Lawyers are paid to minimize legal risk. A CEO's unique role is to balance that counsel against other crucial factors like customer trust, employee morale, and future opportunities. Ceding decision-making entirely to the legal team is a failure of leadership that can lead to catastrophic, albeit less immediately visible, losses.
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A founder's real boss is their customer base. While keeping a board happy is important, some CEOs become so consumed with managing up that they lose sight of the product and customer needs, ultimately driving the company off a cliff despite running perfect board meetings.
In today's founder-centric climate, many VCs avoid confrontation to protect their reputation (NPS) within the founder network. This fear of being blacklisted leads them to abdicate their fiduciary duty to shareholders, failing to intervene even when a company's performance is dire and hard decisions are needed.
When an executive leaves, the CEO should step in to run their department directly. This provides invaluable operational context for hiring a replacement and empowers the CEO to make necessary but difficult changes (org structure, personnel) that a new hire would hesitate to implement.
The most common failure mode for a founder-CEO isn't a lack of competence, but a crisis of confidence. This leads to hesitation on critical decisions, especially firing an underperforming executive. The excuses for delaying are merely symptoms of this confidence gap.
All founders make high-impact mistakes. The critical failure point is when those mistakes erode their confidence, leading to hesitation. This indecisiveness creates a power vacuum, causing senior employees to get nervous and jockey for position, which spirals the organization into a dysfunctional, political state.
Even with full board support, a successor CEO may lack the intrinsic 'moral authority' to make drastic 'burn the boats' decisions. This courage is harder to summon without the deep-seated capital a founder naturally possesses, making company-altering transformation more challenging for an outsider.
Unlike a line manager who can train direct reports in a specific function, a CEO hires experts for roles they themselves cannot perform (e.g., CFO). A CEO's time spent trying to 'develop' an underperforming executive is a misallocation of their unique responsibilities, which are setting direction and making top-level decisions.
The most paralyzing decisions for a leader aren't clear-cut choices but dilemmas where every path is painful. Ben Horowitz's decision to take his company public with minimal revenue was a bad idea, but the alternative—bankruptcy—was worse. The key skill is choosing the 'slightly better' path in the abyss, despite the guaranteed negative feedback.
Founders remain long after hired executives depart, inheriting the outcomes of past choices. This long-term ownership is a powerful justification for founders to stay deeply involved in key decisions, trusting their unique context over an expert's resume.
When making tough personnel decisions, leaders should frame the choice not as a personal or purely business matter, but as a responsibility to the rest of the organization. Tolerating poor performance at the top jeopardizes the careers and stability of every other employee, making swift action an act of collective protection.
