Falling from grace: What happens when founders lose their own companies?
The photo of the enormous blue Weave banner perched across the New York Stock Exchange stopped me mid-scroll on LinkedIn one morning in November 2021. I remembered Weave was poised to go public, so I quickly surmised Brandon Rodman, Weave’s co-founder, must be there to celebrate—until I began reading the post that accompanied the photo.
“We risked everything to bring Weave into the world. We emptied our early retirement account, personally paid employees’ wages, accrued huge debt on our personal credit cards, were upside down on our home and we sold our cars,” Rodman’s post read. He recounted success after success. Then, the post ended with, “Then, almost overnight, I was no longer running Weave. I didn’t understand. No one did. It didn’t make sense. But it happened. One year later, my wife and I quietly celebrated Weave’s IPO from the outside. Everyone else was inside.”
I ached for Rodman when I read that. Unfortunately, his story is nothing new.
It’s not you; it’s me
In 2008, Noah Wasserman published a Harvard Business Review article titled “The Founder’s Dilemma.” After analyzing 212 American startups, he found that 50 percent of founders were no longer the CEO by the time their ventures were three years old. In year four, only 40 percent were still in the corner office, and fewer than 25 percent led their companies’ initial public offerings.
Marc Randolph, the co-founder of Netflix, recently posted a different take. “When I stepped down as Netflix CEO, it was because we all realized I wasn’t the best person to fill that role at that company at that point in its growth,” he wrote. “Some founders do this from day one, recognizing that their superpower isn’t running the company, so they find someone else. The problem arises when a founder (or those around them) insists on running ‘their’ company even if they don’t have the skills, temperament, or desire to do it well.”
Art Coombs, the founder of Lehi-based KomBea Corporation, knows this all too well. In 2000, during the dot-com boom, he co-founded Echopass. It was one of the first companies to provide advanced, IP-based call and contact center solutions as a service for mid-large enterprises. In March of that year, Echopass raised $27.5 million in Series A funding. It would be the company’s first of nine rounds of funding totaling $82.1 million.
“In order to raise big money from a premier venture capitalist, you have to paint this crazy picture of the company three to five years down the road. You’re selling a thoroughbred that will not only win the Kentucky Derby but the Triple Crown,” Coombs says. “That’s what they want to hear. So you paint this big, audacious image for them, set big goals, and then reality sets in. The moment you don’t hit the number is the moment they start saying, ‘We need another person,’ and they slide another CEO in.”
"In order to raise big money from a premier venture capitalist, you have to paint this crazy picture of the company three to five years down the road. You’re selling a thoroughbred that will not only win the Kentucky Derby but the Triple Crown. That’s what they want to hear. So you paint this big, audacious image for them, set big goals, and then reality sets in. The moment you don’t hit the number is the moment they start saying, ‘We need another person,’ and they slide another CEO in."
For Coombs, that time came just eighteen months later. When Echopass was sold to Genesys in 2013, Coombs made 35 cents on the deal.
When I share Rodman’s post, Coombs chuckles and says, “More often than not, that’s how it looks.”
Stephenie Larsen, the founder and former CEO of Encircle, recently stepped down from the organization she had poured her heart and soul into when the board of directors—many of whom she had invited to join the organization—decided a change was needed. I was in absolute shock when I heard this news, as I’d personally witnessed how Larsen had completely given herself to supporting and advocating for so many LGBTQ+ youth in Utah.
When I was able to go to dinner with her a few months later, I asked Larsen how she was doing. The toll this had taken on her was palpable.
“You have to ask yourself who your people are,” she says. “Who do you care about in life? You lean on those people, your truest people, and you tell yourself you did your best, you tried your hardest. And if you failed, you tell yourself you did your best for the people you were serving. And if you walk away or get kicked out knowing you did your best, that’s what brings true peace.”
There are things Larsen would have done differently, of course, but she claims to have no regrets.
“I also learned it’s really easy to judge people who are under a microscope, under constant critique, and no one knows,” she continues. “But you’re the only one who knows you did everything with the best intent.”
The long and winding road
Following his departure from Echopass, Coombs searched for his next opportunity. “Painful lessons are often the best,” he says. Given what happened with the investors at Echopass, he felt no one would hire him. And so he started and self-funded KomBea.
“We pitched KomBea 40-50 times and got shot down each time. No one would give us money,” Coombs says. “But when you have to make it work, you make it work. It’s your livelihood, and that’s the best motivation you have. So we stuck to our own funding, scraped by, and now KomBea is finally seeing a lot of success.”
Coombs says one of his proudest moments came when he ran into his original VCs several years ago—the ones who terminated him. They said, “Echopass was the right solution, just 10 years too early.”
In the end, Coombs found his way with KomBea. Larsen is taking time off to be with her family as she contemplates the next cause that will bring her as much fulfillment as Encircle did. Rodman has gone on to found Previ, a rising star in Silicon Slopes. His posts are hopeful and proud, and in almost every one of them, he talks about putting employees first.
“Weave turned out to be a huge success, but Previ is really time for me to go to work,” Rodman wrote in his Founder Series column. “This is going to be my life’s work.”