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> 1. The check on [CEO's] power prevented us from being wildly successful because there was too much consensus needed for risky, but potentially rewarding, deci

> 1. The check on [CEO's] power prevented us from being wildly successful because there was too much consensus needed for risky, but potentially rewarding, decisions. Wait, so equity share dictates consensus? In my 20 years of working in startups, I haven't seen a relationship between share ownership and board control (other than chairman) and the company executives. The CEO dictates what happens, period. He can either be a consensus builder -- to his benefit or detriment as the case may be -- or a dictator ala Jobs. Just because everyone has an equal share doesn't mean the CEO needs to build consensus. And he doesn't need a check & balance on power. He is in the position of CEO because the rest of the folks trust his leadership, not because he has 1/5 + 1 shares. It sounds like you had poor corporate governance, unrelated to equity sharing. EDIT: TFA states this directly, as well. > Unequal co-founder relationships are a way to dampen future co-founder issues. By making it clear how decisions are made and who is in charge early, you decrease the likelihood of a founder blow up. This is separate from how you divide equity ...

optimuspaul 8y ago
I'm sure there is a lot more nuance to the power dynamics and psychological barriers when one is essentially a minority shareholder yet in control. But overall I tend to agree with your response.
e40 8y ago
Wait, so equity share dictates consensus? In my 20 years of working in startups, I haven't seen a relationship between share ownership and board control (other than chairman) and the company executives. If all the shareholders are employees and the CEO has a minority share and the other employees have a majority, then they can force the CEO out fairly easily. That kept things civil, in our case. Just because everyone has an equal share doesn't mean the CEO needs to build consensus. Again, you are right, to a degree, but even if all employee founders were fired, they could band together, in the situation being discussed, and toss the CEO. That changes the psychology of the situation.
sonnyblarney 8y ago
"Just because everyone has an equal share doesn't mean the CEO needs to build consensus." If they other co-founders own more than 50% of the equity that's a very legit thing and they can call a board meeting instantly and make mega changes including getting rid of the CEO. Moreover - in the early stages among founders there has to be at least basic consensus or you're dead. Otherwise there is literally no team. The CEO should be given more leeway, but it's not always so clear either. There's a reason the others are 'co-founders' and not 'first employees'.

optimuspaul 8y ago

I'm sure there is a lot more nuance to the power dynamics and psychological barriers when one is essentially a minority shareholder yet in control. But overall I tend to agree with your response.

e40 8y ago

Wait, so equity share dictates consensus? In my 20 years of working in startups, I haven't seen a relationship between share ownership and board control (other than chairman) and the company executives. If all the shareholders are employees and the CEO has a minority share and the other employees have a majority, then they can force the CEO out fairly easily. That kept things civil, in our case. Just because everyone has an equal share doesn't mean the CEO needs to build consensus. Again, you are right, to a degree, but even if all employee founders were fired, they could band together, in the situation being discussed, and toss the CEO. That changes the psychology of the situation.

sonnyblarney 8y ago

"Just because everyone has an equal share doesn't mean the CEO needs to build consensus." If they other co-founders own more than 50% of the equity that's a very legit thing and they can call a board meeting instantly and make mega changes including getting rid of the CEO. Moreover - in the early stages among founders there has to be at least basic consensus or you're dead. Otherwise there is literally no team. The CEO should be given more leeway, but it's not always so clear either. There's a reason the others are 'co-founders' and not 'first employees'.