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How Do You Keep From Losing Control Of Your Company When You Raise Your Next Round Of Funding?
There is this false belief that the way to keep control of your company as an entrepreneur is by owning a majority of the stock or creating special classes of stock so you control the voting rights. The concept is pretty is simple: You control the votes, so you can’t be voted out of being CEO.
I think the Uber story debunks the myth that controlling the voting rights will keep you in control.
Travis Kalanick, Uber’s CEO, created a dual share class structure that effectively gave him control of the voting rights for the company. Yet the investors still were able to fire him.
Here was this Uber-successful company that one of its investors thought could be worth over $100B due in large part the CEO’s vision and drive, and the CEO was fired.
The particulars of what Travis did or didn’t do aren’t really important. What is important is understanding that nothing will protect you if screw up.
If you take venture funding, you need to understand that your investors (rightfully) will do whatever they need to do to protect their…
