How We Failed an Employee — and Almost Lost Everything

While vision is important to success, execution matters most. Startups can succumb to multiple points of failure — people, products, competition and legal challenges, to name a few. These issues can be interconnected, compounding the difficulty of overcoming them. Ours is a cautionary tale concerning key man risk.

After recently going public, we were building for our next leg of growth. As I waited in traffic driving back from a run, my thoughts wandered to the upcoming annual general meeting (AGM) set for May, the following year.

It had started to drizzle when Elena broke the silence: “KK, is your phone off? Zisis (our COO) is calling me.” I glanced over at her and responded, “No, it should be on, why?” noticing the raindrops landing somewhat heavier.

Peering down at my phone, I noticed it was on, but on silent mode. I could see a flurry of messages, namely, “It’s urgent.” She handed me her phone. Zisis, breathing rather heavily, said “Hey man, sorry this can’t wait. We have a serious problem.”

My heart rate spiked. As adrenaline surged for all the wrong reasons, the skies had turned visibly dark and the rain turned to hail. He continued, “[Our CTO at the time] wants $10 million by pretty much tomorrow or he’ll wipe the code, repos and post all internal conversations online.”

As I processed this, the clanking of the hailstorm intensified. Subconsciously, I calculated that we could pay him, but it would crush us. “20 minutes; I will call you back,” I responded as I drove home, zombified and broken.

Stepping out of the car, I was engulfed by the hailstorm. As I reached my study, more impulsive thoughts flooded my mind. “Do I go extrajudicial here? Do we shame him globally?” Alas, calmer heads were to prevail as the team and I convened over hours, to arrive at a plan B.

Negotiating with a metaphorical gun to our head was a sine qua non. Our solution entailed letting our stakeholders know of the situation and rebuilding the codebase in Europe. We would use the opportunity to refactor code and remove technical debt. Finally, a police report would be filed and referrals denied. No cent would be paid under duress. As we penned our response, we received an unexpected message from the CTO himself. He retracted his threats and requested a call. Had our silence given him pause for thought?

Glancing out the window, I saw a beam of sunlight pierce through the overcast sky.

Although relieved, I remained confused by his actions. The next day, our CTO appeared on the call rather acquiescent. He explained how he was at the end of his tether and just wanted an amenable exit. A fair ask I thought, given how hard he had toiled. What bothered me was the finality of his decision. His threats weren’t just a flash in the pan. The reasons behind them had incubated over the years.

After deeper introspection, here is what I learned.

Related: Identify and Stop Rogue Employees Before They Become a Security Threat

1. Cultivate real relationships

This incident was a casualty of my war. Each time a new product idea was envisioned, it was our CTO and his loyal team that had to bring it to reality. Line by line, they coded away, beholden to deadlines and debugger audits. They quietly suffered hoping that scaling would happen. It didn’t — at least not in their timeline. Over the years, mental exhaustion set in.

Zisis would travel to the satellite office a few times a year. He would spend a few days with the team there and work on business process improvements and problem-solving. The more time we spent together as a team, the more I believed our expectations were aligned. But each year as our CTO would receive Zisis at the airport, he must have wondered why I never took the time to meet him. Did I not value him enough?

The truth is, I did. But I didn’t invest the time in that relationship, prioritizing firefighting elsewhere in the firm.

Cultivating relationships isn’t just a platitude or buzz phrase. Your employees seek vision and connection, not just a salary.

2. Don’t let proximity — or lack thereof — harbor resentment

After the pandemic, going to the office became passé. Sure, remote working might yield some productivity gains according to some studies. Other studies show these gains aren’t necessarily corroborated by employers.

If you’re a startup, having your tech team in a different country is a recipe for disaster. Time zone differentials, delayed communications, lack of human touch and cultural differences are just a few points of failure.

When your key assets share the same premises, problems can be addressed swiftly. In our case, it was a proverbial death by a thousand cuts; the resentment was brewing quietly over many years, but the distance created cognitive dissonance in my mind. I failed to see the problems before it was too late.

Related: 4 Managerial Downsides of Remote Work (and How to Deal With Them)

3. Be careful with your words

Three months prior to the threats, I Skyped Zisis amid a critical code issue impacting our users, “What’s the point of our testing process? Just get rid of [our CTO’s name] next time…”

Call it karmic justice, but this comment was forwarded to him as part of a wider message “forward” in error. I cannot imagine the shock and disappointment he felt upon reading it.

I learned — the hard way — to eliminate histrionics on electronic communication channels. Secondly, I learned not to write anything on any online medium that I wasn’t comfortable seeing printed on the front page of the Financial Times.

4. Always have a plan B

When we received the threat, our headquarters in Cyprus was still being built. We didn’t have any senior technical leads besides our CTO. We never felt the need — a painful miscalculation.

If you can afford it, a part-time hire who monitors your key tech personnel is advised. Today, we pay said hire as a source for audits, codebase backups and interview assistance. This person also steps in in case of emergency — and boy, have we had our fair share since then. The system now, however, is set up so that there is no single point of failure, and it is battle-tested.

Consider plan Bs as insurance. No business runs without it.

Related: Don’t Wait For Disaster to Strike — These 5 Preventive Measures Can Protect Your Business From All Kinds of Risk

5. Invest in soft skills

The relationship may not be linear, but there is an inverse correlation between coding talent and interpersonal skills. The more time spent with code instead of people, the more emotionally detached one grows.

At first, we would hire purely for technical expertise. Now, our hiring process is more holistic. No person in a tech startup has more theoretical power than the CTO. They code your dreams but can obliterate them on a whim.

Invest in emotional stability. Key man risk is not just something you put as an afterthought in the “risks” section of your deck. It is very real. As humans, we are all flawed in various ways. So hope for the best, but upgrade your defenses in case the “bad actor” in all of us rears its ugly head.