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How NOT to get fired from the business you created – Part One

How NOT to get fired from the business you created – Part One

If it happened to Steve Jobs, it can happen to you.

Or David Neeleman, who founded Jet Blue. Or Jerry Yang at Yahoo. Etsy’s Rob Kalin or Chesapeake Energy’s Aubrey McClendon.

Many company founders find themselves with a pink slip in their hands after bringing on investors if those investors have sufficient control to engineer leadership changes.

Here’s the bottom line: it doesn’t matter how much blood, sweat, and tears you’ve put into your business. Bringing in outside investors and giving them control makes you vulnerable to termination.

The bad news is that “founder firings” happen all the time.

Rather than being naive and hoping it won’t happen to you, it’s important to do one of the following: (1) choose your investors carefully if they are going to have the power to fire you OR (2) structure your investors’ participation in a way that makes it impossible for them to fire you.

Of course, the second option is the ONLY way to be 100% certain that you won’t be fired from your own company. Some investors insist on control in exchange for their investment, but many others do not. Think about what kind of relationship you want to have with your investors before you start raising money. Know in advance what control if any you are willing to give up.