Before we dive into The Takeaway, I want to draw your attention to two quick things.
First, thank you to everyone who has filled out our major tech comp survey. Many of you asked that we survey our community about the nitty-gritty of comp, benefits and performance reviews and how they are changing, and we obliged. The results have been pouring in and they’re fascinating.
We’d be grateful if you’d take about seven minutes to complete the survey, if you haven’t done so already—here it is. It’s anonymous. We’ll be publishing the results for subscribers.
Secondly, mark your calendars for June 22 at 11 a.m. Pacific Time. Kate Clark, Berber Jin, Amir Efrati and Laura Mandaro—our crack VC reporting team—are going to give you a special notebook dump about the state of play in the red-hot market for private tech deals and exits. This team has been on fire lately and this is sure to be a valuable event, where you’ll get a chance to ask them specific questions. Sign up here.
‘It Is Much More Existential’
A few weeks ago, I was reporting on two possible M&A deals and asked my sources why each company was looking at a sale versus an initial public offering down the road. In both cases, the answer was the same: The founders were done.
There’s not a founder or CEO I talk to these days that doesn’t have some version of that story. They are exhausted. They are frustrated. They feel that the leadership challenges they confront in this moment (haggling over days in the office, tending to employees uneasy about a wide range of issues) aren’t what they signed up for. So they are reevaluating—big-time.
My perceptions are mostly anecdotal. Personally, I don’t feel burned out and I am excited about the work ahead. But I do feel very tired. And I can understand why some founders are heading for the exits.
While the rich valuations of this moment are certainly a factor, I don’t believe it is all about money. I know founders who are quitting or selling their companies now when they could certainly have much more lucrative IPOs in the near future. There’s something else going on.
So I went to the experts. Dan Putt is a co-founder of Reboot, a well-respected CEO coaching firm that works with high-growth tech companies. He said the firm is hearing from more CEOs who feel burned out and are evaluating their next steps. He sees it the most with leaders of fast-growing companies that are five or six years old.
They don’t want to work less, Putt said. “It is much more existential.”
“They are deciding that the life they are living now no longer fits them, and [the trend] seems to have accelerated very quickly,” he said.
That feeling encompasses both lifestyle and mission. My guess is that the experience of the pandemic has shown founders different paths they could take.
I don’t for one second want to imply that the challenges leaders face, particularly those at deep-pocketed startups, in any way rival the stress and tragedy others confronting death, job loss and other unimaginable burdens have experienced during this pandemic. They simply do not. End of story.
But we should talk about the situation because it is likely to have real and lasting effects on a lot of people.
Putt warned that it is likely to create “quite a bit of discomfort and anxiety” in organizations as they endure multiple leadership changes.
I worry that if we fail to recognize the stresses and challenges of this moment and help leaders address them, we’re going to have a harder time recruiting leaders of all types—especially those from underrepresented groups who already struggle to break into tech.
And those stresses are about to get worse. As one executive reminded me this week, the sudden shift into remote work was challenging—but it was forced upon leaders and left them with few choices. They had to make it work.
In contrast, returning to offices over the next year is going to be 10 times harder for managers as they devise and enforce new policies filled with gray areas, balancing conflicting demands and many unknowns.
In a pure business sense, I also think the rise of founder burnout creates opportunities for all sorts of business tie-ups that might have seemed unlikely a year or so ago—like those deals I was talking about. I expect smart companies will exploit them and gobble up some fast-growing private companies sooner.
I’m curious what you all think. What are you feeling and seeing?
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