Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Boards are dangerous to founder/CEOs

reactionwheel.net

Post reply on HN
Print view View original

111–120 of 339 posts

Re: Boards are dangerous to founder/CEOs

#111

Post by hinkley »

rsweeney21 wrote: post #48

I always thought stuff like this happened to OTHER founders, but would never happen to me. But my board fired me six months after closing our series A. The advice in this article is 100% spot on. I didn't know any of this. I was totally focused on building my company. But if you raise money you can't do that anymore. 50% of your time will always be occupied with working on your next round of funding or managing your…

They don't have to value the company at $0 to fuck you over once you're gone. The current board can depreciate all of the shares by 50% and then issue themselves twice their original shares so they break even. Then do the same thing a couple of rounds later.

I haven't seen $0 but I knew a few people who got diluted to a joke. It doesn't take but a factor of 2-4 dilution of your outlook to drastically change your opinion of how you spent that time.

Re: Boards are dangerous to founder/CEOs

#112

Post by bluGill »

daenz wrote: post #42

I'm happy and appreciative that this advice exists, but as a tech person who just wants to build new things, it makes running a company sound like a massive drain on the psyche.

There is a reason I "work for the man" instead of run my own company. I could make money, but I wouldn't be a programmer. It took me almost 20 years of a CS degree before I was earning more money programming than I could have earned if I had dropped out of school and stayed at McDonald's (they offered me a management job and the career path in the direction was obvious - and also why most people even on that track decide to self limit before they reach the highest I could see from there.)

To make it clear, if you found a company you MUST be a management type person. You can maybe program 25% of the time, but the rest of your time is sales and management duties. You can hire out the sales but that means more management. Soon you are best off hiring out the programming as well and being all management.

Re: Boards are dangerous to founder/CEOs

#113

Post by m12k »

gonehome wrote: post #101
rsweeney21 wrote: post #48

I always thought stuff like this happened to OTHER founders, but would never happen to me. But my board fired me six months after closing our series A. The advice in this article is 100% spot on. I didn't know any of this. I was totally focused on building my company. But if you raise money you can't do that anymore. 50% of your time will always be occupied with working on your next round of funding or managing your…

Can’t you structure things like Zuckerberg or Palantir and just have the founder retain unilateral company control?

You can - but then your startup needs to be that much more attractive to get investors in the first place.

Re: Boards are dangerous to founder/CEOs

#114

Post by _qzu4 »

flenserboy wrote: post #58

1. Avoid going public if at all possible. 2. Avoid outside investors if at all possible. 3. Avoid having a board if at all possible. 4. Control the shares or the shares will control you.

> 1. Avoid going public if at all possible.

This is basically what Bloomberg has done. Despite selling financial terminals to bank traders, the company still hasn't gone public after all these years.

Re: Boards are dangerous to founder/CEOs

#115

Post by hinkley »

pfarrell wrote: post #106
gonehome wrote: post #101

Earlier quoted context omitted.

Can’t you structure things like Zuckerberg or Palantir and just have the founder retain unilateral company control?

Sure... If your company is so attractive that the investors will go along with it. IMHO, Facebook's history is an outlier. Most startups aren't positioned with the leverage they had when raising money. I don't know enough about Palantir's history to comment.

When the orders of magnitude change, so does the correct solution. In other words:

Stop comparing your startup to FAANG.

You are not FAANG. If you were, everyone else would know it. Since you aren't, their strategies don't work for you.

Re: Boards are dangerous to founder/CEOs

#116

Post by bluGill »

flenserboy wrote: post #58

1. Avoid going public if at all possible. 2. Avoid outside investors if at all possible. 3. Avoid having a board if at all possible. 4. Control the shares or the shares will control you.

That isn't always good advice. Often the money from going public is required to make it. You either go public, or someone else will take your idea, go public and use the money from it to eat your lunch and then you get nothing.

Good ideas are easy. Unique good ideas are so rare as to be non-existent. Nearly all good ideas are obvious to anyone who knows the field and what can be done.

Re: Boards are dangerous to founder/CEOs

#117

Post by bluGill »

ilamont wrote: post #86

Boards are necessary too Are they? I've run my own company without a board for 9 years (bootstrapped) and several friends who were CEOs of funded companies had board-driven horror stories ranging from getting the boot to forcing dissolution of the company.

In many cases the law requires it. Check with your lawyer to see if this applies to you.

Even if it doesn't apply, it is useful to get outside advice. The hard part is getting good advice. Boards should do this, but as the article points out, they rarely do.

Re: Boards are dangerous to founder/CEOs

#118

Post by bluGill »

staunch wrote: post #22

Selling equity is one thing. Selling control is another. When the founders have control, they're the leaders and directors have to follow. When the directors have control, they lead and the founders have to follow. Generally, founders are more successful leaders of their own companies.

> Generally, founders are more successful leaders of their own companies.

Is that just because bad companies remove their founders in a last ditch effort to survive? Is that because bad founders can screw the company before they are removed?

Re: Boards are dangerous to founder/CEOs

#119

Post by fezzez »

system16 wrote: post #103

Reading things like this and how common it is for investors to take over, I just wonder how it is possible that a young - and presumably naive - Mark Zuckerberg avoided the typical VC pitfalls and board guillotine / "CEO replaces themselves to help transition company to the next level" path? Was it just because Facebook's growth was so unprecedented they had no need to replace him? Or did he have a very good mentor o…

He had leverage. Facebook's massive growth meant that he could command the terms of the investment, and he ensured that he would always continue to control the board even as he was being diluted with later rounds.

Re: Boards are dangerous to founder/CEOs

#120

Post by gonehome »

pfarrell wrote: post #106
gonehome wrote: post #101

Earlier quoted context omitted.

Can’t you structure things like Zuckerberg or Palantir and just have the founder retain unilateral company control?

Sure... If your company is so attractive that the investors will go along with it. IMHO, Facebook's history is an outlier. Most startups aren't positioned with the leverage they had when raising money. I don't know enough about Palantir's history to comment.

I think Founder’s Fund and Thiel are desirable because of how they treat founders.

I wrote that first comment before finishing the article (which is a good article people should read it).

His first advice is basically to try to do what I asked if you can.

Post reply on HN