“I don’t know what they want from me, it’s like the more money we come across the more problems we see!” – Sean “Diddy” Combs, Christopher “BIG” Wallace, & Mason “Mase” Betha

 

After reading the selection for this week, I was left somewhat perplexed in relation to the duties of a CEO. I mean hypothetically speaking CEO’s are encumbered with the duty to raise capital, hire a team of knowledgeable and experienced individuals and set and hit financial goals for the organization. However, did you know that after slogging, sweating and hustling for your company that the board can simply oust you?!? Me neither, but now we do…. So, now that we’re armed with this information let’s delve a little further into this and get a lesson in Hip Hop simultaneously.

Founder’s must initially strategize how they will acquire capitals through the life cycle of the startup while also bearing in mind that utilizing funds from friends and relatives can leave relationships hanging in the balance if the company fails to turn a profit and loses the investment. Likewise, utilizing angel investors and venture capitalists both, can leave a bitter taste if the business transactions turn unpleasant. Depending on how much funding is granted and for how long, VC’s can somewhat surreptitiously come in and pretty much take ownership of the entire organization (i.e. every round of funding that the VC offers is another round where their ownership stake grows stronger in the company); and, it’s only a matter of time before they assert themselves and establish their own guidelines and protocols for the business. Mo’ Money, Mo’ Problems…

As we’ve noted from previous blog posts, being prepared in business is key! Having the business acumen to know when to make dynamic changes to existing protocol or organizational structure is what sets excellent CEOs apart from average CEOs. Executives who are not able to evolve with the ever-changing environment poses a risk to their company’s progress and profits. If this issue is not diminished, the organization may miss critical deadlines and subsequently lose out on lucrative business opportunities. On the other end of the spectrum however, are CEO’s who do their job (and well might I add) only to find that the board feels that the company needs a CEO with a different skillset to guide and propel the business through its’ next phase of growth. In my opinion, this is guaranteed to happen, and founder/CEOs should prepare appropriately for the time when they may be seemingly snatched from their “baby.” During this period another individual is being championed for the CEO position. While this sounds somewhat harsh, voluntary successions occur all the time and allow the prior CEO to remain in some capacity with the organization as it levels up. Mo’ Money, Mo’ Problems…

While we all like to think that with additional capital comes additional flexibility, as business owners, we have to be mindful that each incremental profit increase also boosts the company’s legitimacy to investors and exposes future obstacles that the founding CEO may encounter (and may not have the appropriate skillset to deal with). Mo’ Money, Mo’ Problems….
As long as we are mindful of the pitfalls associated with entrepreneurship, we can only do our best to plan for the challenging times (i.e. the roller coaster) and any of the scenarios that could potentially rise. In any event…stick to the code…stay true to yourself, stay true to your organization’s mission and try your best to mitigate the nuisances that come with Mo’ Money!

References

   Herrenkohl, Eric. How to Hire A-Players Finding the Top People for Your Team – Even If You Don’t Have a Recruiting Department. Wiley, 2010.

   Wasserman, Noam. The Founders Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton Univ Pr, 2013.

1 thought on “Mo’ Money, Mo’ Problems

  1. Hello Tiffany!
    Your blog post are so fun to read! Mo’ Money, Mo’ Problems..Ha! In Wassermans examples he also notes where CEO’s are sometimes shown the door even after very profitably founding companies just because they no longer “fit” the strategy or direction of the board. I guess that would be Mo’ Profitability, Mo’ Problems for the CEO. I guess I would beg to be so lucky to found such a successful business to be shown the door by the board. Its certainly something to ponder.

    Thanks again!
    Jeramy

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