My Forced Public Apology

I want to share a dramatic startup CEO experience I had 9 years ago in Japan. It’s something I’ve never written about in public before. I’m somewhat anonymizing people’s names in this piece, but if you are desperate to figure out who is who, you could. I suggest you don’t bother. My hope is that by sharing the story, this doesn’t happen again to another startup founder or anyone else.

If you know folks who work in startups or, more importantly, VC, I suggest you share this piece, as I think that the practice of gracefully handling inevitable startup reshuffles is grossly underdeveloped.

Oh, and, I’m fine now! Or rather, I’m screwed up in various other and related ways, but this experience is firmly in my rearview mirror.

No adults in the room

A few years ago in Japan, I founded and was CEO of a translation platform called Gengo. Together with my co-founder, we scaled the company with several rounds of VC funding and rapid sales growth in the US and Japan. I left in 2015, and in 2019 Gengo was acquired by the industry leader, Lionbridge.

The 2008 principles behind Gengo were, just to get it out of the way:

1. Machine translation sucks, especially between English and Japanese.

2. Let’s make it really easy, low cost, and fast for a human to do the translation instead, and make it really easy and fast for you to order. This will unlock a much larger potential market.

3. Let’s connect the system via an API so that companies can order millions of these translations automatically, especially for ecommerce.

I start working on Gengo in Tokyo in 2008, programming in PHP(!) for months and building a codebase that grows rapidly beyond anything I can keep in my single head. A Japanese friend named T starts to help build it out further and into something that almost works, while I do more design, marketing and building out the front end. We bring in another co-founder, M, who completes the coding, and helps accelerate progress, giving us a valuable boost that means the difference between life and death. I am grateful and excited. T winds down his involvement, for now. We reshuffle our equity stakes — As founder and CEO I have more, M as co-founder has a little less, T as departed co-founder has even less. But we have built something interesting now. You can order a translation, a human can do it online, and you can get it back in a few minutes.

It’s Uber, for words, maybe? We get a little hype.

After so many months, T can’t work full time on Gengo anymore and has to find a real job, and so M and I are left working on it by ourselves, and trying to raise money. We are fueled by Chinese takeout, ramen, katsu curry, and a stack of coke cans that rises unsteadily above our co-working desk. As two of us, we get on well and work hard. In the environment of 2009 fundraising is tricky, and as an English-speaking startup in Japan we find it even harder. Every complexity is a snag. But we hustle. We learn the startup game. I will be CEO, M will be CTO. It will work. We pitch constantly.

We pitch to one investor who falls asleep on our Skype call because it’s 2am in California. He ends up giving us a little money, with the promise that we will pull a large round together — but first we need to fix our equity problem. T still has a huge chunk of the company, and investors tell us this is weird — we need to bring his stake down for it to be a viable investment. But there is no compensation for T. I tell them I will go talk to him.

Tokyo, 2009-2011

On Christmas Eve I go to our co-working space to meet T. I must tell him somehow that we have to cram him down to bring in any new investors. Before we talk, we grab Indian curry together from our favorite local spot. It tastes a little different that day. Probably because of what I have to do. We go into an overly warm, sunlit meeting room at the top of the building to eat and talk.

As we’re eating our curries, and I’m telling T what is happening, I start to feel sick, and sweaty. I explain that if he’s not working full time on the business while holding so much equity, at this early stage no investor will get involved. We have to bring down his percentage quite radically, with nothing in return. If we can’t raise the money, the company won’t stay alive, and so his equity will be worthless anyway.

I dip naan bread into the curry, anxiously. The room is stifling.

T cedes his shares graciously. I have done the first truly capitalist thing. It is reasonable and unavoidable and crappy. I am overwhelmingly grateful for his acceptance. I cannot finish the curry.

Within hours I develop intense food poisoning. I am on the floor for two days, fast frenemies with toilet and sink. T is fine. But Gengo has what it wants. We close the round, do the TechCrunch press stuff. We sigh in relief.

Shortly after, we have $760,000. We graduate from our co-working space into an apartment/office in Sendagaya, a quiet semi-residential neighborhood near Harajuku surrounded by small fashion and design businesses in 2- and 3-story buildings with expensive luxury cars bought for tax reasons. Our office is just three rooms, and has wallpaper that looks like cast concrete. It’s kind of cool, kind of horrible. And, excitingly, ours to build a rapidly-growing team.

It has a meeting room with no doors, covered in a ceiling of glass. It is perfect for controlled environment agriculture. We joke later about having to take meetings in the bathroom because of lack of space. We joke about the sun streaming into the meeting room making it an interrogation chamber. We joke that there is no privacy. When M and I have to let our first junior employee go, without a secluded space we two geniuses decide to traipse down to the Starbucks to do it. As we tell her, she starts crying, in the middle of a busy store with dozens of customers, strollers, kids. We stare at each other, ashamed of our idiocy.

Another room, the “Skype Room” is a converted balcony with no air conditioning or heating. We are constantly on video calls there, handling our newly-growing enterprise sales accounts in the US. In the summer it becomes uninhabitable after 12 minutes of the door being closed. It must be flushed, like an airlock, before re-use.

Each day is ended with me, C and A and others going down to the convenience store on the corner and buying $2 cans of beer, a never-ending stream of Asahi Super Dry and Kirin Ichiban and whatever seasonal special they sell at the time. We buy single cans and go back into the store for more when they are done. F buys hard-boiled eggs at the counter, and taps them open with his knuckles. We are noisy. We stumble home.

I park my bike downstairs. My ride to work is 7 minutes. Apart from the excess of alcohol, we are focused and productive. Everything is about Gengo. We buy handmade cookies depicting Gengo-chan, our mascot. We fill the office with IKEA furniture but we, you know, like, make it nice? We buy plush tetrapods. We have soft ambient lighting. As our team swells, we discover new mathematical proofs — desk tessellations to fit the maximum number of staff into the space. We create dividers with green IKEA leaf-shaped shades. We have beanbags. -perfect

Gengo grows, and we take over the office next door. We have 301 and 302 crammed full of developers, from whom M inexplicably becomes more distant over time as our engineering structure creaks. We can climb across the balcony edges to go between the apartments. Of course this is dangerous, and so we only attempt to do this during parties when we are drunk.

M and I are offered the chance to move the company to San Francisco. We do not consider it as seriously as we should. We are concerned about losing the team and our home circumstances and how we would actually make it work. US sales are growing faster than Japan. We think Japan will continue to be the more natural place for our business, for some reason. The choice or non-choice starts to represent a different path not taken, one that would have yielded something new or better for both of us founders. We refer to this choice occasionally in bad times.

Tokyo, 2014

M and I have a long walk around the neighborhood, trying to figure out what to do with our growing differences of opinion that have flourished and bloomed over Series A and B and now into the prospect of C. Our international sales continue to grow, and the tension between Japan and US focus grows with it. It has become common at board meetings for me to directly confirm our US emphasis with our investors, and get blank noncommittal stares back. We talk about all this as we cross over the train tracks and wind through side roads towards Daikanyama and past the really good burger place and back over the train tracks.

I am agitated. I tend to interrupt. I have my own view of things. The company is still growing rapidly, especially overseas. He is frustrated because he wants to do things differently. I am frustrated because I feel like I have spent years protecting his performance from the board, and working at the request of our leadership to create safety measures around his management. He is frustrated because he feels he has lost agency, which is true. I am frustrated because in my mind I hear no suggestions, only complaints. The underlying fact of us being in Japan but growing in the US, and me not being Japanese, and our investors being Japanese. It’s awkward and unresolved. The walk does us no good and things only get worse. We are heading for something.

San Francisco, March 2015

As our relationship has soured further, M has been fundraising for our Series C among Japanese investors, with some success, an immense achievement. The company has been growing around 100% each year for several years under my leadership, but I have been failing to find any investors for the round, which is the ultimate weakness for a startup CEO. We are not yet profitable. This is bad. 

From the Hyatt near SFO, I peer down at the highway. I have just heard from my team that M has told them something strange. It is 9:30PM. I am looking at my team’s calendar for the week ahead, and M has invited them all to 1:1 meetings. At this point M never has 1:1s. M has had no direct reports and no operational responsibilities for many months. In our recent board meetings he has asked me ‘gotcha’ questions in front of the board as if he were an activist investor, not a co-founder or employee. He has not told me about any of these 1:1s, and we are currently not best friends. This is bad.

Tokyo

When I arrive back in Tokyo a few days later, M brings me into a meeting room, and informs me that the new investors are in — great! They want him to be CEO, and they want me out — oh no! I do not take this news as graciously as you might. M has told most team members at this point. I am surprised that this might happen and that he might do this behind my back.

Early the next day, in our conference room, twenty of the team in person, and half as many again over video, sit down with M in a kind of intervention. Apparently he is seated one side of the table, and everyone else at the other. An ordeal. A rare occasion for them to speak directly to M. I do not orchestrate the intervention and am not present. The intervention is conceptually dramatic but has no discernible effect.

The board meets. The new investors are either going to invest and keep the company alive, or not invest and let us die. If they invest, they want M as CEO. Well OK then. The decision is ridiculous and easy. It is the weirdest meeting of my life, and people who talked about being ‘founder friendly’ for years do things in that meeting that surprise and disappoint me. I am advised to vote in favor of my own dismissal. I cannot look at M. The investors will hold an internal announcement session to tell the team. My exit deal is up in the air. But they don’t tell me about the bullets.

It is 10AM on announcement day. I enter the office through the glass door with its beautiful metal frame. The reflection in the glass reveals the grey buildings of Shibuya. The chairs, arranged auditorium-style, by someone else, and a row of speakers’ chairs facing the audience. Tables, pushed aside, by someone else. The wireless microphone on the chair, our old friend of countless all-hands meetings, shared by everyone, dented, a vector for all diseases. Zoom, already set up and dialed in well in advance. Our two huge TVs, one showing the San Mateo office over video conference, on Mute. Other teammates dial in personally. 

None of the usual Zoom waves. No silly in-jokes or preliminaries. I see Adam and Jamie and Emily on the video, and Spencer and Issam and Yosuke and Mike and Andrea and Shoma.

The feeling of waving through a screen at your family as they watch you prepare to be executed, and ha! Still in that moment the temptation to make an in-joke. We have plenty of jokes. We have the game where we try to insert an unexpected word into a speech. We have Japanese jokes. My friends would have loved for me to learn how to blink S.O.S. in Morse code. We have plenty of these jokes.

But I look down at a printed list of bullet points instead. A list written by M, and given to me the day before. Seven items. The bullet points are apologies that I must make to him, in front of the team.

This is Tokyo, and this is 2015, so all of us know about these apologies. On TV in 2011, after the earthquake, we watch the executives from TEPCO. They have been collectively deemed responsible for the Fukushima disaster, wearing the blue boiler suits that indicate solidarity with the worker, that show down-to-earth practicality, that nod in respect to the engineering powerhouse of Japan. They bow and apologize over and again. We have all watched this performance on TV when something goes wrong. 

These cultural apologies are meaningless and crucial. The apologies are a fantastic scheme for avoiding reality by creating a low-res proxy for healing. The apologies are a respectful way for society to focus its grief. They mean you never really have to figure out what is wrong. They are good. They are dystopian. I miss them. I am glad to be free of them.

Years before, M and I have been on the receiving end of a serious apology from an editor at Nikkei, the print newspaper with the largest circulation in the world at the time. They make a minor mistake in a short article, a simple error about our little startup’s customer support hours — and we notice, politely. The editor insists they must immediately visit us to clear up the error. So they do. Soon, the editor and his junior sit across from us at our tiny meeting table in our tiny interrogation chamber with the sloped glass ceiling. The sun is bright. They apologize in Japanese, bowing to us, in different depths and cadences and with different levels of pause in-between, and we bow back to receive the bow and receive the apology and smooth the waters. The apology is the only topic of the meeting and the meeting lasts 30 minutes and most of that is bowing. It feels like eating pancakes for half an hour straight. At first great. Half an hour later, that’s enough pancakes and no one wants to be in a room together anymore. They leave with our respect and smiles all around.

All of us now, back in 2015, our whole team, is in this newer, cleaner room in Shibuya. This larger room, with dozens of spaces to sit and powerful air-conditioning and remodeled interior and $235 chairs and Gengo branding on the glass. We here are all familiar with the public apology from afar. But perhaps none of us thought we might get a front-row seat. 

Today has none of the sensory cues of regular Gengo gatherings. No coffee smell. No pastries. No fruit. I am told where to sit, and I sit. Soon we are all seated. We start. First, there is a comment from M. An introduction of the investors. Very quickly M passes me the microphone. 

Around two years earlier was the night before M’s wedding in Napa Valley. He had handed me another microphone at a small gathering of friends and I, surprised to be asked, made an impromptu speech in the bride and groom’s honor. I spoke from a deck in a vineyard as the sun goes down, the air warm but cooling into evening. It was wholesome, direct, to the point, celebratory. I was proud. 

This time when M hands me the mic, will I melt in a puddle? Will I throw the microphone through the window? And run along the top of the desks, and kick over the monitors? And then, while running, will I get my foot caught in unseen HDMI cables and fall, my shin cracking on the edge of a desk divider, twisting to glance back at the audience, looking to each other, concerned for me, some of them standing to help? And will I struggle, limping, but still with drunk momentum, to tip over the white IKEA bookshelves dividing the office, which have, outrageously, never been fastened to the wall as the instructions insist. Will I hobble over to the couch, and set fire to the couch, and walk out, to fall down the fire escape, 8 floors down, out into the Shibuya streets, panting? 

I will not. I have been told by A-san who is the representative of the investors, very firmly, and very clearly, that my performance today will have a significant impact on my leaving deal. And my performance today must include reading out the bullets. The apologies that M has written. So, the institutions of Atomico, Intel Capital and others are aware that it is happening like this. Their logos sit behind the prisoner of war in the news broadcast. I’m joking.

If this is happening to you, make sure to pause, and breathe in. And look around, at the very specific color of the light today, in this room, at this time, around ten in the morning, in March 2015, the cherry blossoms close to coming in. And the gentle sound of the air conditioning, and the feeling of the $235 chair, and the sound of the person breathing next to you, who you know so well and do not love in this moment.

I hold the microphone and read the bullets, pretending I am bound only to give my surname, first names and rank, date of birth, and army, regimental, personal or serial number, or failing this, equivalent information.

I read them, attempting to give the bullets no spin, to strip them of style, my mouth a short, unrifled barrel. 

We here at Gengo, audience and party officials and condemned, we are all in the business of language. We trade words and count words and celebrate words and create tests for other people’s usage of words, and we charge for words. We charge more for some words than others. Even those among us who are over video and sitting in California distant from this curious mess, we all know about intonation in Japanese and keigo and how to talk very nicely to people for a long time without saying anything at all. Words versus meaning.

In this audience of language professionals and friends, M’s bullets spill, limp from my mouth. They have no muzzle velocity. They clink at my feet, and roll a little into my friends in the audience, collecting around the chair legs and under radiators. I look into the eyes of my allies and colleagues as the brass tumbles down from my tongue to the carpet. 

One bullet, clink, is about how I did not give my co-founder sufficient trust to manage. Another bullet, clunk, is about how I did not listen to his input on running the company. Another bullet is a general apology to him for not letting him flourish. There are other bullets. They are all apologies from me to him, clink clunk. Apologies for a failed co-founder relationship, a loss of trust, resentment, grudges, lack of communication, uncertainty, misplaced expectations, all rendered into a public apology read by the offender, written by the victim. 

It feels comedic and ugly all at once, the disbelief when I show people the bullets — like look, my leg is broken, how did that happen, I did it to myself it seems, over the course of years — when we talk it through, we make sounds of confusion and sarcasm and dismay. Timeless commiserations of comrades lampooning oafs in power. You can’t write someone else an apology, dummy.

But if you could, maybe you would. And if you did, the person reading the apology might know you better, and might know what you were upset about in the first place, and might empathize, and might open their ears just a little to your needs and feelings, and take a little more time to resolve things. But no, it might not work like that very often.

And if you were to watch two co-founders do this to each other in public, as an investor with some responsibility for the situation, might you pause and suggest a little time out?

I add a tiny speech to the end. I say that I am so proud of the team that we have built over six years. I am thankful for the friendships we have created, and that people have achieved so much and grown so much, so much so that the team has no need for me any longer. It is short and good. Not the best ever, just good, but that is probably better, anyway. It is wholesome, direct, to the point, celebratory. I am proud. 

We wrap things up within minutes. I walk out of the room and shake hands with A-san. He says ‘good job’. He is clearly relieved I haven’t created a scene, or cast some incredible reputational pall over his salaryman career at Intel Capital. I have many things I might say. I say ‘thank you’. I pull a smile, and walk to the elevator. I descend and release the smile. I walk to the train. The chimes on the platform ring out. It is 11am. I have literally nothing to do.

Weeks later, I am in the area, like an idiot, for an unavoidable errand. By chance, I see M and a co-conspirator walking out of a convenience store, deep in conversation. I think of the scene in the Great Gatsby when Tom and Daisy eat together, noticed through their window by Nick, in earnest discussion, after the accident killing Myrtle Wilson. I pull back into a doorway. Tom and Daisy do not see me. This is the last time I ever see them in person. 

I make a point of talking to Niklas Zennström, wishing to impart some sense of responsibility on Atomico for allowing a public disgrace, to let things unfold so ham-fistedly. It goes so-so. There is no white paper that comes out, no friendly guides for executioners. No public apologies! 😀 

Over the next few months I go running, a lot, and each time I think about what happened. For a while I think about it for the whole of the hour-long run, and then gradually it takes up less time. By the end of the summer, I am proud to only spend a few minutes of each run ruminating about it all. But it takes further years for me to see how I contributed to the situation, to fully understand M’s position, and further years to know that by the time M and I were having our disagreements along the train tracks, it was far too late.

May you be wiser. And if you are in a position of power and see this kind of thing on the horizon, may you have the sense to avert it.

In service of that wisdom, I have five thoughts about all this. “All this” being a founder or CEO who finds themselves at risk, in shifting tides in a venture-backed startup. This specific situation is incredibly common at VC-backed companies, and I know several folks who have experienced their own strange permutation of the scenario.

One of the nice things about Farm.One is that despite our trials and tribulations, our investors were and are individuals rather than institutions. And my departure was a million times more planned and pleasant. This is not to say I would never work with institutions again, but more about being prepared.

I will make some sweeping statements that do not apply to all VCs. Thankfully I know many folks now who do not fit into this mold, and I do believe the investor world is gradually becoming more diverse, with more gender equality and fewer arrogant pricks. You may have the opportunity to choose who you work with, and if you do, you should.

1. It’s already too late

By the time you are aware of a situation like this unfolding, it’s too late. The work is to be done in the years and months before.

This is a creative problem-solving opportunity, that is best done together. Communicate your needs, and try to understand the needs of the others. There are mediators. There are advisors. There are creative ways to combine two, three, four people to figure things out. Of course, all this stuff works when both parties want it to work. It stops working the moment one of you doesn’t care, or has a vested interest in it not working.

Strategically, as an exec under threat, you are forced to work a dual- or triple-track, by trying to improve company performance while shoring up your options and trying to repair relationships. This is no easy task. As you scale a business, and as the stakes increase, finding a personal attorney who can represent you becomes more and more valuable — but gets no less expensive.

2. There is no ‘truth’

Our society perpetuates an idea that there is a factual truth to every situation, and if you just research and find the data, that truth will emerge. But when you are in an argument with your spouse or being thrown out of a company you founded, there is no real truth. This is even worse in startup world. Startup CEOs end up thinking that data will tell you everything. It won’t. There is no use waving around facts in a room full of folks who want you out. The work is to be done with people, and relationships.

3. People are not chess pieces

As a startup founder, your team is everything. You know everything about how they work, what they need, what they love, what they hate. You have been through everything together. People become intensely loyal in these situations.

You will want to create sides and join sides and orchestrate coups. But the support of a team means remarkably little to someone who is determined to shake things up, no matter the cost. It is often a disaster to risk folks around you in last ditch attempts to save yourself. Life goes on, and you can leave with strong friendships and relationships intact that will serve you far better than any short-term edge.

4. Don’t be a pest. Or do.

Two qualities that make founders successful are determination and persistence. Paul Graham often says they look for ‘formidable’ founders at YC, and this makes sense — but those formidable folks are dangerous too.

Of course, this means that when a startup CEO is being ousted, a board may view you as a tiger they need to hunt down before it eats their village. They need to time and construct things such that they kill you dead, and then immediately bury you. They know that if they don’t, and you stay adversaries, you can cause all kinds of bother for them. In terms of contracts, most founders are unable to get Zuckerberg-like control over their companies because they are not growing like absolute rocket ships. And so they actually have very little leverage when push comes to shove.

After I left Gengo, I spent a few weeks talking to our earlier-stage investors about my situation, and writing carefully-structured emails about company strategy. While I found sympathy and shock, it was a waste of time. I could see quite clearly there was a path ahead around being a pest, and it wasn’t something I wanted. So I stopped it very quickly.

Forgive individuals, not institutions. Individuals have so much baggage and unique motivation and circumstance at any point in their life, that they are destined to make poor-quality decisions based on these factors. The individual on your board is answering to their superiors, and hounded for progress and success. They are rewarded for it, and they are not without responsibility, but ultimately they are bound. Your co-founder or COO are human beings too. They are an asshole in the moment, but they are worth forgiving.

Institutions have longer memories, can have better systems, and should learn from the combined experience of all of their members. I don’t think there’s any moral issue with being a temporary pest to an institution, if it means the difference between you getting paid and not getting paid. If you need to block that merger with your vote in order for someone to re-evaluate your compensation package, do it. And rest assured, they are getting paid.

But then move on.

5. There are no adults in the room

No one cares. As a startup CEO you are invited to build a positive team culture that will somehow withstand rapid growth. You do this with solidity, trust, respect, clarity. Conversely, if an investor in power wants to reshuffle the team, they will do this in moments, with no regard for these values. They will move the chess pieces around as they like, quickly and with no preparation. Arguments around what is right, what might be a kinder or more resilient way to do this or that, are useless. It all comes down to your contracts at the end of the day. If you are unlucky, a company will end up in this limbo for months or years, with constant reshuffles among folks who don’t give a damn.

No one is good at this. If you are very lucky, more than one person in the room will have been through something like this before. If you are very lucky, someone will have experienced it a few times, and thought about it long enough to want to do a good job. I think that young founders assume that investors and advisors, who tend to be older than them, know what they are doing. They often do not, and they are the kind of folks who will never let you know that. A principal or even a partner at a VC firm may not yet have any direct experience of how to do this stuff kindly, and they may well be winging it. They will do short-sighted things without realizing the further implications.

I tend to find that lawyers have seen the most of these situations, and are the most cool-headed. But their loyalties are fixed, and so this is often of no help. Do not be surprised if a person in power ignores their lawyer, too!

As one of the people in those rooms, I don’t claim to have been an adult or to have handled things well. I do wish someone had helped us all get from A to B with more respect.

An adult in the room might suggest:

• mediation of some kind

• thoughtful frameworks for having the essential difficult conversations

• a little more breathing and space

• a process that respects everyone involved

• a process that gives the incoming exec the best chance of success

That last point is critical. When reshuffles happen, half the time the new CEO has to worry about divided loyalties and who they can really trust - because the way they were inserted was clumsy. What a nightmare to have to worry about past pests. May you be spared this.

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