Stories of entrepreneurs behaving well, and badly

We’ve all heard the horrific tales of venture capitalists behaving badly. And while all of us who practice the profession would like to brush them off as sour grapes, we have to admit that sometimes they do hit close to home. See: VC Non-Admissions

However, so far, we haven’t seen any venture capitalists brave enough to point out that there is a corollary issue that only gets aired behind closed doors.

There are plenty of entrepreneurs who behave badly, too.  Some VCs fear that going public (no – not IPO) about these characters will turn off potential startups from visiting them.  We’re betting on the opposite.  We think that since the vast majority of entrepreneurs behave well, they’ll get a chuckle out our challenges in dealing with the minority who peg the needle in the other direction.  In addition, by pointing out our hot buttons, you’ll know what actions tend to set us off, in advance.

So, here goes – with the circumstances obscured to protect the guilty.  However, take heart – since the title says “Good” as well as “Bad & Ugly” we’ll get to some stellar stories of entrepreneurs in future blogs….

GBU - Part 1:

I was attending a Board meeting of one of our startups when the CEO excused himself because he was feeling ill.  The VPs continued on presenting their functional areas, but there was a notable tension in the room that could not be explained simply by the circumstances.  Then, the most experienced member of the team took the floor to tell the Board that the VPs had been talking and felt the CEO was not able to lead them anymore.  In fact, it was so bad that the ultimatum was, “Either he goes, or we go!”  Needless to say, this was a shock to the system.  While we knew the company was having problems, we certainly did not have a clue it had risen to that level.

We did some additional discovery, and came to understand that what had happened was as the company had grown, and things became challenging, the CEO had essentially frozen at the controls.  He wouldn’t make any key decisions, for fear of being wrong. But he wouldn’t let the VPs make decisions either.  So, when it came down to the choice of fire the CEO, fire the VPs, or try to get everyone to play nicely – we went with the former.

To his credit, the CEO took his dismissal as a real pro.  Frankly, I think he was relieved because he must have been terribly stressed being in that far over his head.  And once we turned the VPs loose to make decisions, the company started performing again, while we searched for a new leader.

The lesson:  If you are a CEO of a startup and are over your head, don’t freeze up – put your hand up - and ask for help.  We might have been able to save that CEO’s job if we’d known earlier and could have gotten him some coaching.  Most importantly, realize that if you think you are over your head, you are - and your direct reports already know it! 

On the GBU scale – this only qualifies as a B.  Everyone was behaving honorably and trying their best.  Next time, we’ll talk about a “U”.

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