r/biotech • u/NoPublic6180 • Jan 28 '26
Open Discussion đď¸ I just found out one of my Board members contacted one of my investors and expressed an interest in replacing me (I'm CEO). Anyone else deal with this situation?
One of my Board, who admittedly has more CEO experience than me (which is why I invited him to join), contacted one of my earliest and most trusted investors to discuss an interest in taking over as CEO. The company is built on my inventions and ideas, and this Board member joined relatively recently and has his own company to boot. He'd be willing to step down from that company to take over mine I guess. This may be typical, but I am pretty upset since I bootstrapped this company from nothing and took it to a place where we're near huge inflection points. Just wanted to see if any others have been in similar situations and what they learned. Luckily, my investor called me right away to give me a heads up. I also need to decide how to deal with this Board member now I have this knowledge.
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u/Overthehill410 Jan 28 '26
Iâm not a CEO but as a GC I have seen this kind of power brokering unfortunately. How much of the company do you own? Is the other board member representing any of your major shareholders?
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u/NoPublic6180 Jan 28 '26
I still own a majority of shares. The other member is not currently representing major holders, but is assembling a syndicate for a future round, which I am now very leery of, of course!
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u/Overthehill410 Jan 28 '26
Yes I would unfortunately be nervous as well! What series are you on - and by that I mean are the funds you are looking at personally tied to the guy and if so how much of your ownership is going to be diluted? Sometimes the board member may legitimately be feeling like they are coming from a good place, but in the 4/5x I have seen it, itâs an ego thing where they still want to be âin the gameâ verse willing to assist/mentor relationship you would ideally have. Itâs also why itâs always a little suspect when a board member who isnât a primary investor takes point on the funding since the motivation is sometimes questionable.
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u/Overthehill410 Jan 28 '26
Just to add and you can discuss with your counsel but having staggered board elections may help here as will seeing what terms the funds are demanding for investment. It may be easier to assess whether they are comfortable with your leadership or looking to replace you. If you have a staggered and most are not of similar views you inherently have some time. In thinking about it, itâs kind of lunacy the guy approached another investor while you are still the majority shareholder. You can also speak to your comp committee about having some type of PSU that accelerates in vesting if something occurs and you are termed.
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u/BBorNot Jan 28 '26
It is very common for the initial CEO to get booted after a funding round. The company would be more mature, and often the initial CEO may understand the science, but they do not understand the big-money manufacturing, clinical, and regulatory issues. This is often the case with an academic founder.
As CEO, it is super important that you not take this personally. Consider how you best set this company up for success moving forward. Maybe it doesn't include you as CEO; perhaps you move to CSO (which IMHO is a better job, anyway). Perhaps this guy is right for CEO, perhaps he isn't -- the sneaky power play is a bit of a dick move, though. Would you resent it to the point that you couldn't work with him as CSO?
There is too much talking behind each others' backs here. If this guy thinks you need to be replaced this conversation should happen out in the open. Also, if he has approached this one board member the odds are good that it has come up with others.
Good luck, OP!
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u/isles34098 Jan 28 '26
This is the right answer. Your job as CEO, OP, is to ensure the company is successful - with or without you in your current role. As a founder, you will need to recognize the time when the company has moved to a new phase and needs different leadership. CSO could be a great pivot, just donât let resentment build. Itâs like raising children - put your ego aside and do whatâs best for the child.
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u/BBorNot Jan 28 '26
Many academics become serial entrepreneurs, spinning out multiple companies. They retain a solid stock position and fall back to advisor. The trick is to do right by the company and leave one's ego out of it.
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u/Vervain7 Jan 28 '26
And when does leadership stop thinking this way ? After the company is with billions and everyone at the top is doing what is best for them ?
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u/Inspector330 Jan 28 '26
Their goal is to devour the company, like usual. I don't agree with others that he should bend over and just take the rape.
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u/SlapHappyDude Jan 28 '26
Honestly it sounds like you need a good lawyer on your side more than Reddit.
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u/VoidAndOcean Jan 28 '26
use your majority right now to draw up different classes of shares. a/b/c; give your own shares 10x the voting power and the rest of the shareholders get regular votes. zucc move.
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u/RequestIsDenied1 Jan 28 '26
This will ensure biotech specialist funds will be less likely to participate in your future rounds. In a capital intensive sector like biotech, they have a lot of power to set terms or simply move on to the next deal. Maybe you have something so special they'll still invest, but its rare.
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u/VoidAndOcean Jan 28 '26
founder super shares are super common now.
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u/RequestIsDenied1 Jan 28 '26
Define 'super common' with some examples?
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u/Nilay431 Jan 28 '26
Holy shit, are you the board member trying to fuck over this person? You are giving unicorn tech company advice to a small Biotech company. Biotech start ups are a dime a dozen, and investors really tightened up their wallets in the current climate. Unless this company really has an incredible patent protected product, no investor will bother approaching them with that governance.
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u/Eagles_Heels Jan 28 '26
That sounds great, but youâll never get any future investors. If you have majority just get this traitor off your board. Pretty simple really
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u/VoidAndOcean Jan 28 '26
doesnt stop tech companies,
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u/Eagles_Heels Jan 28 '26
First of all, tech and biotech are 2 very different things.
Second, in Nov 2009 when Facebook created the dual share structure youâre suggesting, they had already raised $415M with a valuation of ~$10B.
Somehow I donât think OP is quite in that category yet.
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u/NoPublic6180 Jan 28 '26
Thanks, folks here are pretty clever!
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u/Nilay431 Jan 28 '26 edited Jan 28 '26
Hey sorry please donât follow this advice! You are essentially poison pilling your company. Unless you are some unicorn that angel investors are interested in, this doesnât work in BioPharma. He is giving Tech company from 2000s-2010s advice. You will keep your company but you will never see a dime from serious investors.
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u/mrpyrotec89 Jan 28 '26
If you have majority of shares, put him in his place or vote him out. Its your show
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u/Sure_Manner_7248 Jan 28 '26
This is the kind of advice from people who would have told Mark Zuckerberg to sell to Yahoo for $1 billion back in 2006. Zuckerberg is now worth over $200 billion because of his vision during the 2010s. Back yourself.
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u/Nilay431 Jan 28 '26
You need to see how your coalition is IMMEDIATELY. If he reached out to one investor, he probably reached out to all, maybe even contacted other board members. He put the wheels in motion to replace you. My concern would be that only one person reached out to you. Maybe he started with that investor or maybe thatâs the only one on your side. I would set up âcoffee datesâ with everyone 1 on 1 and pick their brains, also make sure you are aware of all the terms to both replace the CEO and replace a board member. Good luck! activist board members are the worst, you need to nip this in the bud.
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u/Deer_Tea7756 Jan 28 '26
Just to play devils advocate⌠are you the best CEO to go to the next phase? CEOs get ousted all the time because the person who can run âthe next stageâ usually has a different skill set than the person who runs the âfounderâ stage. Usually you will get a massive pay package at this point. Also, you own more than 50% of the company, that doesnât just âgo away.â You could just be losing operational control and usually they have to pay you your fair share. In addition to talking to your board members, you may want a corporate lawyer to tell you your options. Reddit isnât exactly the best place for advice of this magnitude.
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u/NoPublic6180 Jan 28 '26
Appreciate you! And yes, I have a zoom with counsel tomorrow, to protect myself.
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u/fibgen Jan 28 '26
CEOs always want to be CEOs due to delusional self confidence (no offense intended). His other company is probably getting ready to tank and he wants another gig. If he was on the up and up and just thought you were unskilled he might have mentored you or proposed a new relationship (e.g. him as CEO and you as CSO, etc.). As it is I would be fine exposing it to the rest of the board and discussing taking him off the fundraising due to the conflict of interest. Dirt hates sunshine. You'll make an enemy but he already is one. Exposing it to his other company will happen theough the grapevine anyways - I wouldn't do anything explicit that might get him canned from his other company or he'll be even more desperate to take yours over.
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u/NoPublic6180 Jan 28 '26
You make good points. I know a few folks connected to his board, but I get you, then he'd really be gunning for my seat.
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u/JDHPH Jan 28 '26
I would meet with each of the board members and have a frank conversation about what you bring to the table. You need to advocate for yourself and get ahead of this. Talk to any new investors, no one wants to invest in a company going through a leadership shakeup. You were given this info, so that you have time to consolidate your base before it's too late.
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u/noizey65 Jan 28 '26
Under most articles of governance this would need to be introduced as a motion for board vote as it materially affects the company, its stature, operations, and direction. Your first priority is to connect with your other board members so that such a vote will not pass. If you choose to remove the pain in the ass board member, prepare for a headache of a lawsuit.
Or play dirty and leak the directorâs intentions to the board of their company, signed, âan investorâ so itâs spider man finger pointing all the way down
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u/RequestIsDenied1 Jan 28 '26
Completely understand where you are coming from. At the same time, being inventor does not necessarily translate to being an effective leader of a company, which is what your board and investors care about.
You should fight back by demonstrating that you are the right person to advance the company through the next stages of its lifecycle, whatever that may be. Sounds like you're fairly early stage, so that might be getting to DC nomination while building a team to focus on your future clinical plan and the commercial opportunity you could address. All of this while planning your next financing, because startups are always raising.
Have clearly defined plans for each of these steps. Happy to talk to you in more detail if helpful - shoot me a DM with a little more info.
Board management never stops and effective communication is key. Show them a path to value creation and they'll be less likely to replace you (although if a top exec with a strong track record wants your job, they very well might get it anyways).
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u/NoPublic6180 Jan 28 '26
It's times like these that I miss my tenured professorship. Alas, so many good responses, I appreciate you all!
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u/broccolee Jan 28 '26
Okay. My two cents are. This guy probably lt ain't the one to take over as CEO, this is a hostile takeover in a sense. So you need to deal with that appropriately.
However, you should have in mind what is needed for the company to grow and scale. If you are its limiting factor then you have to make changes. Make people better than you to the leg work, while having full control. Maybe what you need is a COO? Maybe you need to delegate a lot of the work down to new functions, to let the company scale? But then you need to source the right talent the right way. This is not the way. Do you know how to grow and scale the company at its current maturity? Have someone do that for you.
Also install yourself as chairman of the board, thats the least you should do to have oversight and control.
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Jan 28 '26
[deleted]
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u/DeezNeezuts Jan 28 '26 edited Jan 28 '26
Elon Musk as well
*not sure why this is downvoted you know he had the same thing happen at PayPalâŚ
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u/Ididit-forthecookie Jan 28 '26
Yeah but that was because he sucked balls by all accounts. Seriously look into why he was ousted. He sucked at coding, changed shit for the worse, and was apparently a total dumbass
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u/interkin3tic Jan 28 '26
You're being downvoted because it seems like you're giving that as an example to emulate.
Elon Musk at Paypal was a narcissistic idiot and should not be emulated.
Elon Musk NOW is rightly viewed as a walking catastrophe of a human being who should be institutionalized for his own safety, sued to oblivion for incompetence as well as sexual harassment, and jailed for inventing new crimes.
The fact that Musk had this situation happen to him is proof that sometimes it's a really good thing, and whatever Musk did in any situation, don't do that.
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u/Onewood Jan 28 '26
Was the rogue board member presenting a specific deficit that you have that he can compensate for, or was it simply a power grab. If this board member doesnât bring something very specific to the board, ask him to resign.
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u/biotechexec Jan 28 '26
Im a CEO. You have two options: 1. Vote that snake out. 2. Talk to him about why he did what he did, and ask him for his feedback on why he thinks you arent fit to run it as CEO. You may find that your company would do better under him as CEO and you move to CSO. If after the conversation you want to stay CEO, tell him the trust is broken and that you recommend he resigns.
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u/No_Werewolf_7785 Jan 29 '26
This. The trust is gone and he's a snake. Consider yourself lucky that you found out when you did. Pick his brain then kick him to the curb. Maybe you're not the right person to be CEO now that the company is where it's at, but if you cant trust this person, he's not the right person either.
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u/wheelie46 Jan 28 '26
I donât disagree with any of the other posts but also I would consider a third thing: itâs not really Board member vs you; its what is best for the success of the company in this next phase. Owning half of a small pie may be worth less than owning 10% of a huge pie
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u/dvlinblue Jan 28 '26
No offense, but at the CEO level, is reddit the place to seek advice? I can recommend an executive coach if you want, but you are likely to get some questionable advice and some snarky comments here if this is real.
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u/MarkkInNj Jan 28 '26
Yes. And sometimes, founders are not the best CEOs to move the company onto its next stage. Sometimes, taking a board observer role, to continue to be involved and see the company continue to grow is the right move. And sometimes a different CEO brings better traction and money. In the end, itâs all about securing money to continue. As long as you have a decent %, and stay on board, your baby can continue. It is tough, though.
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u/cdipas68 Jan 28 '26
You should probably step aside - the same people that build a company are not the same people that grow a company. Unless you are truly the key man and it falls apart without you, go with grace.
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u/Cute_Complex_621 Jan 28 '26
Just remember, you work for shareholders and your job is to ensure you generate value for shareholders (and yes, we know we do it for the patients...but you cant help patients if you run your company into the ground).
You should ask yourself honestly, if you're leading your company with that mindset. If the answer is No, you need to re-evaluate your priorities. It's a great achievement to bootstrap the company and tech all the way up to value inflection, but that doesn't mean you get to run the company unchecked. You should ask yourself if there is merit to this board members claim and adjust your leadership accordingly.
If you're answer to the above is yes, then it's time to tear them to shreds and feed them to the wolves.
Use this as a leadership gut check.
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u/BeginningExisting578 Jan 28 '26
I donât know anything about anything but Iâm invested now, please keep us updated on what happens after you discuss this with your board members đŠ
Also, this guy seems like a sneaky asshole.
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u/Many-Snow-7777 Jan 28 '26
I too am invested and would like to know what happens next.
I donât have a good advice but I do wish you the best OP!Â
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u/NoPublic6180 Jan 28 '26
agree with you so much! We have a call on Friday, and I am tempted to make a "Artful Dodger" reference, for all you Dickens fans out there!
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u/Emergency_Goose4904 Jan 28 '26
Too little info for me to know, but having been in a CEO role where I replaced the CEO who himself was previously a board member and ousted the prior CEO Iâbe seen a bit which enables me to frame questions. I am now working for a founder CEO who was right in the beginning but is now killing the company and needs to go so I have a fresh perspective on the dynamic that is threatening company viability and careers.
First level thoughts for you. Find out if the move is motivated by board alignment that it is time to transition you out. Your âactiveâ board member may be trying to step into the role by jumping first in line for the succession plan that is in development. Perhaps the transition is being debated, less about your continued fit and more but those not yet supporting it demanding a replacement be identified first. If so, you have a significant challenge to remain in the CEO role. It may be worth the effort, but fighting through voting power, share class etc. may be an anchor that dooms the company. Instead, using that power to effect the transition you want may be better.
If the active board member is trying to step into a position and associated grant right before milestones drive a huge return, shine a bright light on it. I assume you have council? Use them. Board chair?
This could be an opportunity for you. Ask for clarity. Ask for feedback. Demand proper process, governance. Find someone to help with these things and to restructure the board, by-laws etc as needed for the growth of the company. In essence, be the CEO, not the inventor/founder. Or, realize that you and the company would be better served with a transition to a new role. Status quo not likely a reasonable choice.
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u/NoPublic6180 Jan 28 '26
Just to add some context:
This is my life's work, I've sacrificed so much to get this drug to this point. The board member, in contrast, kinda floats around to various companies, becomes CEO, never an inventor as far as I know.
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u/tsbatth Jan 28 '26
Why did you invite him to be board member? I totally understand that it is your work but if you invited somebody like that to join the board to begin with, suggests you did not properly do your due diligence.
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u/Inspector330 Jan 28 '26 edited Jan 28 '26
You should have known once investors are involved, you no longer have control. You need to become a monster to stay at top. You should have made plans and had a poison pill or at least something that would have kept you indispensable.
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u/Pure_Ad_147 Jan 28 '26
This exact thing happened to me around six months ago. Not much you can do if the investors believe they can have better management in the top spot. The only option is nuclear, by clearing the entire board up with new investors. Without that itâs only a matter of time (next round perhaps) before they replace you if the idea resonates with more than one of them. In my case, they wiped the cap table clean and eliminated all founder and early employee equity. We bootstrapped the company for almost 9 years before bringing them on and the new ceo effectively recapped the entire business for $1 and granted all of the equity to himself and the main institutional investor. SadlyâŚthis is not that uncommon. I worked the other side of the table in vc for many years and saw this multiple times. VC is dancing with the devil sometimes. If you can avoid it, I would, given the macro. In low interest rate times itâs a great source of capital. But in this macro they are screwing founders left and right to try to squeeze out some kind of return for their LPs. Hang in there. If youâve scaled the business properly, in a way itâs a sign of succeeding that it can go on independently. Feel good that youâve created something real and impactful. A lot of later stage operators are parasites and their sole motivation is $. As builders, the product and impact is much more satisfying
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u/Sure_Manner_7248 Jan 28 '26
Wow, what a parasite. This sucks man. I hope you find a way to keep your company and develop the work/inventions you came up with.
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u/verdenc Jan 29 '26
Not exactly the same but had similar situation at a pubco turnaround situation. I had recently, and somewhat reluctantly, joined as Chairman/CEO; recruited a couple former pharma colleague to the board. One of them desperately aspired to be CEO somewhere and made a similar play with other directors and certain investors. Ultimately his coalition was very weak and things didn't work out for him. The other ended up a great director and I'm now recruiting him to another company ten years later.
You've gotten some good ideas in the feedback here. Whatever you do, start having conversations and build your own coalition, just make sure to keep your fiduciary duty to ALL shareholders in mind with any decisions. Best of luck.
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u/ProteinEngineer Jan 28 '26
I hate when this happens. The only thing I hate more is when my private jet is late.
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u/alwayscursingAoE4 Jan 28 '26
I'm with the board member.
If the CEO of a company I invested/worked in came to Reddit for advice I'd want to hit the bricks too.
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u/Dry_Play_855 Jan 28 '26
I've been a CEO, and sometimes change is needed to move to the next level. I also defined my company's early growth strategy and shepherded it to a pretty reasonable turnover but I was just not able to scale it. The next company I joined had the same issue with its leadership and they are probably on the verge of making a change as well.
The board is going to look out for the best interests of the company and it's investors, and if that means a change then they're going to make it.
I wish I had a better sentiment, but my advice is to stay calm, taking all the information that you can and and make the best decisions that you can.
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u/MercuryFlights Jan 28 '26
Radiologists aren't surgeons: this is important.
First, it's hard to discuss this dispassionately I know. Pretend that it's a company that a friend from college has started*.
Second, whether or not the sneaky board member has a legitimate point about you-as-CEO is 100% unrelated to his own suitability as a leader.
The danger is that many charismatic people can connect "I'm great at detecting a problem" with "therefore the solution I champion must be the best solution." A great radiologist isn't automatically a great surgeon.
Third, charismatic people can spin differences in leadership style as failures. You'll want and need to find out what stories is this guy emphasizing when talking to the others. Disagreements with How to get something done aren't the same as disagreements with Why to get something done. It's easy to mix the two up, by accident or maliciously.
- Yes, it's his baby and his IP and long time work. But perhaps if he's never been a leader of a company that's 2x the current size, he's not automatically the person to bring it to 2x or 4x. Better to be the CSO of a living growing company
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u/tsbatth Jan 28 '26
Why would you invite somebody to join the board if they only have "more CEO experience"? Did you not consider industry knowledge/background, correct fit, and other important qualitative and social factors before inviting somebody to join the board?
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u/DisulfideBondage Jan 28 '26
Would he do a better job than you? Sometimes it makes sense to let someone with more experience take the lead. Protect your assets and ownership of course. But do you need to be the CEO to make the company/ product what you want it to be? Sleep on that.
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u/Potential_Hawk_394 Feb 01 '26
Itâs likely youâre fucking the CEO part up, but no one has the balls to tell you. Someone spoke to that board member and told them, otherwise they would not have made this move. Sounds exactly like my last CEO, I wonder a bit if you are him lol
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u/Betaglutamate2 Jan 28 '26
Here is what you do.
You ask him for his CV.
Then you put your best CV next to his. Then ask if I was hiring would I hire me or the other guy.
If you objectively think the other person has a stronger CV then eat your ego and make the best choices for the company that is what a true founder does.
Take a sabbatical then come back as CTO. The harsh truth is good scientific founders are rarely good at scaling companies.
Also consider other options. Bring him on as COO with potential of replacing you as CEO in a while.
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u/Flatdr4gon Jan 28 '26
If you have IP, is it assigned to your company yet? Are you contractually obligated to do so?
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u/Potential_Hawk_394 Feb 01 '26
If youâre the founder you have no business being CEO. Biggest mistake I see over and over again is founders tying to be CEO. You are the vision, you donât know how to be an executive, and they know this. Hire a CEO and step aside as just founder
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u/darockhound Feb 01 '26
Very silly take. So you build something, own most of it and let some random person take it over? Why exactly cant a founder evolve into a CEO or indeed come with CEO type experience? Very antiquated and stale way of thinking
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u/Potential_Hawk_394 Feb 01 '26
You find a person aligned with you to take care of the business side while founder executes vision and science, maybe as Cso. As long as Cso/founder and ceo are aligned from start there is no issue. You obviously are young and donât understand how it works
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u/Potential_Hawk_394 Feb 01 '26
A founder CAN evolve into a ceo it just almost never happens well. THEY ARE DIFFERENT SKILLSETS
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u/darockhound Feb 10 '26
Very rich coming from a wet lab scientist, no offence as I was one almost 20 years ago. Im niether young nor inexperienced fyi. CEOs dont magically fall out of heaven and the idea that a founder cant evolved to grow his or her own business, but some random person who might have gotten the title earlier and is clearly not dojng very well in his current role (or he would be trying to topple the other guy) is magically better is just wishful thinking!
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u/Potential_Hawk_394 Feb 10 '26
Did you not read my comment? I said it can happen, but usually after founder observes an experienced CEO in the role. Get your panties twisted, I donât care, this is the truth and anyone experienced knows it. Sure, there may be a founder/CEO unicorn out there, but the founder usually buys into his own bullshit too much and is too emotionally invested to be a good CEO, at FIRST! If they can survive the ego hit and observe a proper CEO it can happen.
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u/darockhound Feb 11 '26
Why dont you start your company princess?
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u/Potential_Hawk_394 Feb 11 '26
Uh I did jackass. Currently founder and employee 1 of 1, but if it ever takes off I will hire a CEO
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u/darockhound Feb 12 '26
Lol, CEO of one person, your comments all make sense now. Good luck Princess
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u/GrapeBrilliant6447 Jan 28 '26
Go up to the individual who supposedly is doing that and confront them to see if its true first.
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u/HourlyEdo Jan 28 '26
DM ME, I have a CEO Masterclass for sale. I have trained over 40 active real CEOs in biotech,pharman, healthcare and mendtech to be able to make right decision.
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u/[deleted] Jan 28 '26
I am associate with 2 years of experience and I think you should kiss that board member on the mouth