Is there a solution for this problem? Yes several, for instance:
1) Better VC oversight and due diligence: This seems obvious but I think some VCs are way too relaxed on some startups (I’ll cover this in a future issue) and tend to trust very easily on CEOs with flashy credentials without properly contrasting the plan they’re investing in and the reality of the company. I think a lot of bad investments could be avoided if you just talk to the employees or the customers.
2) Separation of powers: This is the easiest one; stop concentrating the decision power and public relations of the company in a single person. Enforce a more active participation of the board, give more power and influence to other C-Levels and/or get rid of the CEO role (open question for the industry: why do we insist that monarchies/feudalism work well for companies?)
3) Stop sycophant culture:
Put a stop to the yes-men, the bootlickers, the flatterers, the doormats, the self-seekers. There are two types: the active and the passive. The former is the one we all know and hate (except people in power); the latter is people that witness and enable the sycophancy, the ones that say nothing and don’t neutralize the lies and half-truths (these are most people, sadly). I’ve seen strong companies with great leaders go down because of sycophants and manipulators. Advice to CEOs: find ways to keep them away from your organization, they’ll push you into the overconfidence cycle and blind you from reality. Everyone else: Disable them by speaking up and using hard data against their claims, document everything and expose their manipulation.
4) CEO transparency and collaboration with the company: a CEO is not a leader if they are isolated from the operations or the concerns and ideas of the employees, and defining the strategy of a company without facts and hard data is likely to be unrealistic and prone to failure. CEOs: don’t become moths to the media’s reflectors, remember that the company relies on your hard-work as well.
5) Focus on consolidation: this is a difficult one but CEOs need to get better at determining when it’s right time to jump to new geographies, start new business units or doing mergers/acquisitions. These are risky endeavors and a company without a solid foundation is likely to crash and burn with these initiatives. This analogy might help: imagine a tree, if the tree grows too tall or with too many branches faster than it can grow roots and attach to the ground, the tree will topple and die. Market-share is worth sh*t if the company can’t keep up with it.
6) Publicly measuring startup success differently: This is a cultural issue that ecosystem needs to fix, especially journalists, raising money is risky (for all parties involved) so let’s stop talking about it like it’s a sign of unequivocal success. Ironically and counter-intuitively, too much money can kill companies and we should stop romanticizing it, let’s talk about the caveats and risks. Let’s measure success differently and pay attention to other types of startups as well; by inflating the reality of a startup you might be putting it at risk.