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Boards are dangerous to founder/CEOs

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Re: Boards are dangerous to founder/CEOs

#31

Post by icedchai »

vmception wrote: post #2

when you get thrown off of the board you still have your shares. so the trade is still successful by my rubric. I consider all things to be trades, whether I invested in a publicly traded equity, or whether I created a bunch of $0.00 par value shares to sell to a bunch of other people. the rule is the same: don't get married to a company. a board removing you doesn't need any fanfare. you still have the shares.

Sure, but it might not matter. Your company can be in such a bad state that the next round, if it happens, will massively dilute everyone, including you. You wind up owning less than 10% of a sinking ship. I've seen it happen. (And if you don't take that money, your company goes to zero.)

Re: Boards are dangerous to founder/CEOs

#32

Post by dangrossman »

StriverGuy wrote: post #28
dangrossman wrote: post #18

Earlier quoted context omitted.

I don't think that's a new sentiment around here. Anything published by 37Signals and its founders used to be mandatory reading on HN, and they were all about small teams eschewing outside investors. Their Getting Real book was published in 2006.

Interesting you avoided calling them basecamp given the recent media fallout. Not saying you did it intentionally, but just rare anyone refers to them as 37Signals much anymore.

I forgot they had changed their name. They were 37Signals when they were HN's darling. This is the company everyone was in love with: https://37signals.com/manifesto

Re: Boards are dangerous to founder/CEOs

#33

Post by toxik »

mattkevan wrote: post #30
anthropodie wrote: post #26

Earlier quoted context omitted.

“A group experience takes place on a lower level of consciousness than the experience of an individual. This is due to the fact that, when many people gather together to share one common emotion, the total psyche emerging from the group is below the level of the individual psyche. If it is a very large group, the collective psyche will be more like the psyche of an animal, which is the reason why the ethical attitude…

“The intelligence of the creature known as a crowd, is the square root of the number of people in it.” - Terry Pratchett

Jung's statement is much stronger, more akin to 1/sqrt(N).

Re: Boards are dangerous to founder/CEOs

#34

Post by ericd »

StriverGuy wrote: post #28
dangrossman wrote: post #18

Earlier quoted context omitted.

I don't think that's a new sentiment around here. Anything published by 37Signals and its founders used to be mandatory reading on HN, and they were all about small teams eschewing outside investors. Their Getting Real book was published in 2006.

Interesting you avoided calling them basecamp given the recent media fallout. Not saying you did it intentionally, but just rare anyone refers to them as 37Signals much anymore.

Eh it’s still how I think of them, fwiw. I haven’t seen as much from them since their name change.

Re: Boards are dangerous to founder/CEOs

#35

Post by lumost »

claytonjy wrote: post #17
0des wrote: post #16

It may be gauche to express this opinion on HN of all places and I hope it doesn't come off as tonedeaf disrespect, but does anybody notice VC is falling out of favor unless absolutely necessary? I am noticing a lot of bootstrappers that are emerging with the ethos that VC isn't what it used to be for some markets, and often a poor choice of the right VC can be a detriment to a project's longevity, with some teams ch…

I've noticed the same though I don't know what the split is; still lots of VC companies, and more companies of all flavors being started right now. I've also seen some late stage cos raise a mix of equity and debt at favorable terms; is that becoming more common as part of the same phenomenon?

Rates are low, its preferable to raise debt than a dilutive round for existing investors. Companies that are locked into a prisoners dilemma for spending/market share need to get creative with how they finance their spending.

Re: Boards are dangerous to founder/CEOs

#36

Post by 0des »

StriverGuy wrote: post #28
dangrossman wrote: post #18

Earlier quoted context omitted.

I don't think that's a new sentiment around here. Anything published by 37Signals and its founders used to be mandatory reading on HN, and they were all about small teams eschewing outside investors. Their Getting Real book was published in 2006.

Interesting you avoided calling them basecamp given the recent media fallout. Not saying you did it intentionally, but just rare anyone refers to them as 37Signals much anymore.

It was my impression Basecamp is more associated with the product of the same name, rather than the group (37signals) associated with it. Correct me if I'm wrong, others may have a different opinion and I'm not the foremost expert on that.

Re: Boards are dangerous to founder/CEOs

#37

Post by ricksunny »

anthropodie wrote: post #26
ChuckMcM wrote: post #10

This is something you should really understand if you're starting a company. The board isn't your "friend" while individual board members may be, as an entity it probably isn't. The understanding that individuals can be "good" and the composite can be "bad" is usually encountered by most people when some government is doing something "bad" but the people who live where that government is in power are known to be "goo…

“A group experience takes place on a lower level of consciousness than the experience of an individual. This is due to the fact that, when many people gather together to share one common emotion, the total psyche emerging from the group is below the level of the individual psyche. If it is a very large group, the collective psyche will be more like the psyche of an animal, which is the reason why the ethical attitude…

So I think there’s a lot to this composite phenomenon and I wish it were studied explicitly. (Although I wouldn’t necessarily know), I’m not aware of social science / organizational behavior research that dissects the difference between an individual’s behavior and a group’s behavior that they are a member of. Yes we know about peer pressure and power dynamics (the Milgram experiment), but what are situations when an org will do something that all its constituent individuals would not but for fulfilling their respective unique responsibilities in the organization?

Re: Boards are dangerous to founder/CEOs

#38

Post by icedchai »

bgroat wrote: post #3
vmception wrote: post #2

when you get thrown off of the board you still have your shares. so the trade is still successful by my rubric. I consider all things to be trades, whether I invested in a publicly traded equity, or whether I created a bunch of $0.00 par value shares to sell to a bunch of other people. the rule is the same: don't get married to a company. a board removing you doesn't need any fanfare. you still have the shares.

Headline - I agree with you. Just retire, or do something else. You own the shares. Fine Print: There's still some screwy stuff they can do diluting your shares in particular.

"Just retire"... that may be difficult without liquidity, regardless of value of the shares.

Re: Boards are dangerous to founder/CEOs

#39

Post by kingcharles »

0des wrote: post #16

It may be gauche to express this opinion on HN of all places and I hope it doesn't come off as tonedeaf disrespect, but does anybody notice VC is falling out of favor unless absolutely necessary? I am noticing a lot of bootstrappers that are emerging with the ethos that VC isn't what it used to be for some markets, and often a poor choice of the right VC can be a detriment to a project's longevity, with some teams ch…

I gave up on VCs because I hate the entire experience of raising money and being beholden to someone. It's exhausting, for a start, and takes away so much time from building a product.

I just took my idea list and erased everything that needed VC money.

All ideas need some money to launch, and sadly some of the best ideas need a ton of money to launch.

Ask yourself - do I have a simpler idea I can build first to make enough money to launch the thing I really want to do?

Re: Boards are dangerous to founder/CEOs

#40

Post by ganeumann »

throwaway55421 wrote: post #6

If you give up your 51% share, sure.

Very few things in a VC-backed startup require a shareholder vote. Firing the CEO is not one of them (this is a board vote.) Electing directors to the board is not one of them (this is usually the subject of a voting agreement that ensures board representation by the VCs.)

Let's say the company raises money from VC1, who buys 20%, leaving you with 80%. The contracts add VC1 and an independent to the board, alongside you. Later the company raises money from VC2, who buys 20%, leaving VC1 with 16% and you with 64%. The contracts add VC2 to the board.

Now the board is VC1, VC2, an independent, and you. If the VCs can convince the independent director to vote with them, the board can fire you, even though you own 64% of the company.

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