Raw thoughts from Alex Dong

The scapegoat theory of founder-investor relationship

I have been puzzled by one phenomena for a long time. I found that the board/investors seems to be fond of the idea to kick out the founder. My biggest problem with this is this is almost like uprooting a tree and cut off the thickest root. I couldn’t understand how could this be a good idea at all.  Yesterday I finished class note from Peter Thiel’s  Class 18: Founder as Victim and Founder as God, which offers a perfect explanation.

The theory is as simple as this. The founder usually follows an inverted normal distribution where their personalities sit at the extreme ends of the spectrum.

This is the same as the main characters in history and mythology, like Oedipus, Achilles or Cessar.

Human’s history is filled of a cycle between peace and chaos. The invention of scapegoat makes that cycle complete.  The cultures that last long all, in one way or another, invented the sacrifice concept.

When time gets rough, the founder, especially the single founder, becomes the easy target and the perfect candidate for a scapegoat.

Peter also talked about whether it’s possible to delay or even avoid this process near the end of the article. His suggestions?

Founders should think carefully about how to preserve the original founding moment for as long as possible. The key is to encourage and achieve perpetual innovation. It is very important to avoid, or at least delay, the shift to a horrible bureaucracy where no one can do anything and everyone is circumscribed.