How not to Fire your Founder

What if the Hokey Cokey really is what it’s all about?

I have this printed on a T shirt that is appropriate workwear in co-working spaces, along with a couple of others:

There are 10 types of people in the world
those who understand binary
and those who don’t

and the even more geeky derivative:

There are 2 types of people in the world:
1) those who can extrapolate from incomplete data.

Answers on a postcard – but I digress.

The Hokey Cokey, however, did come to mind this week with the extraordinary events at OpenAI, with the firing of Sam Altman, his potential defection to Microsoft, the likely subsequent implosion of OpenAI, and Sam’s triumphant return. What a week it’s been.

There is a lot that could be said about the unusual board structure at the heart of OpenAI, the tension between being a not-for-profit organization and the eye-watering commercial reality and costs of building world-changing LLM technology. The e/Acc vs. e/Alt debate rages on, with profound consequences for humanity – but that is not the focus of this post.

Instead, a more relatable, and very human, situation at the heart of this story. As is well known, most startups fail, and most startups believe that failure to find Product/Market Fit (PMF) is the most common reason businesses go bust. In fact, it is more often misalignment between co-founders, or between founders and investors in the cap table, that can tear an organization apart. In the early days of building, when the future is bright, energy levels are high, and the challenges of difficult customers and competitors have not arrived in force, and teams can generally work well together. Disagreements are rare, and easily solvable.

But like any long-term relationship, teams are like a deck of playing cards: it’s all Hearts and Diamonds at the start, but by the end you’re using a Club and looking for a Spade to bury the bodies. It is a team’s ability to resolve disagreements, most importantly differences in vision around purpose and mission, that will determine its resilience and long-term success. Being anti-fragile is essential, and it is only in the most difficult phases of growth that the team’s emotional intelligence (EQ) is discovered and tested.

Differences of opinion between investors and founders can also be extremely destructive. As a market evolves, if commercial success does not meet expectations of the board, then changes are needed. A common misconception that founders have is that their investors have invested in them as individuals. This is increasingly rare, and the reality is that investors are (quite reasonably) looking for returns and have invested in the company. Retaining the founder, or even founding team, can become optional.

So what should OpenAI have done differently? Hindsight is a wonderful advantage, and it’s hard to be objective and see the full picture. Certainly more transparent and complete communication between all board members, setting and meeting expectation, would have helped. And some basic common sense could have predicted the fall out from the attempted coup. A ‘disagree and commit’ culture at the very least would have been appropriate.

And what should we do with our own businesses? Spending time intentionally debating mission, purpose and values, and encouraging thoughtful debate, particularly among the board and senior leadership team, is a great place to start.

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