[deleted]
Boards are dangerous to founder/CEOs
251–260 of 339 posts
Re: Boards are dangerous to founder/CEOs
#252Earlier quoted context omitted.
Good board needs to be able to act independently from the CEO. One reason for bad corporate governance in America is boards made from the friends of the CEO.
That's a high minded goal not really connected to the minutiae of the situation. Also relates to larger companies as opposed to early stage VC companies. Think about it from a founder perspective with a bit of reality: who in their right minds would you hire an antagonistic board for the high-minded goal of making corporate governance in America better when you don't even know if your company is going to make another…
Firstly, founder does not hire the board.
Secondly, independent is not the same as antagonistic.
Re: Boards are dangerous to founder/CEOs
#253Earlier quoted context omitted.
"The shareholders elect the Board which has the responsibility to hire and fire the CEO. The Board has the right and the responsibility to fire the CEO if they believe it is in the best interests of the company. If the shareholders don’t like the decision, they can call a special meeting of the shareholders to fire the Board and appoint new Directors. The new Board may re-hire the recently fired CEO. So the majority…
That may be true in many companies, but venture capital funded companies almost always have something called a "Voting Agreement". I pulled a random one from my folder of docs, it is below. The upshot, if you are not used to reading these, is that all of the shareholders signed an agreement that says they will vote their shares to elect certain directors. In the absence of an agreement like this you are right, the bo…
So what can a founder do with a majority of voting shares (in practice)? Seems like they’re pretty hemmed in no matter what…
Re: Boards are dangerous to founder/CEOs
#254Thanks to this article I can learn more. Expand my knowledge and abilities. Actually the article is very real.
Re: Boards are dangerous to founder/CEOs
#255Earlier quoted context omitted.
That's a high minded goal not really connected to the minutiae of the situation. Also relates to larger companies as opposed to early stage VC companies. Think about it from a founder perspective with a bit of reality: who in their right minds would you hire an antagonistic board for the high-minded goal of making corporate governance in America better when you don't even know if your company is going to make another…
Firstly, founder does not hire the board. Secondly, independent is not the same as antagonistic.
> Firstly, founder does not hire the board.
Where the founder also controls the voting majority of stock, yes, the founder hires the board.
Re: Boards are dangerous to founder/CEOs
#256What's interesting is this, which speaks to a level of entitlement that's kind of bonkers:
"I imagine you believe that the decision to stop being CEO of the company you started should be your decision, not someone else’s. But the fact is, it often isn’t. Often, it is the board of directors’ decision."
The CEO serves at the pleasure of the shareholders. If the founder wishes to maintain control until he or she decides to walk away, there is a very simple choice that will absolutely ensure this: maintain control of 51% of the voting shares.
The interests of the owners of a firm trump the interests of an employee of the firm. A minority-shareholder founder-CEO is an employee with equity, and can absolutely be fired.
The tl;dr is that if you dilute your ownership, you're not in control anymore. This is often part of the deal. But don't act like it's some huge injustice. It's literally the deal the you made.
Re: Boards are dangerous to founder/CEOs
#257I 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…
Does anyone have a good idea about the laws for valuation tricks and the ways companies skirt them? A company for which I had stock options recently was sold to a larger company, but the deal seems to have been coordinated such that the investors with privileged shares (or whatever they're called) got their money, but the peasant shares (again, I forget the terms) were worthless--all of the "key employees" got genero…
Very typical in acquihire situations and probably isn't anything to spend energy feeling bitter about--the company simply wasn't worth enough to trickle value down to common shareholders, and didn't yield the result the founders and early investors imagined.
Re: Boards are dangerous to founder/CEOs
#258The world's all about greed now, and the higher up and abstracted out the people are from the passion of the company's founder, the more the more they're going to fuck everyone over for a shark bite. We're just brilliant animals at this point.
Re: Boards are dangerous to founder/CEOs
#259Earlier quoted context omitted.
Had this happen on a much smaller scale as an employee. I (foolishly) bought out some of my options when I left the company. Years later they sold it, but structured the deal such that the major investors got paid out all the proceeds, leaving zero for the common shares. Yes, I realize preferred shares and payout preferences and so forth. The really galling part is that the exec team (who had themselves acquired, not…
All the horror stories around VC money and shennanigans like this make bootstrapping look not just appealing, but required. It's an iterated game that they play a lot, and you play once, and they have no incentive to play fair. I'm glad some of them were named and shamed in this thread, though. Like, why would anyone take money from someone who has acted in bad faith many times in the past? It reeks of unaccountable…
Mostly I believe it happens because 95% of tech founders have no business being anywhere near the c Suite. So they fall prey to venture bandits who will let them call themselves ceo or entrepreneur. If you're actually ceo material, use debt, private or commercial. Figure out the Toronto stock exchange.
Re: Boards are dangerous to founder/CEOs
#260Earlier quoted context omitted.
Man, I hear a lot of horror stories about working at Walgreens and the like on Reddit, even among pharmacists I guess that just going there part time as part of a bigger plan will be a lot lower-stress than trying to make a living off it, but that still sounds like a bad idea You might be better off working as an engineer for a year and then saving 3-4 years' worth of minimum wage money instead I had a friend who rea…
If a person has enough experience at contracting to lean on that reliably, or enough skill to earn ~$80k-$100k per year (to build enough savings quickly for a good runway), then it's definitely not the ideal route to pull a part-time $15/hr type job (it'd be a waste of time). And it only works well for younger people without a family, as it'll involve 70-80 hours of work per week (at least in the beginning). It's a p…
It worked out well for the guy who made Stardew Valley, I have to admit!