Why Startup Founders Often Get Kicked Off Their Own Board

New tech startup founders I meet are often obsessively concerned with a seat on their board of directors. Often the nature of the startup is such that it will need significant outside capital.

Founders who get kicked off their own boards usually do so for failing to understand that the minute they do take outside capital, the board ceases to be the steward of the founder’s vision and becomes the steward of shareholders’ investment.

The board’s fiduciary responsibility may, likely will, someday run counter to the inventor/founder’s dream for his or her tech.

In my experience, the founder board split is often exacerbated because most inventor/founders do not do enough work on the customer value proposition and product/market fit early on. As a result, they overestimate when profits will arrive. After that happens a few times, hard decisions need to get made because money doesn’t grow on trees.

Something the founder wants to do will be too expensive or impractical and the board will have to fix it or risk tanking the company. A big row ensues, someone resigns (or threatens it.) This might go on a few times over a few years. Eventually, the board gets tired of it and the founder is suddenly off the company board of directors.