In Spring 2021, my startup, Powder, was riding high.
We had announced a $14m Series A to scale our mobile app. We had 300k monthly users with 20% of daily users posting on the platform.
There was an exciting opportunity ahead of us, and scaling headcount seemed the best way to realise our potential. We reinforced our one-and-a-half-year-old AI team and built out Android and PC divisions to expand beyond iOS. We grew from 15 to more than 40 people.
By Autumn of 2022 the picture couldn’t have been more different. The base content we had built our platform around — user-generated game clips — wasn’t varied enough to keep users engaged. And without a large, engaged audience, we started to haemorrhage creators.
With little more than a year of runway left, our investors sat us down. They were clear that a sharp restructuring was needed or the business would fail.
At this moment, all three of my cofounders told me their intention to leave.
Suddenly, not only would I be facing the hardest chapter of my career so far, but I would have to do it alone.
When your cofounders leave
I've read somewhere that the two main reasons startups fail are 1) not finding product-market fit and 2) cofounders breaking apart. In Autumn 2022, I needed to navigate the latter to then solve the former.
Luckily, we had a robust shareholder's agreement in place, helping clarify what needed to happen from a contractual perspective. I’d recommend any founding team put time into drawing up such an agreement.
That period of time felt very strange to me. For the last four years, our interests as cofounders had been well-aligned. Suddenly we were on opposite sides of the table. This made for some tense discussions which thankfully we all handled professionally.
I had a new job too, catapulted from COO to the helm of the ship. I’d spent a decade in the tech industry as a supportive number two, cofounding ventures like Hello Tomorrow and Artomatix. But now I had CEO and sole founder responsibilities amidst seriously challenging market conditions. Without a cofounder, I leaned heavily on my loved ones, in particular, my wife Mariela and my father Matthieu, who kept me going.
This was as much a personal transition for me as professional. I needed to clearly articulate my vision for leadership and start embodying it immediately.
Convincing people to keep the faith
My list of problems to solve was overwhelming, and so very early on I committed to addressing topics in sequence. This compartmentalisation made everything easier.
For me it was first about convincing investors of the future of the project, then validating the conditions of my cofounders' departure, followed by restructuring and then implementing a new strategic vision.
Our investors were shocked by my cofounders' decision to move on. They had invested in a team, not a solo founder, and warned me that many difficult discussions lay ahead. My first job was to convince them that our project was about to thrive, not crumble.
I had a simple strategy for this. I created a document highlighting the assets of the company, the leadership and organisational changes I would make and my plan to succeed.
And then I pitched them as though my business depended on it.
Luckily, our investors were entrepreneur-friendly and ready to listen. They rose to the situation.
I took that same document, and used it as the foundation of discussions with the 18 employees we asked to stay at the business. All of them stayed too.
When people join a startup, they're trusting its leaders to navigate towards success. In that sense ‘restructuring’ — or, to avoid sanitised jargon, ‘layoffs’ — is a failure for any entrepreneur. It can’t be sugar-coated.
I know a lot of founders are going through similar experiences right now. The best thing we did back then was an all-hands meeting with all departing and remaining employees at the same time. No questions were off the table. If your organisation values transparency, it's crucial to hold up to it in difficult times — not only when it’s easy.
We then treated departing employees the same way we’d want to be treated. Keep in mind that the employees you're asking to stay are watching you. With help from my team and investors, in particular Camille and Anne, we scouted more than 120 job opportunities for our outgoing team members.
We made dozens of intros to potential employers. We freed employees from working their notice and guaranteed them six additional months of vesting. Employees who didn't meet their cliff received small cash bonuses.
That group all-hands was the final intervention from my cofounders. I was now alone at the top. As the new leader, I had to embody the correct values from the get-go.
The dust settled and we had a business to build back up.
I’m happy to say that a year later our business is flourishing. And, if anything, that tricky period honed our resolve and redirected our vision. It became a crucible of learning and we're stronger for it.
Hindsight is of course a wonderful thing. But with the luxury of being able to look back from a sturdier place, I’m grateful for the entire experience.
As Steve Jobs put it, "Character is built not in good times, but in bad times; not in a time of plenty, but in a time of adversity." I hope other founders going through similar troubles right now can take heart from that.