6 ms·

It's a different experience, for sure, but not necessarily an easier one. Common perception is that founder CEO's call all the shots like some third world dict

by nugget 11y ago

It's a different experience, for sure, but not necessarily an easier one. Common perception is that founder CEO's call all the shots like some third world dictator whose word is law and cannot even be questioned. Well, appearances can be deceiving. I went from undergrad to CEO of a startup that my best friend and I founded. I very much had a boss: our lead investor who settled in as Chairman of the Board and unleashed his domineering personality to run rampant on our weekly management calls. I had an extreme amount of pressure from him to hit deadlines and hold ourselves accountable to our excel projections (which, like most early startup projections, were pretty useless to begin with). Over time, as success bought some freedom from the board and investors, a few of our most important anchor clients filled their role instead. I would spend months feeling like a certain VP or SVP at a make-or-break client for us was basically calling the shots in large areas of my life. In hindsight what we were lacking was real mentorship, management guidance, and similar help, (unfortunately) none of which were included with capital from our investors. We figured it out as we went along while taking flack from all sides. Only later when we were acquired and I had a ''normal'' boss with a ''normal'' p&l, career oriented direct reports, etc, did I realize how different it is, in some ways worse but in some ways much better. It was a heck of a lot more predictable and less stressful. I didn't have to pull any rabbits out of hats I just had to wander over to the rabbit cage and feed them. But, without a doubt, experiencing the whole cycle made me a better founder down the road.

jacquesm 11y ago
That was - I'm trying hard here not to be harsh on you - because you let him. If you're inexperienced I can easily see how this situation could come into play but you as a majority shareholder, co-founder and CEO have no boss, certainly not your chairman-of-the-board investor. That's a relationship that you will have to manage, that's for sure but if you see him as your boss you imply that he has the right to throw you out or sanction you and that isn't the case, as majority share holders you and your co-founder should be in control of the company and the board should have an advisory role. If the company goes public, hires an outsider CEO who is not a part of the founding team or if the founder-CEO is not seeing eye-to-eye with the other founders then the board can become more dominant.
- asah 11y ago
  If you depend on that outside investor to support (take pro-rata, say upbeat things etc) your next round, then you have little choice but to say "how high" when such a board member says jump.
  - jacquesm 11y ago
    I really disagree with that. Board members (and other shareholders for that matter) can hold you accountable for mis-steps but if they get in the way of you doing your job then you owe it to yourself and your company to manage the relationship in such a way that they do not have the ability to impose on you in such a way. That's also in the best interest of that investor. Structuring and managing relationships is one of the things a CEO should be good at if the company is to become successful. This goes for the relationships with the rest of the company management, it goes for outsiders and it goes for the board. If a CEO is hired by the board then that changes but if you found it you should be in charge and you should make it clear - in a respectful way and if necessary by educating your board members - why that is the case. > If you depend on that outside investor to support (take pro-rata, say upbeat things etc) your next round He or she will say upbeat things regardless (because they're already in it is in their own interest), whether or not they will take pro-rata shares with a next emission will depend on the price and their ability to purchase as much as anything else so I would not count on it regardless and take it as a nice-to-have but not a must. If you behave like someone else is in control they are in control. Don't do that.
    - apalmer 11y ago
      Interesting comments... At the level of CEO and the Board there is no 'boss', there are only checks and balances.
      - jacquesm 11y ago
        Indeed. Even a hired CEO has a mandate and the board can fire him/her but they can't unduly influence that person beyond supplying (possibly unsolicited) advice. Otherwise no CEO would ever be able to do their job. Ultimately, whatever happens is the responsibility of the CEO and the board is a source of advise and makes sure the CEO does a good job. If the board is backed by the shareholders they can fire the CEO, but if the shareholders (and in this case that meant the original founders) don't agree by simple majority to get rid of a CEO then he/she can continue to do their job. Whether you still want to is another issue entirely. Anybody in a CEO position would do well to make sure they understand their rights, obligations and their relationships with the various other entities they are dealing with. If you don't understand those then it is a recipe for frustration and potentially disaster. This is the reason why you'll see board members leak to the press (see for instance Yahoo! recently). They can't win the argument in the boardroom and they can't/won't fire the CEO (maybe because they only have a minority share and the rest of the board and/or shareholders do not see their way). This is also why founder disputes are extremely risky for a company. Founders typically hold large blocks of shares and if some those suddenly align with of non-founders then it can really break your stride or cause serious trouble. Say a company has two founder that still hold 60% of the shares, 5% is in an option pool and 35% is held by an outside investor. If the founders no longer see eye-to-eye the board suddenly holds the tie breaking vote and this could lead to the departure of either one of the founders depending on with who the board sides. In such a case I hope your shares are vested if you're the founder that is forced to leave (and if not I hope you have a vesting acceleration clause in your contract).
staunch 11y ago
Working for a year or two post-acquisition is nothing like working for 10+ years in the industry as a normal employee. You know nothing.
- nugget 11y ago
  I'm genuinely curious, what do you think you experience in 10+ years that you wouldn't in 2-3 years? I spent three years working post acquisition. I experienced an up cycle (we were making so much $ that budgeting went out the window and we could spend/hire without restraint) and a down cycle (multiple rounds of layoffs, C level firings, hard resetting of public market expectations and a deep restructuring of parts of the business). I managed a team of about 30 people through this. Almost everybody seemed to be comfortably settled in to their jobs. Bad times were more stressful than good times, of course, but apart from these external factors impacting the business, it was a pretty monotonous routine month after month. The status quo is powerful and acts as a headwind against anyone making much radical change, while the business coasts along on whatever its core legacy income streams are. You try to make cautious, incremental improvements to those income streams without jeopardizing anything. The very senior employees (SVP and C level) seemed to have the least stability and most career anxiety, and entry levelers had that first time in the foxhole look on their faces for the first few months, but in the middle ranks, it was pretty much good natured cruise control. If I had stayed 10+ years I imagine it would have just been more up cycles, more down cycles, but mostly the same routine.
  - staunch 11y ago
    You worked at one company, hired as a senior person with no experience, probably with an employment contract, a high salary, and large earn outs/bonuses. You had a very different experience from normal people, so why would you think you can relate to them...
    - x0x0 11y ago
      And presumably had enough cash that even being fired would not have caused major problems in your life, like an inability to pay rent/mortgage, eat, or afford health insurance.

by nugget 11y ago

jacquesm 11y ago

That was - I'm trying hard here not to be harsh on you - because you let him. If you're inexperienced I can easily see how this situation could come into play but you as a majority shareholder, co-founder and CEO have no boss, certainly not your chairman-of-the-board investor. That's a relationship that you will have to manage, that's for sure but if you see him as your boss you imply that he has the right to throw you out or sanction you and that isn't the case, as majority share holders you and your co-founder should be in control of the company and the board should have an advisory role. If the company goes public, hires an outsider CEO who is not a part of the founding team or if the founder-CEO is not seeing eye-to-eye with the other founders then the board can become more dominant.

asah 11y ago
If you depend on that outside investor to support (take pro-rata, say upbeat things etc) your next round, then you have little choice but to say "how high" when such a board member says jump.
- jacquesm 11y ago
  I really disagree with that. Board members (and other shareholders for that matter) can hold you accountable for mis-steps but if they get in the way of you doing your job then you owe it to yourself and your company to manage the relationship in such a way that they do not have the ability to impose on you in such a way. That's also in the best interest of that investor. Structuring and managing relationships is one of the things a CEO should be good at if the company is to become successful. This goes for the relationships with the rest of the company management, it goes for outsiders and it goes for the board. If a CEO is hired by the board then that changes but if you found it you should be in charge and you should make it clear - in a respectful way and if necessary by educating your board members - why that is the case. > If you depend on that outside investor to support (take pro-rata, say upbeat things etc) your next round He or she will say upbeat things regardless (because they're already in it is in their own interest), whether or not they will take pro-rata shares with a next emission will depend on the price and their ability to purchase as much as anything else so I would not count on it regardless and take it as a nice-to-have but not a must. If you behave like someone else is in control they are in control. Don't do that.
  - apalmer 11y ago
    Interesting comments... At the level of CEO and the Board there is no 'boss', there are only checks and balances.
    - jacquesm 11y ago
      Indeed. Even a hired CEO has a mandate and the board can fire him/her but they can't unduly influence that person beyond supplying (possibly unsolicited) advice. Otherwise no CEO would ever be able to do their job. Ultimately, whatever happens is the responsibility of the CEO and the board is a source of advise and makes sure the CEO does a good job. If the board is backed by the shareholders they can fire the CEO, but if the shareholders (and in this case that meant the original founders) don't agree by simple majority to get rid of a CEO then he/she can continue to do their job. Whether you still want to is another issue entirely. Anybody in a CEO position would do well to make sure they understand their rights, obligations and their relationships with the various other entities they are dealing with. If you don't understand those then it is a recipe for frustration and potentially disaster. This is the reason why you'll see board members leak to the press (see for instance Yahoo! recently). They can't win the argument in the boardroom and they can't/won't fire the CEO (maybe because they only have a minority share and the rest of the board and/or shareholders do not see their way). This is also why founder disputes are extremely risky for a company. Founders typically hold large blocks of shares and if some those suddenly align with of non-founders then it can really break your stride or cause serious trouble. Say a company has two founder that still hold 60% of the shares, 5% is in an option pool and 35% is held by an outside investor. If the founders no longer see eye-to-eye the board suddenly holds the tie breaking vote and this could lead to the departure of either one of the founders depending on with who the board sides. In such a case I hope your shares are vested if you're the founder that is forced to leave (and if not I hope you have a vesting acceleration clause in your contract).

staunch 11y ago

Working for a year or two post-acquisition is nothing like working for 10+ years in the industry as a normal employee. You know nothing.

nugget 11y ago
I'm genuinely curious, what do you think you experience in 10+ years that you wouldn't in 2-3 years? I spent three years working post acquisition. I experienced an up cycle (we were making so much $ that budgeting went out the window and we could spend/hire without restraint) and a down cycle (multiple rounds of layoffs, C level firings, hard resetting of public market expectations and a deep restructuring of parts of the business). I managed a team of about 30 people through this. Almost everybody seemed to be comfortably settled in to their jobs. Bad times were more stressful than good times, of course, but apart from these external factors impacting the business, it was a pretty monotonous routine month after month. The status quo is powerful and acts as a headwind against anyone making much radical change, while the business coasts along on whatever its core legacy income streams are. You try to make cautious, incremental improvements to those income streams without jeopardizing anything. The very senior employees (SVP and C level) seemed to have the least stability and most career anxiety, and entry levelers had that first time in the foxhole look on their faces for the first few months, but in the middle ranks, it was pretty much good natured cruise control. If I had stayed 10+ years I imagine it would have just been more up cycles, more down cycles, but mostly the same routine.
- staunch 11y ago
  You worked at one company, hired as a senior person with no experience, probably with an employment contract, a high salary, and large earn outs/bonuses. You had a very different experience from normal people, so why would you think you can relate to them...
  - x0x0 11y ago
    And presumably had enough cash that even being fired would not have caused major problems in your life, like an inability to pay rent/mortgage, eat, or afford health insurance.