Alienating, Difficult, Cyclical and Risky

...and we're not talking about my high school experience. 

Anyhow, nevermind about high school, let's talk talent. Noam Wasserman—who, if he didn’t come up with the Rich vs. King idea (and I think he did) is certainly strongly identified with it—conducted a JumpStart talent seminar about a week ago, and it was great! He shared several case studies, including one where a founder, who by all accounts had done a pretty good job to-date, still got fired by venture capital investors. Some seminar participants were openly frustrated by that scenario—the founder had done most things right. But here’s what was going through my mind as the seminar was taking place: that unfairness is not innate just to the venture industry—it’s capitalism. So, if you’re going to be mad, be mad at capitalism.

For instance (and I hate to be pedantic here but I think it’s important to run through these scenarios) I know of numerous, non-venture-backed businesses that have gone south because their biggest customer decides to “fire” them. It isn’t fair—but it happens. I also know of small companies that get their working capital lines or term loans pulled out from under them not because of anything they did, but because the creditor/bank is changing its strategy. Ditto—not fair, completely stinks, but it happens too. I also know of big businesses that “fire” or lay off people in a very direct and impersonal fashion – just take a hatchet to 5% of the workforce. It’s happening left and right these days. It ain’t fair—it’s deeply alienating and disenfranchising especially to those on the edges of the workforce who are working their way towards being ‘enfranchised’—but it happens. So, when I hear a case study about a VC firing a CEO for a not-totally-great reason, I feel the same frustration as everyone—you do a good job as a founder, and look what happens (by the way, it’s not a trivial point that the fired founder in this real case study appears to have made north of $30 million). But in the context of a dog-eat-dog business world, it’s as harsh as any other route you might choose. So, when people rail on venture capital investors as “not getting it” or being too “trigger happy” to fire people, they’re really railing on capitalism as being a system that often isn’t right and chooses too frequently change and growth over patience and steady-as-she-goes. That’s capitalism—guilty as charged, especially right here, right now in this particular time in American and even global history.  It’s alienating, difficult, cyclical and risky. If anyone finds a better way, one that’s riskless, easy, and fun, let me know (it’s not a rhetorical comment— I actually believe a better way exists, but alas I haven’t had time to figure it all out and humbly collect my Nobel Prize). In the meantime, as I seek the kinder, gentler capitalist road-less-traveled, I’m going with the right here, right now reality I know and see all the time, which is that founders of great companies can get fired but get rich. Not a terrible road, all things considered. Becca Braun is a past president of JumpStart Ventures. She founded and led a number of early-stage companies and organizations, as well as worked as a private equity investor and management consultant. She received her MBA from Harvard Business School and her BA in Linguistics from Harvard University. She is keenly interested in the intersection of wealth creation and broad-based regional economic growth.