10 Incredibly Successful Founders Fired By Their Own Companies
George Zimmer, CEO and founder of Men’s Wearhouse, K&G and Tux brands was fired yesterday from his own company. Shocking, sure, but it isn’t the first time a founder was booted from running his own company.
When you start your own successful company, there’s always the thought of taking your business to “the next level”—going public, selling stock and making the really big bucks. But that big payday comes with a big risk. Shareholders and investment companies don’t care about your history with the company and how much of your personal money, sweat and sleepless nights went into getting the business off the ground. All they care about is the bottom line. To them, you are just another employee.
Here are ten company founders who found out the hard way that starting the company won’t necessarily save you from a pink slip.
In 2006, Glass and Evan Williams created Odeo, a podcasting platform that instantly become obsolete when an updated version of iTunes allowed the same functionality. Needing a new idea, Glass and Williams came up with Twitter. Glass was placed in charge of the new software and wanted to spin it off as its own company. Williams, working behind Glass’ back, secured the funding to buy Odeo and all of its assets—including Twitter—back from the initial investors. Williams changed the name of the company to Obvious and, for reasons that still aren’t entirely clear, fired Glass. Williams did later admit that Glass was the one who originally came up with the Twitter name, but the two have never reconciled.
When you’re dealing with founders being ousted, there is sometimes a bit of a gray area between “fired” and “pressured to leave.” Although former Apple CEO John Sculley and Jobs always disagreed on whether Jobs was actually fired from the company he helped start, the fact remains that Jobs left Apple in 1985. Over the next several years, Apple struggled to gain a foothold in the growing personal computer market with a marketing approach that seemed aimed on pushing lots of products out to market, but not doing any of them particularly well. With the company foundering, Jobs was brought back as an adviser in 1996 and then given the reins as CEO the following year. Under Round Two of his leadership, Apple went on to become one of the most innovative and profitable companies in the world. Jobs died of pancreatic cancer in 2011 with a net worth estimated at more than $11 billion.
After completing a master’s degree in computer science, Lerner co-founded Cisco Systems with her boyfriend (and future husband) Len Bosack. The company was one of the forerunners in the development of internet routers and software. The company went public (to the tune of $224 million) in February 1990, but Lerner was fired just six months later and Bosack also resigned under protest. The two sold all of their Cisco stock and Sandy used the revenue to start a venture capital firm. Today, Lerner is still involved with a number of high-tech and philanthropic organizations, but has left the corporate world behind. She now owns an organic farm and Hunter’s Head Tavern in northern Virginia. Writing under the nom de plume “Ava Farmer,” she also recently published a sequel to Jane Austen’s Pride and Prejudice entitled Second Impressions.
In 2006, Mason was working as a software developer when he secured $1 million in startup capital to bankroll a new web platform. While the project itself never got off the ground, it morphed into what would become Groupon, a site selling half-price coupons for local businesses. The new startup exploded and had an annual income of over $800 million by 2010. Google offered to buy the company for $6 billion, but Mason turned the offer down and took the company public in late 2011. However, Groupon’s business model and Mason’s erratic behavior resulted in a stock price that dropped almost 75% and Mason being named “Worst CEO of the Year” by CNBC. Mason was ousted as Groupon’s CEO in February 2013 and, because he had taken most of his compensation in stock instead of a paycheck, his severance package—six months salary—equated to less than $400.
McClendon co-founded Chesapeake in 1982 at the age of just 23. Under his leadership, Chesapeake became one of the top 15 oil producers in the country and the second-largest producer of natural gas. In 2008, he was the highest paid CEO of any company in the S&P 500 with a total compensation of $112 million. However, when the price of natural gas slumped, Chesapeake’s aggressive growth began to catch up with the company and stock prices plummeted. Grumbling against McClendon’s leadership reached a fever pitch in April 2012 when it became known that he had borrowed over $1 billion against his personal stake in several thousand company-owned wells. Weeks later, McClendon was forced out as Chairman of the Board and later retired as CEO in April 2013. McClendon has since started his own oil/gas drilling company and is a minority owner of the Oklahoma City Thunder. Oh, and he’s related to Kate Upton.
Neeleman had already launched and then sold two small airline companies before founding JetBlue in February 1999. The company took many low-fare cues from Southwest Airlines, but sought to differentiate itself by offering amenities including in-flight TV and satellite radio in every seat. Under Neeleman’s leadership, JetBlue was one of the few airlines to turn a profit after 9/11 and became one of the leading airlines in the eastern United States. By 2006, however, high fuel prices and operational problems within the company were cutting into the airline’s profitability. In February 2006, the company announced its first-ever quarterly loss. But the final straw came in February 2007 came when a massive snowstorm struck the Midwest and Northeast. JetBlue refused to cancel flights or offer any assistance to stranded travelers, leaving some passengers stuck in planes on tarmacs for hours and many more stranded in airports. The fallout cost JetBlue more than $30 million and, more significantly, gave the airline a huge public relations black eye from which it has never fully recovered. Two months later, Neeleman was forced out as CEO and, a year later, was fired as Chairman of the Board. He has since returned to his native Brazil and formed Azul, a new airline serving South America.
Anyone who’s seen The Social Network knows how this one turns out. Saverin was a classmate of Mark Zuckerberg at Harvard and helped arrange much of the initial funding for what would become Facebook. Saverin served as the business manager and CFO of the company in the company’s early days. But as the company grew, Saverin was eventually pushed out in favor of “bigger fish,” such as PayPal co-founder Peter Thiel and Napster inventor Sean Parker. After a nasty and public fight, Saverin’s lawsuit against Facebook was eventually settled out of court. The terms of the deal were not disclosed, but the agreement did list Saverin as a co-founder of Facebook and entitle him to an unknown but apparently pretty hefty amount of Facebook stock. Saverin now lives in Singapore. He renounced his US citizenship in 2011, ostensibly to get around the hefty capital gains tax he would have had to pay on his stocks when Facebook went public months later.
Thalheimer originally started The Sharper Image in 1973 as an office supply store, with the name touting the superior quality of his copy machines. In 1977, he discovered a waterproof runner’s watch that he thought he could market. He took out an ad in Runner’s World magazine and proceeded to sell thousands of his first gadgets. The Sharper Image grew into one of the nation’s leaders in cutting edge high-tech offerings. Thalmeier’s company introduced the world to cordless telephones, answering machines, handheld computers and air purifiers. Thalheimer was also one of the first to see the marketing power of the internet. By 2003, company profits rose to almost $800 million and the chain had nearly 200 stores across the country. In March 2006, a hedge fund bought much of the company’s shares and installed three shareholders on the Board. Thalheimer and the new Board members clashed almost immediately and Thalheimer was removed as CEO. By May 2007, the Board had finalized an agreement to buy Thalheimer out of the company he had spent over 30 years growing for $25 million. But Thalheimer had the last laugh—The Sharper Image filed for bankruptcy just nine months later. Thalheimer meanwhile launched a new tech company at richardsolo.com and is back to selling many of the gadgets that made his first company so successful.
As a student at Stanford, Yang and classmate David Filo co-created a directory website called “Jerry and Dave’s Guide to the World Wide Web” which was later (wisely) shortened to Yahoo! The two put their graduate studies on hold and officially launched the company in April 1995. Working initially on the product development and technical side of things, Yang was not appointed CEO until 2007. His tenure was short-lived, however, as revenues and stock prices both fell and Yang rejected a $48 billion buyout offer from Microsoft. Yang lasted just 18 months on the job before being replaced as CEO. He remained on the Yahoo! Board of Directors until resigning in early 2012. He currently serves on the Board of Cisco and the Stanford University Board of Trustees.
A former substitute school teacher, Zimmer opened his first men’s clothing store in Houston in 1973, using a cigar box in place of a cash register. Over the years, the company grew to include over 1,200 stores under the Men’s Wearhouse, K&G and Tux brands. Zimmer, most famous for his “You’re going to like the way you look. I guarantee it.” tag line that he’s used in commercials for years, served as CEO of the company from 1991 to 2011 and has served as Executive Chairman the last two years before being fired by the Board on June 19, 2013.
Although Men’s Wearhouse hasn’t commented publicly, speculation is that Zimmer had butted heads with the Board members over his new role and that the move was not due to economic factors (sales and stock prices are both up significantly for the chain this year). Despite being forced out, you’ll still see Zimmer around—Men’s Wearhouse must pay him $250,000 annually for the next four years for the rights to use his likeness in their marketing efforts.
He still owns 3.5% of the company’s stock and is entitled to a buyout of around $2.7 million.