This is eerily similar to what happened at Twitter. I just finished reading the book Hatching Twitter by Nick Bilton and the parallels are frightening. Now I'm not sure how much of that book is true or fabricated, but the book claims that first Jack Dorsey was kicked out as CEO and replaced by Ev Williams. Then Williams was kicked out as CEO and replaced by Dick Costolo. Just like with Tinder, Twitter was a giant success (by any measure) when the CEOs were pushed out against their volition.
According to the book, the fatal flaw is board control. Even though Ev Williams was the largest shareholder (an assumption), he didn't have board control. He only had 3 out of 7 seats. And so he was forced out against his will.
Now Zuckerberg (at Facebook) never lost board control and hence was not pushed out by the VC board. The major conclusion seems to be it's imperative to maintain board control or you'll most likely be vulnerable to being replaced by professional management - even if you create a successful company.
The other interesting parallel is Benchmark. According to the book, Benchmark was one of the vcs to push out Ev Williams. It's been reported that Benchmark is now on Tinder's board.
Not sure how similar this is, since the majority of Tinder is owned and controlled by IAC. The founders never really had a chance to control it since it was an incubated project.
The IAC thing makes me wonder whether these stories can even be read normally. Given that this is a very large company that is closely managing the creation of a startup-shaped thing, do things like "founder" and "CEO" and "investment" mean what we usually think they mean? And if not, is there at all a meaningful parallel in the story of Twitter or any other actually-independent startup?
"""I spent a short and intense two weeks last summer reporting out a Tinder feature for Bloomberg Businessweek. What I found was a meteoric startup that wasn’t really a startup, owing to the fact that Tinder was born in an IAC incubator, and IAC owned and controlled the company. Rad and [former Chief Marketing Officer Justin] Mateen seemed to be playing make-believe in a lot of ways. They were keen to hide the IAC arrangement (“They’re sort of our partner in this”) and pretend that they were living the dream of being wined and dined by Silicon Valley moneymen (“We are being bombarded by venture capitalists … it’s very overwhelming”). When I talked to their minders at IAC and the incubator, executives were often dismissive of the two youngsters—happy to let them spin grand visions and soak up founder acclaim, while telling grownups, i.e. Wall Street analysts and investors, that Tinder was simply a lure to get millennials to pay later in life for IAC’s profitable dating service Match.com."""
>Just like with Tinder, Twitter was a giant success (by any measure) when the CEOs were pushed out against their volition.
Isn't this a core operating tenet of VC investment and one of the key reasons for taking a board seat? It is pretty well known that "founders" are generally not very good managers/executives and the investors know that and plan on bringing in new management ASAP.
According to the book, the fatal flaw is board control. Even though Ev Williams was the largest shareholder (an assumption), he didn't have board control. He only had 3 out of 7 seats. And so he was forced out against his will.
Now Zuckerberg (at Facebook) never lost board control and hence was not pushed out by the VC board. The major conclusion seems to be it's imperative to maintain board control or you'll most likely be vulnerable to being replaced by professional management - even if you create a successful company.
The other interesting parallel is Benchmark. According to the book, Benchmark was one of the vcs to push out Ev Williams. It's been reported that Benchmark is now on Tinder's board.