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In the realm of startups, while having a clear vision is undeniably essential, the importance of execution often outweighs it. Startups face numerous challenges that can derail their progress, including issues related to people, products, competition, and legal dilemmas. These elements can be interconnected, making the path to overcoming them even more complicated. This narrative serves as a caution regarding the risks associated with reliance on key individuals.
Having recently completed a public offering, we were in the midst of planning for our next growth phase. As I navigated through traffic after a jog, my mind drifted to our upcoming annual general meeting (AGM) scheduled for the following May.
It was drizzling lightly when my colleague Elena broke the quiet: “KK, is your phone off? Zisis (our COO) is trying to reach you.” I turned to her, replying, “Not at all, it should be on. What’s going on?” Just then I noticed the rainfall intensifying.
Checking my phone, I realized it was indeed on silent mode. A series of urgent messages caught my eye, particularly one stating, “This is urgent.” She handed me her phone, and Zisis, sounding increasingly anxious, relayed, “Hey man, I’m sorry to disturb you, but there’s a serious issue.” My heart raced, and the adrenaline spiked at the wrong moment as the storm raged outside. He continued, “Our CTO has demanded $10 million by tomorrow, or he’ll erase all the code, repos, and expose all internal communications.”
As I absorbed his words, the tempest outside echoed the turmoil in my mind. I calculated that while we could meet his demand, it would severely cripple our finances. “Give me 20 minutes,” I managed to reply, my mind racing as I drove home, feeling lost and defeated.
Stepping into my house, I was met with the aftermath of the hailstorm. My thoughts spiraled rapidly. Should we handle this extrajudicially? Or should we publicize his threats? However, cooler heads prevailed as my team and I spent hours deliberating on an alternative strategy.
Negotiating from a vulnerable position was indeed crucial. We decided that our stakeholders needed to be informed about the predicament and that we would reconstruct our codebase in Europe, allowing us to refactor and mitigate technical debt. We determined that filing a police report was necessary, and we could not concede to intimidation. Just as we composed our response, we received an unexpected message from the CTO. He recanted his threats and suggested a call. Had our silence prompted him to reconsider?
Looking out the window, I caught a glimpse of sunlight breaking through the dark clouds.
Although relieved, I was left puzzled by his change of heart. The following day, during the call, our CTO was surprisingly accommodating. He expressed that he felt overwhelmed and was seeking an amicable exit — a reasonable request considering his contributions. Still, it unsettled me that his threats had not appeared impulsive but rather stemmed from deep-rooted issues that had developed over time.
After reflecting on this experience, I gleaned several key lessons.
1. Build Genuine Relationships
This situation epitomized the fallout from my lack of connection. Each product idea that emerged relied heavily on our CTO and his committed team to bring it to fruition, often resulting in unacknowledged toil under the pressure of deadlines. Their efforts on scaling were met with disappointments over time, leading to growing mental fatigue.
While Zisis would make trips to visit the satellite office to foster team relationships and address operational challenges, I neglected the importance of establishing rapport with our CTO, which could have changed everything. Although I valued him and his contributions, I prioritized less impactful matters over nurturing this key relationship.
Investing in relationships should never be considered merely a buzzword; employees crave connection and purpose, not only financial remuneration.
2. Beware of Physical Distance and Its Consequences
Post-pandemic, the shift from physical office spaces became prevalent. Despite some studies suggesting remote work can boost productivity, many employers argue the opposite, emphasizing the challenges of lack of face-to-face interaction.
For startups, having technical teams dispersed internationally can prove detrimental. Issues like time zone mismatches, communication delays, and cultural differences can snowball into significant challenges.
When teams work closely in one location, issues can be solved more efficiently. In our case, resentment silently brewed for years, exacerbated by my inability to recognize the mounting issues until it was too late.
3. Exercise Caution in Communication
Three months before the threats, I had a moment of frustration during a call with Zisis about critical code failures, saying, “Just eliminate [the CTO’s name] next time.” This comment, intended to remain private, was inadvertently shared with him, likely shocking him deeply.
This experience taught me to keep strong emotions out of written communications. Additionally, I’ve learned to treat all communication as if it could be publicly disclosed.
4. Always Prepare for Contingencies
When we first faced the threat, our headquarters in Cyprus was still under construction, and we lacked additional senior technical expertise beyond our CTO. This oversight proved to be a serious mistake.
If feasible, consider hiring a part-time mentor or consultant to oversee crucial tech personnel. We now employ someone who conducts audits, ensures code backups, offers interview support, and can step in during emergencies. This proactive measure has fortified our team against the potential of a single point of failure.
Think of contingency plans as necessary insurance; no venture operates without risk management.
5. Prioritize Soft Skills in Hiring
While there’s often a disconnect between technical proficiency and interpersonal skills, our approach has shifted towards a more integrated hiring process. In tech startups, no one holds more sway than the CTO — while they can create, they also have the capability to dismantle.
Focusing on emotional intelligence and stability is vital in any key role. The reality is that key man risk should not only be the abstract concept included in a risk assessment; it’s a palpable concern that mandates attentive management.
Recognizing human imperfections is crucial. While we aim for the best outcomes, preparing for potential pitfalls is equally important.
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