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Boards are dangerous to founder/CEOs

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Re: Boards are dangerous to founder/CEOs

#291

Post by Danieru »

amelius wrote: post #199
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…

Why didn't it happen to Bezos or Musk?

Lol. How do you think Musk became CEO?

He IS the investor who pushed out the founder CEO.

Re: Boards are dangerous to founder/CEOs

#292

Post by garmaine »

secondaryacct wrote: post #210
amelius wrote: post #199

Earlier quoted context omitted.

Why didn't it happen to Bezos or Musk?

Tesla is an MBA case study of CEO-aligned board (which is bad for public companies, Im sure you can see why now), probably because Musk had most of the seed capital. As to how he kept enough out of his previous ventures, I dont know.

> which is bad for public companies, Im sure you can see why now

Tesla is the world's most valuable car company. What is bad about that now?

Re: Boards are dangerous to founder/CEOs

#293

Post by MagnumOpus »

ganeumann wrote: post #235
gnopgnip wrote: post #231

Earlier quoted context omitted.

The board and officers still have a fiduciary duty to minority share holders. Even if they can vote the company is worth zero and issue 100x as many shares, a court can say the company wasn't worth zero and they need to compensate the former owner.

While this is theoretically true, I think you would be hard-pressed to find an example of someone suing and winning.

Hard pressed? Ed Saverin is a very well known case. He sued Facebook after his co-founder Zuckerberg diluted him out and settled for multiple billions. But then, it was a unusually straightforward case because Zucks put his malicious intentions in writing.

Re: Boards are dangerous to founder/CEOs

#294

Post by sgtnoodle »

lumost wrote: post #243
redshirtrob wrote: post #206

Earlier quoted context omitted.

That's certainly not true. You should evaluate the investment just like any other investment and decide if you can afford to lose the money and stomach the risk. Part of your evaluation should be consulting a tax professional to determine if there are any immediate, negative tax consequences. You're not guaranteed to get hit by AMT just because you exercise some stock options.

There are very few times where the finances work out for options. Most employees lack access to the necessary company financials to make an informed financial decision, there is a 100% downside risk and barring early stage founder equity stakes - it's unlikely that the equity will do better than getting lucky on a top stock pick. I have yet to hear a single case of an employee purchasing their options when they left…

I won't claim that it's the expected outcome for most, but I've exercised options well into AMT territory on multiple occasions, and it seems to have worked out favorably to the point that I could probably skip the ping pong and shrimping boat phases and jump straight to mowing lawns for fun like Forrest Gump.

Also, I have heard stories of former employees that didn't exercise their options or cashed out early, and I wouldn't say regretted it, but reflected on the fact that the stock did a lot better than they predicted it would.

Salt of the Earth folk love to share their stories of financial misery, but generally keep quiet about their embarrassment of riches.

Re: Boards are dangerous to founder/CEOs

#295

Post by ngcazz »

tdfx wrote: post #245
distribot wrote: post #207

Earlier quoted context omitted.

Anyone know how Zuckerberg avoided the same thing happening to him? Bezos was a 30 year old with a decade of experience in finance, I assume he was quite savvy. But Zuckerberg was a teen.

As far as I can tell, Zuckerberg's true talent is being thrown into situations he has no life experience to handle and appropriately picking the right people to surround himself with and listen to.

Situations like work.

Re: Boards are dangerous to founder/CEOs

#296

Post by disgruntledphd2 »

tdfx wrote: post #245
distribot wrote: post #207

Earlier quoted context omitted.

Anyone know how Zuckerberg avoided the same thing happening to him? Bezos was a 30 year old with a decade of experience in finance, I assume he was quite savvy. But Zuckerberg was a teen.

As far as I can tell, Zuckerberg's true talent is being thrown into situations he has no life experience to handle and appropriately picking the right people to surround himself with and listen to.

>Zuckerberg's true talent is being thrown into situations he has no life experience to handle and appropriately picking the right people to surround himself with and listen to.

This seems to be falling apart for him right now, as a bunch of those people have recently left FB. But yeah, I generally agree with your main point, he does seem to be very good at this.

Re: Boards are dangerous to founder/CEOs

#297

Post by nabla9 »

dragonwriter wrote: post #255
nabla9 wrote: post #252

Earlier quoted context omitted.

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.

That case is outside the context of the discussion.

If founder has majority of stocks, he can't be fired.

Re: Boards are dangerous to founder/CEOs

#298

Post by mooreds »

jerrre wrote: post #287
mooreds wrote: post #130

Earlier quoted context omitted.

Plan for the divorce during the honeymoon. Then put the agreement in the safe. Two outcomes: * everything goes swimmingly: you've wasted a bit of time and paper * everything does not go well: hard decisions are already made Before I co-founded a startup, I read the Nolo books on partnerships, especially the parts about dissolving them fairly. The details differ slightly if you have an LLC, C corp etc (as long as it i…

Shouldn't you do it before marriage? That also gives you a third possible outcome * you find out beforehand your ideas about what's fair don't overlap enough to even start.

Good point. I should have said "plan for the divorce during the courtship".

Re: Boards are dangerous to founder/CEOs

#299

Post by cannabis_sam »

Boards themselves have conclusively proven to be extremely dangerous to all of society, not just founders, since it’s dominated by CEOs deciding the salary of other CEOs…

Adam Smith literally warned against this two fucking centuries ago:

> People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

We are all paying a double price, first for insanely inflated executive salaries and second since us normal workers actually have to face the consequences of a business going down, while the CEO, who’s actually responsible for the destruction of the company, drifts of on their golden parachute to a new executive position.

Re: Boards are dangerous to founder/CEOs

#300

Post by boringg »

nabla9 wrote: post #297
dragonwriter wrote: post #255

Earlier quoted context omitted.

> Firstly, founder does not hire the board. Where the founder also controls the voting majority of stock, yes, the founder hires the board.

That case is outside the context of the discussion. If founder has majority of stocks, he can't be fired.

You didn't even read the article and don't understand fundraising dynamics for a start up. Go directly to jail, do not collect $200 and don't come out until you've done your homework.
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