fire you. Let's dig into some of those buckets. Okay. Yeah, so I, I'll just throw these out randomly. Bucket number one I'm probably going to say is they fear that there's some sort of retaliation, escalation blow up moment, right? Yeah, yeah. Yep. They need to shut you up or just basically keep you contained in.

A better way to do that in some cases is to actually keep you here. Right Now, you gotta figure if you're a board member, and I've been on the other side of this too, where I've been working with board members and investors. And talking them through like how to deal with this with with founders, and I tell them the same thing every time. I was like, remember, this is 99% emotional and 1% financial. You are taking someone's baby from them and you're asking them to do it with a smile, right?

Like, so understand the scope of the ask. You may be looking at it as well, it's for the good of the company and blah. Yeah. They don't give a shit about any of that, right? No. You just ripped away everything they built. You gotta be tactful. And so the first thing I said is, let's say there's, there's a bunch of different ways we can approach this, but one of them, one of the reason we're not just gonna fire this person is because it could go really bad.

Because unlike an employee that may have stock options, but it's fairly portable, this person is usually significantly hard coded into the DNA of the cap table. Not easy to extract. Yeah, no. The unwinding that is significantly harder and and can get really contentious. And so I think that's why it's easier to just kinda. Put 'em to the side, right. In a way that doesn't always, isn't always necessarily obvious to, to the founder, right?

Like, and I've seen it come in some really funny forms, which is like, the founder will start talking about like, you know, wanting to get back into like more product focus and all of a sudden they're like, let's make you chief innovation officer so you can just focus on product, whatever, whatever. And like. Then, then, then you're not hearing from the product team for some reason. You are hearing from the legal department a lot. They seem to be very HR department. Yeah. Friendly with you.

All of a sudden HR is talking to you a lot. Yeah. Yeah. It's, it's really, really weird. Right. There's another version too, so we'll, we'll explore a few different buckets because for some folks that think, Hey, this might happen to me, it may also be important to understand where, where those buckets are in case you might be approaching one Another one is the team actually likes you. Everybody likes you. You're, you're a good dude, right?

No one wants to lose you, but the company has outgrown some for like force function that they need to, to, to, to push. And so this often happens with like a CFO or a CTO or something like that, where you were the smartest person on technology when you had four people in the room. 'cause no one else knew how to code. But now you have 400 people and you are by far not like, you know, the, the, the sharpest person, or you suck at management. You're really good. Go. Yeah. That happens a lot.

Market management, right? Have time. Great technical person, great builder. All of a sudden you're managing a team of 30, 40 people, which you might also hate. Right? And that's again, I think that's where smart boards, smart investors take advantage of this kind of stuff. They're like, you really seem to hate running that team, don't you? We've got something for you over here in the closet. Over here? Yes. In the supply closet over here.

The other side of it is usually, by this time there is a substantial amount of friction in the company. 'cause things aren't going well. No one's like, well I take that back every now and again. There's an outside case where it's like, well, we're on an IPO path and we just need like a bigger name, like, you know, bigger CEO to like fill the shoes to, uh, to take this in the next level. That's actually what we also did. At the agency at the time.

A couple years later, my business partner, uh, also replaced himself as the CEO. We brought in a guy who was a super big wig, had an incredible resume with the intent that he was gonna take us public, and he turned out to be an empty suit. But the point is, it happens right now. That's a very small use case, and that's usually more voluntary by the CEO, but again, typically. This is an investor driven thing, right? It's very rare that anybody else would have the power to force this upon you.

So when we're talking about, why didn't they just fire me, that implies that someone has the power to do that. And let's pause for a second. 'cause I, I, I think we need to talk about, um, board mechanics for a second.

A lot of founders going into this world think, well, I have 60% of the stock so nobody can fire me. Ryan, you wanna explain why that's absolutely not case. The case whatsoever. Stock and, and voting rights don't always align. In fact, they, they very rarely do. When you start taking on other people's money, regardless of how much equity you give up, you give up lots of control, right?

Yep. Look into those contracts that you signed and you will likely find that yes, you still own the majority of the company. No, you don't have the majority of the decision making power. It's just the way nor you have a job for life. Usually your employment in your SOC are two totally different things, things they don't tell you. The mercy of the board and the investors.

Correct in all those provisions that your attorney was going through and you were ignoring when you were raising money, um, those are exactly the ones that, that are coming back to haunt you right now. Read me the line with the dollar sign on it again, like it's the only one I wanna hear. Hey, Joe. Yeah. What's the amount, what's my valuation? Good. I don't wanna hear about the rest of it. So we get to this point where the, the, the investors are like, okay, we got a problem.

This person is, is up. Problem in some way. Maybe like, uh, not generating revenue, can't raise more money, whatever it is, the board has decided in their infinite wisdom that you are the problem and they need to get you out of here. Now again, they can just fire you, but it's, it's an expensive decision.

At a lot of ways, and I'm just talking about financially, but the other side of it is, look, if we just take this person, if we take Shelly and we just give her a new title, she's chief vision officer now, and we, we put her on some like exile planet in the org chart. So nobody's actually, uh, what's great about that, I mean, great, not great for founder. What's great about that is by the time we actually get rid of her, nobody's heard from her.

Like she went from being the CEO and she had like that photo op moment, that social media moment where she, she talks about how incredible this new CEO is gonna be, which is all you want as the, as the board. And then they put you into this bullshit title and then they could have that conversation with you six months or a year from now. Hey, it's not working out. We don't really need a chief vision officer. Uh, sorry about your luck. That's why they don't just fire somebody.

It, it's so expensive to do that. You know what I mean? Yep. No, it's easy to just wind you down, wear you out, and then. Let you fade away, right? Yeah. From the investor stand. Let's talk about that. Let's talk about what the investors are trying to accomplish. Sure. So you understand why these things unfold the way they do.

First thing the investors want is they've gotta make sure that if they're clearing the lane for a new CEO, let's say I'm just using CEO as an example, that they haven't set a trap from the outgoing CEO. In other words, like if outgoing CEO is like, I'm filing lawsuits, I'm doing this, I'm gonna make it a public stink. All these things. Yeah. Think of what that means. If you're a board trying to recruit somebody into what's likely a struggling company.

Yeah. It's, I said there was already a struggle. Then, then, then you, you decide to blow the bottom out of the boat by, by riling up the current CEO. Now you've got double the trouble at least. Yeah. If, if you can even get anybody to walk into that. It doesn't just stop there because that CEO is also tied to all the people that work in the company. 'cause they recruited all of those people. Okay. Yeah. So now I am pissed off outbound, CEO, the founder getting, getting booted.

And now I'm gonna go on the campaign trail to everybody internally and, and I'm gonna start, it's, it's called coalition building. I'm, I'm gonna start coalition building, right? Saying, oh my God, aren't these investors stupid? And I'm really just trying to protect my ego, but regardless what a nightmare. Yeah. For the investors? Yeah, for the, for the investors, for the inbound. Yeah. It's, it's, it's absolutely untenable. Right.

And so for the investors, they're like, dude, we gotta make sure that does not happen. So if, if we put will off in office exile and have no one report to him, but he still feels like he has his job, he's still getting paid, he still feels like he has a voice in everything, then that's a best case scenario for us. And that's why we didn't just fire him. A million other legal reasons and everything. But I mean, the optics really matter in this case. You know what I mean? It does.

I mean, especially, I mean with, again, depending on how well liked or not the CEO, the founder was that internal politics even. Even without the CEO, the founder, the outbound. Trying to rile things up, even without them trying to to cause trouble, it still can, right. I guess said differently if they're, if they're not there as a peacemaker and trying to ease that transition and supporting all of that, it's gonna go at least suboptimally, if not extremely poorly.

Um, and so in the case where they actually do make the attempt, then even worse. Smart investor understands the value of this. You only have to go through a blown up CEO one time to realize why you never wanna do that again. And every now and again, you see this every now and again, you see the CEO just like firing hot lead back at the investors publicly, et cetera. And it's an absolute shit show because remember.

It's not just about preventing that the next CEO from being recruited, et cetera, think of all the potential employees that see this, customers that see this, investors that see this. 'cause you probably need more dough. No one wants, wants to do with that hot, steaming piece of shit, which is something we're gonna talk about a little bit later in this chat about kind of how that gives you a little bit of leverage. But if someone comes to me, the founder comes to me.

And says, Hey, someone on the board seems, uh, wants to, uh, pulled me aside, and it seemed like they were floating this crazy idea that they're thinking about. Maybe find another CEO Ryan. What would you tell them in that case? Uh, yeah, they're, they're not thinking about maybe, um, they've already probably identified the candidates, like by the time they, by the time, you know, all right. It's, it's done for, right. That that is not an early warning sign. Right? That's that, yeah.

The expiration date is already passed at that point you're on and it's hard to wrap your head around somewhere else. It is, right? Like, yeah. It's, it's a huge, it's a huge surprise because then all of a sudden it feels like the company, at least the investors, the board, somebody's been conspiring against you, right? And that, that can, which sucks. It does. It, it feels awful. And to be fair, even if they're good people, they have been conspiring against you.

That's exactly what they're doing. Right. And maybe to be fair, maybe for the right reasons, like maybe like you're the only person that can't see what's going wrong here now. Ryan, you and I have a, a different opinion of founders. Like we believe founders should lead companies.

Yes. I'm not saying that they're infinitely qualified, no one's ever more qualified, but I think that the, the, the old investor thing where we gotta bring in season management, I'm like, yeah, no, we gotta throw a new quarterback in mid-season. Right. Have they ever thrown this ball before? No. It's a different, it's hard like. I think it rarely works out. That doesn't mean that it doesn't happen with some frequency though, right? So think that's, the two things have to separate.

Does this ever work? Not really. Do they still try it a lot? Yeah, all the time. 'cause it, it sounds like, Hey, this person's 24, let's get the person who's 54 and show everybody how management should run. And it's like, yes, they can do that. And again, we've done whole episodes on this. Yes, we can bring in someone with more experience. It doesn't necessarily make them. Better. Right?

There's something very unique about the founder running a company that we've seen time in time, in time again and again. I'm, I'm not saying there, there, like you said, Brian, that there aren't cases otherwise where someone brings in a very capable, not founder. You, you could point to Tim Cook, you could point to, uh, Dara at Uber. Like there are cases where there clearly are people, but I would argue that by the time it got to that point, the company was that big.

It's just big company at that point. Right? Yeah. Put whomever in it. I'm not saying it's very, very different. Yeah. I'm not knocking their capabilities. I'm saying that's where the founder isn't as important anymore. Right. Isn't as important. And, and like in that case, the founder wasn't bad. The company outgrew what, what that founder was, was great at, or what the, the company needed at that point. Right.

Yeah. Yeah. Also, like you have to, you have to recognize, like when we've said this before in the podcast, he wouldn't have taken Apple from zero to one or zero to 50, but he can take it from 90 to a hundred. He's a great ops guy, fantastic operator. Right? But like, it's not, not a founder.

So, but let's go back to, I just got this call, I just got this text. Investors just sent me something that seems a, a little. Off. Right. I know things are a little bit tense, you know, in the last board meeting, but I just got this, this message and they said, Hey, we need to talk to you about, see if there's another option to bring somebody in as a CEO. Just gonna pause right there. No, like we said, no one tells you that. Unless they've already decided that they're going to do it.

Okay. No one trial balloons that one, okay. Yeah, yeah, yeah. So let's fast forward through this a little bit. By the time you're getting that message, you can fight it and, and hopefully you win. You probably won't, but hopefully you win. Okay? But at which point the situation's gotten that bad, at which point someone's written up divorce papers. That's because they plan on getting divorced, right?

Yeah. You can fight it, but you gotta understand how it got here, just in case we ever needed these. I'm gonna stick them in the safe next to the birth certificates, but just, just in case we ever needed these things. Right? Like, you know, there's a reason that happens. Yeah. And so at that point, the hardest thing for a founder to. Accept what just happened. Yeah. Yeah. I'm divided on this, Ryan.

'cause part of me thinks you should fight it and part of me is like, I already know you're probably going to lose. So let's accept it in a way that's beneficial to us. What's your thought? Yeah, I think it's one of those where like as per usual, I'd want more information. Like I'd want to be able to understand. Like what's actually going on, right? Is, is there some deficit in what the CEO EO and founder's doing? Um, is this really just opinion?

Is there really any chance, I think this is what you and I are always gonna come back to the same point, which is that is there actually a likelihood that whoever comes in next is going to be able to do a better job of this? Maybe the one thing you're fixing, I think we talked about this in other episodes, I'm not gonna beat this up too much, but yeah, they might like, whatever that one deficit is that you're replacing that person for.

What about all the other stuff that they were really good at? Is this new person gonna also be great at those? Are you picking somebody who does the one thing? Let's just say, I'll go sports. I'll go sports. You can't throw a slider. They bring in somebody. Absolutely. You know, crush a slider. Can't throw a fastball, can't throw a curve. Can't. Right. And, and Right. So like, are you giving up more than you're getting? And so, yeah. I think to your point though.

You're fighting from your back a hundred percent. 'cause at that point, by the time you know about it, the conspiracy is already happening. You are probably so far behind that. Mounting an offense at this point is gonna be nearly impossible. You're just gonna wear yourself out further. And as you said, and I think we'll, we'll get to it a little bit later, but there is some possible leverage for the founder in these cases. There can be some outcomes that get created.

You know, something that's really funny about everything we talk about here is that none of it is new. Everything you're dealing with right now has been done a thousand times before you, which means the answer already exists. You may just not know it. But that's okay. That's kind of what we're here to do. We talk about this stuff on the show, but we actually solve these problems all dayLong@groups.startups.com.

So if any of this sounds familiar, stop guessing about what to do, let us just give you the answers to the test and be done with it. I think step one is, let's call, call it what it is, right? Let's call it what it is. The board had enough of you and they fired you. Yeah. Uh, they're gonna call it something else because again, they don't want you to create a stink.

They're, they're gonna say, Hey, wouldn't it be great if we just focus that you're, you're part on strategy or product or whatever you're good at? And that's just a different way of saying, here's how we're gonna get rid of you. And like, I'm not demonizing the investors. This is what they have to do. This is their job. I'll wake up in the morning and say, I can't wait to like, you know, create this, all this consternation.

Um, some 'em are better at doing it regardless, but it sucks for them too, just like it sucks to let someone go. That said, there has to be a version that some point for us for as founders, where we go out like a gentleman. Yeah. That's a big deal. It's a big deal, man. It's, but I think all of that leverage that we'll talk about later is predicated on that, right? Because you, you either, you either choose to leverage this at some point, or you choose to fight it now.

And if you fight now, the leverage later is, is largely gonna be lost. I, like you said, you gotta call it what it is, man. Uh, polite, firing, or, or reassignment. You still got fired, right. I call it what? It's, it's it's firing your comeback fantasies, um, are nothing but a liability to the, the board, the investors, the new, the new CEO. Right. None of this stuff, any reasonable founder Ryan, is going to have a comeback fantasy. A hundred percent.

But it, it's just, just like a relationship where someone broke up with you, where you're like, oh, they'll see what the mistake they made and they'll have me back and everything will be great. Yeah. Okay. That happens. Almost never. Okay.

And, and, and I wanna cite a few examples. You could say it happened to Steve Job, he, he gets replaced, uh, by John Scully, right? Uh, they, they bring him, I think it was from Pepsi at the time. Scully fucks everything up and they bring jobs back and he creates one of the most valuable companies in history. Yes, that happens. Yeah. Howard Schultz had a different version from Starbucks. Right. But they brought him back.

Uhhuh, uh, Jack Dorsey, they brought back when t Twitter was a huge shit show and then just became a bigger one. Um, yeah, my sure actually worked out. There are star founders that get brought back. Okay. I'm not saying you have to be a star founder. I'm saying even here. Here's what I'm trying to say. Yeah. Yeah. Even some of the biggest names. Went through some version of this. So, so bear in mind this isn't just a, you know, I, I'm not fit for this game.

No. Those people were very fit for the game. Yeah. And had very similar kind of paths. But the problem is we sit there and go, well I'm just gonna kind of stew here until I can figure out how to like, you know, mount my, my Napoleonic comeback. Yeah, yeah, exactly. And I'm like, that's a bad idea. Yeah, because it, it's exactly what, why nobody wants you there. You know what I mean?

Yeah. I mean, look, if, if your return plan requires the company's failure, you, you're not planning, you're, you're cursing, you're dooming the company, you're plotting, you're, you're plotting, right? Like Yeah. You don't want to be, that happens all the time. Yeah, it does. Happens all the time.

'cause emotionally we feel invalidated. How could we not? Yeah, I, I, I get it. How could you not? And we look at it as, you know, we don't feel like we were respected, you know, in, in the, the, the way we felt. Like we put so much work into this. And there's a, this big giant hole where sometimes embarrassed, sometimes humiliated, sometimes all, all these emotions, right? And if you're listening to this and you're like, Hey, I was feeling some of that, here's what I'm gonna say.

How could you not? Right. Yeah, that that's the actually thing. I just got divorced. Right. And man, I feel bad about it. Of course you do. Yeah, yeah, yeah. It's not about how you feel in this case. Yes. You have those feelings.

How you act based on those feelings is what's going to dictate what happens next. Right. So let's talk about how to make the most of it. Right. Let's talk about how, if you're going through this, what can we do? What can we do to actually make like a little bit of silver lining here? And by the way, the path we're about to go through isn't a emotional, just make you feel better. We're talking about like, how does this actually work in your favor? Like what are some things you can do?

What leverage do you have, right? To actually get something out of this transition. So, so hold onto that thought for a second, because this is an interesting point. What's your opinion on this?

If, if you find yourself in this situation, let's say you've been given, you haven't been outright fired yet. Maybe they're not even saying that they're, they're playing the COI game and you have now been made chairman of the east wing of the building, we don't even own. Right. Whatever it is. Like you've been, you clearly, like, you're like. I've just been put out to pasture. Do you address it head on?

Do you go at them and you say like, let's turn this into a negotiation, and how do you do that? Like, do you confront it directly or do you say like, how do I make the most out of what they're handing me? Great setup. Here's how to walk out like a pro, right? Here's how to walk out like a pro. First things first, say, listen, I understand the challenges are what they are. You know, some of it I, I don't agree with, but from this point forward. I wanna be on your side of the table.

Okay. This is such a critical positioning. Yeah. Okay. From this point forward investor person who you thought we were gonna be enemies in this, I wanna be on your side of the table. I wanna do what's best for the company. And what's best for our outcome? 'cause I wanna make sure we're in perfect alignment. Okay. I love this so much because this also feels like feeding them back some of their bullshit lines from early on when they're like, let's sit on the same side of the table. Right?

Yeah. This is, I, I'm telling you man, I this, this is, this is money in the bank feels like sweet justice it. Well, okay, so, but it does a few things. Okay? Now this is where it gets interesting. Once you're on their side of the table, then you can say things like, well, what should the CEO's comp be? Or you can, and again, what I'm saying is like, you can say. I don't wanna look at it from, what didn't I get? Or, or, or whatever.

I wanna look at it as, Hey, I know a lot about this business as you do what is best for the business. And what, what I would say openly is, look, my job continues to be what is best for the business. It sucks that I don't have the CEO job. Honestly. That hurts a bit, right? I'm just, you know, being vulnerable, it hurts. But I'm a big boy and this is, this is, it's an important moment for me. And, and I tell founders in that, in that moment, by the way.

This is one of the single most important moments of your life, right? Like as critical chapters go, this today is a critical chapter. Do not fuck this up. Yeah. Right? And, and here's how you fuck it up. You fuck it up by going ape shit and you just, you lay into everybody. You, you lay into the board, you start doing the coalition building where you get all, all your cronies that are in the company and tell them like what a bunch of idiots, the, the, uh, the boards are and like, et cetera.

And you basically poison the well. Worst case scenario. Now, let's go back to the leverage. The board. Best case scenario is that you walk out with a smile. Best case scenario is that here's what you don't do. You don't piss off everybody that works there. You don't piss off potential customers, potential investors, and most importantly. CEO O, who they're trying to replace you with. Yeah, look, they want peace. So this is how you have to figure out how do you send an invoice for peace, right?

What's the price of peace? What is the price of peace? Is the price of peace right now? And that is a real thing. Yes. Now everybody's situation's a little bit different. Okay, so like if you just got caught embezzling, probably not the time to bring up on my Less leverage. Less leverage. Yeah, exactly. Less leverage. But if you're not being fired for like, you know, like extreme cause like that Yeah. Malfeasance or complete ineptitude. Yeah, absolutely.

Uh, what you can do is you can say, look guys, I've put in seven years with this company. I've given this company everything. Let's talk about severance. That's the position you wanna talk about. You wanna talk about your exit as severance. Okay. The reason you, you isolate it as severance is because everyone understands severance. Yeah. Right. Even shitty employees get severance. Right. Sometimes. Most of the time. Right.

You're also sort of saying at that point, but you are saying very clearly, you're saying, I'm going away. Yeah, I'm going away. And there is a cost, right? The cost to it must be paid, but there will also be some terms to it, which is what they want, the terms you want. But founders often think in terms of severance, Ryan, because we're used to giving other people severance. It never occurs to us. We get severance. We get severance.

Okay. Yeah. Now, there's a number of of categories where levers that, that we can use mm-hmm. When severance, uh, comes into play. Number one is cash. Just, you know, I've been here this many years. This is, you know what? I think this, the severance should be that. That's one. Okay. And everyone kind of understands that. Number two is stock. I have 28% of the company. I am no longer in control of my own destiny here as I was before.

I'd like to be able to cash some of those chips in, and that does happen. Just so folks understand, that does happen. Again, it's a shut you up payment, but often worth it to the investors, right? So you're not saying, I want a million dollars just because I want a severance. You're saying I'd like to sell back some portion of my stock for this amount. Under terms that we think are reasonable for the company.

Yeah. Gimme some liquidity because at this point, holding equity is like being a ghost in the cap table doesn't help them Having a bunch of equity tied up in a company that you no longer run doesn't feel good to you and so Correct. I think that that's a, that one's probably more common than people think. Correct. And, and, and the other side of it is you're basically saying, I, the, the key here is I no longer have control of this outcome the way I did before.

And so I'd like to be able to, to, um, convert some of that, you know, lack of opportunity, if you will, into, into cash.

The third bucket is whatever version of your new job there is. Now, I, I wanna just build on this a little bit. You get to kind of call your own shots here. Again, it depends on the relationship. Whatever. If, if, if they are so sick of you and they hate your guts, then obviously this doesn't apply in quite the same way. But if you're gonna say, Hey, I'm gonna be chief vision officer, here's what I'd love my job to be. Here's what I think that job should be compensated as.

Here's what I think the bonuses should look like. Here's, you know, like basically. Take a shot at crafting your dream job. Yeah. Yeah. That isn't CEO. Yeah. What's reporting look like? What's budget look like? 'cause there's a whole bunch of things there. 'cause like if you, yeah. You get, you get the strategy role without any budget, you're scrapbooking. Right. Strategy without budget is just scrapbooking. Right. You're, you're not actually doing anything.

There's a huge spectrum of where the The board wants you. Yeah. Okay. Somewhere between we never wanna see your face again and somewhere between, you're a key person in this company, we actually can't afford to lose you. Right. Yeah. So like, yeah, you can't, and both of those things happen. Right. And of course, the full spectrum. Yeah. Yeah. And so your mileage will vary.

That said, I think that in order to make the most of it, there's another side of this that has nothing to do with the board, which is calling it what it is and being like, you know, I'm gonna wake up tomorrow. This is going to be someone else's problem. Mm-hmm.

And for someone who's been in the shit, especially when you get to this point for who's been in the shit for this long, Ryan for this long to wake up tomorrow morning and being like, huh, that's not my problem, is like a billion pounds off your shoulders. I gotta tell you, by the time anybody gets to this point, they absolutely deserve and need that break. I don't know of anybody that gets to that point that's like, oh no, I had so much gas in the tank. I'm just looking for 10 more things to do.

Right? Yeah, yeah, yeah. No, yeah. I would say, well, even if you were energetic right before that situation occurred, how many founders do you know that get that call from the boards and they're just like super energized after the fact? Do you know what happened today? Man, finally the board has decided to fire me. Now they're gonna call it something else, but I'm actually getting fired. I couldn't be happier. Right. I Right, right, right.

I'm sure there was somebody out there where that did happen once, but it's definitely not the norm. You've also, you've gotta use a tremendous amount of diplomacy, which is hard to do because you're so emotional. Okay. Yeah. So everyone in the company is gonna know what happened, and that's humility. So your subordinates are gonna know that you got fired, right? Yeah. They're always worried about you firing them. All of a sudden, you know, you got fired.

That's, uh, that's very tough for a lot of people. Super. So a big part of it too is you're trying to save face. You're going out of your way to try to make big announcements or, you know, like kind of flex what's left of your authority. And the reality is you're, you're dead man walking. Yep. Right. I actually had the president of our company, um, who I had hired when I walked into a meeting and she was like, will, what are you doing here? I'm like, I'm sitting on the meeting.

She wasn't trying to be offensive. Yeah, yeah, right. She actually meant like, everyone knows that. Like, you're done. Whatcha you doing here? And I was like, damn, I didn't get the memo right. I thought I was needed here and I'm not. And I didn't have to be told that twice. I just went off and had fun. But, but I guess what I'm saying is there is a version where, where the, the benefit here, the silver lining is a respite. It, it's just like a break man. It's like.

Damn. I could use them and I go on a vacation. Who? Who'd guest, right? Like I can do. Maybe a million other things to just try to like, just recompile myself and I just need, uh, I shouldn't be cool about this. Here's the opposite of that. The opposite of that is, let me go totally atomic, let me stir up tons of shit with everybody. Let me get in legal battles and HR battles and personnel battles and all this other stuff that is the polar opposite of what you wanna do. Yeah, yeah.

You win really bad, unfortunately happens. Play that game. Really, really bad prices. Yeah. Yeah. Now look, there is no future. And the chief vision officer. The chief vision officer is the, if anybody should be able to see that it should be the chief Vision officer. Right. Like the irony of that fucking, yeah. Yeah. The irony. But this move is not a promotion, right? Correct. This move is you're being put to pasture.

Yeah. And if you're not sure of it, ask yourself, how much control do I have at this point? Right. How much control do I have at this point? How many people report to me? That's usually a a, a big sign. Yeah, that's a great one. Yep. And if I leave tomorrow. Will anything change meaningfully? Like will this thing just be fine? Right. Not for you, for the company. Yeah. Yeah. That's what I'm saying. Right. So I think for a lot of us, there's this postpartum. That comes with this, right?

Where we have to just wrestle and live with what just happened. And it's hard, super hard. There's no version where, where you're just such a pro and you're so divorced from motion where you're just like, oh, I guess that happened. I guess I'll just move on to the next thing, right? Like I know who that person would be. It's impossible to see it in the moment, but I think like if we go back to some of the examples of people that we know that this has happened to, it isn't the worst outcome.

The worst outcome is that. Nothing happened and that statistically what happened to your startup happened, like most of them don't work right like that. You just, the company just ends up failing as a result, and you walk away with nothing. Like that is one of the potential. Now, of course, like maybe that isn't what happened, but let's call it what it is. Like if you can play this right and you can get something out of it, is it the exit you always dreamed of? No. How often do we get that one?

Anyways, it's something. So I think if you can get to that point, right, like of course the, the feelings might be what the feelings are. If you get to that point where you're like, look, let's land on some severance, right? Let's figure out what that looks like. After that, I'm happy to help If we can lock in scope, budget, and a runway for handoff, I'll enable the handoff. But I'm not gonna stick around for a two CO experiment. You don't want that. I don't want that.

Like, let's, let's make this work. It can be a decent outcome, right? To your point, you get some money, you get some rest, you get to shirk and shed a whole bunch of responsibility that has been absolutely nobody but yours for a long damn time. Yep. It's not the worst thing that can happen to you.

The worst thing that could happen is that they, they show your ass the door and they publicly humiliate you. Like that's the worst thing that could happen. And they sue you. Right? And, and by the way, you, you, you could go from a, it could have been good to that outcome a hundred percent based on your own. That's it, right? Yep. Like if you go nuclear, you'll just get nuclear back. Yeah. And you're like, I don't care. I'm fighting for this company. I built this company. I get it.

And I'm not saying, saying, you don't have any option at that point because you've, you've taken away the cool, you've taken away the cool path. Right. They're like, well, right. If you would've gone quietly, we could've worked out some stuff. But at this point, now it's actually in their interest, they have to make you look like a giant asshole at that point. Yeah. So that they can fully justify getting rid of you and move on as quickly as possible. Total disaster.

Best case scenario would go something like this. You get that call late at night from an investor that just wants to have a chat. You quickly understand what they're actually saying. 'cause again, at which point they're saying, Hey, maybe we should look for some other options. It means that they've already looked for other options. And while they may, it may sound like an ask, it ain't an ask.

And by the way, if you wanna keep a CEO, the last thing you would ever say is maybe we should look at other options. Right. Like that'd be the last thing you, you would ever say to them. So again, perfect path. You catch this quickly, you see the writing on the wall, you go back to the board after you process your own shit and you say, Hey listen, I wanna be on your side of the table through this, right? I want to create a severance for me that is, um, that is equitable.

Um, that's fair, that's fair to both you and, and tam me 'cause I've put a lot of time into this. But I wanna work with you to Carver path forward where I can add value. So we can both get the outcome that we both work so hard to achieve, and I can help support the organization, uh, however I can. Those are the dream words Yeah. That an investor wants to hear. Yeah. By the way, say them even if you don't mean them. That's what I was getting at before, man. It's like.

Even if this isn't exactly what I mean, if you feel completely different, right. You know? Right. Go fight for a title, fight for terms, and then figure out how you're gonna move on and build something else. I always tell my wife that if I ever told people how I actually felt, I'd have no friends. I, I always say like, there's a version of how you feel and there's a version of what you say. Right.

And this isn't about being disingenuous, it's about understanding that the words that come out of your mouth have a consequence. Yes. And just because you feel them doesn't mean you get to say them. You, you sanitize it for everyone's sake, right? It's, you're not, yeah, yeah, yeah. Just we're not telling you to just stuff it down. We're saying, look, turn some of that angst into a little bit of back pressure and, and make it into something that actually works for you. Right?

Um, but if you just uncage the lion from minute one, do you just get a blood bath? That's it. That's all that's gonna happen. Most people don't have that self-awareness and or self-control to be able to do that. So that's usually where our coaching comes in. We're like, like, dude, I know you're, you are raging pissed right now. If you stay this way, you are about to engage in the worst possible outcome.

Well, I think that's why this is such an important episode, because I think that most people win faced with. Call. Yeah. Don't know. The rest of what we just described as even an option. They think Correct. It's it's fight or roll over and die. Right. They don't assume that there's any middle ground, any path forward that doesn't involve either humiliation or some sort of victory. Right? Yep. Where they're like, I will fight until, right. Yeah. No, you won't. And every now and again.

It comes full circle. Yeah. Okay. Every now and again, it comes full circle and the board realizes that you were the best person. And they call Steve Jobs back. They call Howard Schultz back, they call Jack Dorsey back. Right. I actually just saw this last week. Shit. It, it wasn't Zillow, it was some company in that space. And they just brought the founders back and they said, well, now we're back in founder mode. Right. And you know, because that, that's, uh, cliche founder mode reactivate.

Oh, yikes. Yeah. But, but they brought back in the founders and like, you know, that's supposed to change some things. That's a publicly traded company, so the stakes are higher. My point is there could maybe tiny percent chance be a chance that mom and dad get back together, but it's fairly low. So we don't plan for that. We're saying it could happen, but the way it doesn't happen is you set fire to everything on the way out. The way it does happen is you are a good soldier.

You say, look, not an ideal outcome. I'm gonna maximize my upside here, but most importantly, I'm gonna maintain my relationships and reputation, which by the way, speaks volumes to all the people that work for you as well. Hundred percent just being able say, Hey, uh, I've got the humility to be able to say sometimes, you know, I made the wrong move. I'm going to just sit on the board, uh, like I normally would. And I'm, I'm not gonna be an a-hole about it.

Like, every time the CEO e does something wrong, I'm gonna, you know, like call 'em out about it. I'm gonna, I'm basically just. The best answers I can get. And if it looks like there's an opportunity in the future where, where, uh, folks have warmed up and they wanna call me back in, great, not planning for it, it could happen, uh, but not planning for it. I think when we get what we call the severance with a smile, we just kind of have to call it what it is. But here's what I would say.

If this happens to you or if you see this coming, take the hint early, process it early, take the leverage early while, while things are still positive, put on that positive face, but more importantly. Take this opportunity to reset, reevaluate, and takes your next shot, because for many founders, this isn't the end of something. It's the start of something else, and all that has to do with how you deal with it right now. Overthinking your startup because you're going it alone.

You don't have to, and honestly, you shouldn't because instead, you can learn directly from peers who've been in your shoes. Connect with bootstrap founders and the advisors helping them win in the startups.com community. Check out the startups.com community@www.startups.com to see if it's for you. Could be just the thing you need. I hope to see you inside.