Ask HN: How can founders protect themselves from being fired by the board?

#1

Post by licensekey » Sat, Jul 03, 2021, 8:54 PM UTC

What can startup founders do early on to protect themselves from being fired by the board from their executive positions?

I am talking pre-VC when the founders are the only directors of the board and can pass any bylaw. Also assuming, of course, that VCs want to invest enough to look past certain things.

1. Can it be written into bylaws that founders cannot be fired unless there is a severe breach of trust / legal issues?

2. Is it more common to issue stock with extra voting powers?

Re: Ask HN: How can founders protect themselves from being fired by the board?

#2

Post by deviledeggs » Sat, Jul 03, 2021, 9:08 PM UTC

Don't take money until your customer growth looks like a hockey stick. The founders of most famous tech companies didn't take funding until it was clear they were riding a rocket.

If your revenue/user growth is high enough you can write your own terms. People will beg you to take their money.

Re: Ask HN: How can founders protect themselves from being fired by the board?

#3

Post by cherryturnover » Sat, Jul 03, 2021, 9:44 PM UTC

I did a stint in commercial lending so I know a little about Bylaws and operating agreements. Why not just write that in there? VC's are not banks so they have a bit more flexibility in terms of what they'll accept.

Re: Ask HN: How can founders protect themselves from being fired by the board?

#4

Post by icedchai » Sat, Jul 03, 2021, 10:31 PM UTC

Realistically, you can't. With institutional investors, generally if you want their money, you'll have to play by their rules. Your corporate charter / bylaws aren't set in stone, and will just get updated during the next financing round.