What Founders Should Do in a Crisis
And how Sam Altman taught a masterclass with the OpenAI crisis
Unless you got an early start on Thanksgiving you probably heard that OpenAI fired and then rehired Sam Altman as CEO over the last week.
I don’t have any inside information about what really went down other than a few friends who’ve talked with Sam directly and later privately expressed concern about his intentions with AI.
Much has been written about that and the structural issues that led to OpenAI saga already so I won’t rehash anything here, but what stood out to me over the last week is how authoritative and self-assured many of the opinions I saw people post on X were… only to be proven wrong hours later.
I get it, some people are just engagement farming. But it made me realize most people have never been on the inside of a true existential crisis situation at a startup…
But I have, both as a founder and an investor + board member of another company.
So this week I’m sharing what actually happens inside a startup when a crisis is happening and how founders can manage their investors, team, users, legal counsel, the press, and each other.
Read Time: 05 minutes
Crisis Management 101 for Founders
The hardest part about a crisis is managing your psychology. The most important thing you must do is stay level headed.
As the founder, you and your co-founders are the only ones who can actually decide how to respond. And crises are icebergs — no one else will have full context about what’s going on (things will simply move too fast) but they all desperately want you to keep them in the loop. You can’t do this fully for everyone, because moving quickly to resolve the crisis is critical.
As a result, some people you trust will cave to the pressure they’re feeling from outsiders and turn on you.
It’s especially terrifying if this is the first time you’ve gone through a crisis and the startup that you’ve poured blood, sweat, and tears into is at risk of going under. You don’t know what move to make, everyone’s waiting for you to make a move, and everyone you’d normally go to for advice on various things is making contradictory recommendations.
Bad crisis management quickly becomes a game of whack-a-mole. Good crisis management requires a steady, consistent approach.
How to Work With Stakeholders
Not all crises play out in the public arena like OpenAI’s did. If yours is able to remain in-house, that’s one less thing to worry about. Focus on addressing the issue with the necessary stakeholders head on.
But for the ones that become newsworthy, it’s another level of chaos. Here’s how to work with each major type of stakeholder during a situation like that.
Your most critical relationship during a crisis is with your co-founder(s). This is the one place where you cannot afford for things to go wrong.
You need to operate at extremely high levels of trust to not turn on each other, communicate flawlessly even as you learn information in real time, and divide and conquer wherever possible.
Quickly meet to stack-rank priorities, assign which areas you’ll each be responsible for, and set up a process to check in regularly (ideally you’re together in person so this last part is considerably easier). Then get to work.
If this relationship breaks down (especially the underlying trust in each other’s leadership, roles, and judgement) then the chances of the company failing will rise dramatically.
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