11–20 of 88 posts
Your first and only duty is to the welfare of your company.
If I talk with my boards on his misbehaviour it will get them stressed and stop believing on the company Sorry dude, looks like that is precisely what you are going to have to do. Don't worry about the board stressing; they can handle it. That's their job. Focus on YOUR job: the success of the company. The board will stop believing you when you prolong this longer than you should have, actually making the situation m…
You may in fact be legally obligated to discuss this with the board. I would also give a heads-up to your lawyer about this. If this gets messy, you'll want some ironclad legal protection for the company.
Here is one way you could structure this. Create goals for him to reach. If he repeatedly fails to reach them, then you can ask him for compromises such as giving up equity, etc. If you do it in the right way (that is a win-win, helping him to make more contribution), then it can be worked out. If he repeatedly fails, then you can involve your board and work out a solution that is best for the startup.
At this point, he should just go directly to the Board and include his proposed improvement plan in his presentation. The co-founder has already indicated an unwillingness to change or leave; the Board should be able to force it.
Don't forget that just because he is a shareholder doesn't mean he has an automatic right to be a Director (or employee). Hold a vote of no confidence in his abilities to add value to the company and fire him as a Director - you can't take away his shares though, unless you can convince him to sell. Your first and only duty is to the welfare of your company.
I recommend reading "The Founder's Dilemma's" to cover the other things you'll need to consider later as well prevent other, BIGGER, issues.
If I talk with my boards on his misbehaviour it will get them stressed and stop believing on the company Sorry dude, looks like that is precisely what you are going to have to do. Don't worry about the board stressing; they can handle it. That's their job. Focus on YOUR job: the success of the company. The board will stop believing you when you prolong this longer than you should have, actually making the situation m…
Here is one way you could structure this. Create goals for him to reach. If he repeatedly fails to reach them, then you can ask him for compromises such as giving up equity, etc. If you do it in the right way (that is a win-win, helping him to make more contribution), then it can be worked out. If he repeatedly fails, then you can involve your board and work out a solution that is best for the startup.
Is an employee agreement and vesting schedule in place?
Who reports to whom? You haven't mentioned formal titles/roles, but unless you're already final-say CEO, you'll probably need the board's support to oust him. You'll definitely want their support and advice, especially if adversarial steps to adjust equity or reorganize are necessary.
Talk to older mentors/lawyers who've seen similar situations.
Look up 'shotgun clause'; even if one doesn't already exist, a 'him-or-me' game of chicken might be resolvable with minimal damage/legal-risk using some sort of similar bidding/step-up-or-leave arrangement.
What, he won't even hold the whip? ;)
I'm pretty sure that "S&M" above actually refers to "Sales & Marketing", for anybody else who was... confused on a first read.