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The dynamic changes as soon as founders give up control of the board. It goes from investors having to convince founders of major decisions to founders having t
by staunch 8y ago
The dynamic changes as soon as founders give up control of the board. It goes from investors having to convince founders of major decisions to founders having to convince investors. It also makes the founders fireable. The founders become effectively employees of the investors. This results in them becoming become averse to "rocking the boat". It's a very powerful negative incentive.
Investors have more than enough control over a company using money, minority board seats, and the potential of follow-on funding. Founders should control the board as long as as they're running the company.
A famous example of how bad boards can be is Facebook's board wanting to sell to Yahoo for $1 billion. Zuckerberg controlled the board and vetoed the idea outright against them. Facebook is only worth $600+ billion today because he maintained control.
- matt_the_bass 8y agoAccording to most bylaws CEOs sit at the pleasure of the board, not the pleasure of the chairman. So a ceo can be fired any time the board votes for it regardless of who the chairman is. Perhaps a better question to ask is what is really the role of the chairman vs the CEO in the company.
- staunch 8y agoThe board generally controls everything, including who the chairperson is. Founders should maintain board control as long as possible, hopefully until they leave voluntarily. They're the least likely people to destroy the company. They're the most qualified to run it (having created it) and the most incentivized not to destroy it (owning a large part of it).
- matt_the_bass 8y agoI’m not convinced that they are always the most qualified to run it. I’ve seen plenty of good technologies founded by people who are terrible at executing.