Being on a board as an employee
paulosman.me
paulosman.me
We also have a biannual meeting we call our General Assembly in which anyone can make proposals, and then we debate and vote on them as a company. For anyone trying to inject more democracy into their company, I think having a structure like that which more explicitly empowers workers to shape company policy is essential.
[^0]: https://o1labs.org/
I always felt like seeking input from employees, especially those who have contributed significantly and that you value a lot, is extremely important, but it's not necessary for them to have board seats and votes to consciously take steps to obtain their feedback and make good use of it.
Since participation in a company is entirely at-will, what's wrong with "Join if you agree with the founders' vision, leave if you don't"?
Too many cooks spoil the broth.
It's possible to not have a top-down approach on a day-to-day basis, but for the founders to still maintain veto power at the end of the day if shit happens.
And what employee would prefer a promise to represent their best interests on the board over actual representation?
...because of how executive compensation is typically structured. Non-executive employees can also receive stock grants.
1. Guide the company to do things that boost the stock price in the short term (1-3 years) but destroy the company's ability to compete on longer time lines
2. Dump your stock position
This doesn't usually happen with founders, but I can personally attest to the fact that this has been done intentionally by board members of billion dollar businesses.
There are also more subtle approaches, e.g. board members pushing for strategies that hurt the company, but boost the board members' other holdings.
That said, like pure authoritarianism, pure democracy as a state governance system also has failure modes, and its merits are also debatable.
How does being a non-employee make an outside board member less self-interested? What if an outside board member wants to get paid $500K a year in cash for serving on the board and overthrows the CEO to get it?
At the end of the day board members have a fiduciary duty to shareholders that applies regardless of whether they're an employee.
The idea that someone who spends almost all of their waking hours on a company would be more likely to tank a company than someone who spends a few hours a month as an outside board member seems odd to say the least.
That's the thing, they (assuming you're talking about an investor or cofounder) wouldn't want to. They're holding onto a chunk of equity that would be worth maybe $10M, $100M, maybe even $1G, if the company gets to IPO, so they would NOT want to sabotage the company by taking a $500K salary from it now and have their shares be worth nothing.
Employees who have peanuts in equity have different incentives. They couldn't give three hoots about the company's long term success if they can get $500K this year for a downpayment on a house to send their kids to a good school district.
An employee has incentives like needing the company to survive so that they can maintain their healthcare, pay rent/mortgage each month, maintain a work visa, and recieve a pension. Getting a big downpayment on a house makes the employee even more tied to their employment, since now they have a bigger monthly cost to fill than before.
Unless you're already clearly a unicorn it's not particularly easy to find a buyer for your founder equity in a startup at the prices it might IPO at if things go well.
Founders selling their own equity too early will also destroy morale and investor relations to the point where the company isn't likely to succeed anymore. Buyers realize this, and aren't going to hand you IPO prices for it.
However, they also don't sabotage the company since word would get around that they or the VC they represent are terrible board members that sabotage companies.
Besides reputation damage, they can also be sued by the shareholders for failing to uphold their fiduciary duty.
It's similar to why the CEO doesn't just pay themselves their entire series C, close the company, and retire (assuming the bylaws allow the CEO to pay themselves).
Not always true. I've had VCs who want to split their investment between fund and personal at the last minute when you pretty much don't have a choice and don't have time to shop around.
Your thinking doesn't seem to take into account the social and economic power dynamics at play. The working class has less bargaining power than the capitalist class right now in general. We are forced to live under their terms and have very little say in what the status quo is.
A democracy would certainly give a company a huge advantage. I would take a significant pay cut for that. But it does have to produce tasty soup as well, and in order to exist at all, pay salaries.
I'll be candid in saying that I haven't found a company that meets my high expectations. :)
I don't understand how this applies. If anything, having only employees on the board would mean fewer total cooks (i.e. stakeholders influencing decisions) compared to having those same employees in the company plus a board of outsiders.
Or isolation of the board from information at all levels of the company leads to poor decision framing?
That's only possible if every workplace is organized along those lines, and workplaces are networked together to coordinate their action. It's not possible by people just leaving a company, you need to also construct the structures of democracy.
https://en.m.wikipedia.org/wiki/Supervisory_board#Germany (not exactly correct i.e. misses the special rules for coal and steel industries)
Many of the board members are together a lot outside the board. Many board members serve on the boards of several different companies. These board members likely see each other at expensive charity events and political events and cultural/art events. Their kids likely attend similar private schools or colleges. They will often go to the to the same ski resorts in Colorado or Switzerland.
Having a board member who is not part of that socio-economic class, sounds nice in theory, but in practice will get left out of the real decision making and real discussions.
Are you basing this on supposition or experience? Yes, Board business happens off the clock. But that's prep. If a Board member is being systematically excluded from material negotiations, that exposes the Board to a host of liability.
I read the whole article and I didn't have any sense of the author performing the activities that directors are generally expected to perform and there was some discussion about non-voting members being asked to leave during "administrative" parts of the meeting but not whether that included him.
I can see that it has strong predictive power on company revenue, which the board must be very interested in, but is it really stronger than just a time-series? Perhaps it affords a set of knobs that can be twiddled to try to improve the outcome, but how much of that control is illusory? (After all, most startups fail, even -- especially? -- VC-backed ones.)
Outside of that discussion, going a bit more meta, it feels like the experience left a fairly bitter taste in OP's mouth. I continue to believe that corporations and startups, even friendly ones like Honeycomb, are not pleasant places to work at.
Every business and product are different, so there are no specific numbers you should expect in general. You can sometimes find benchmark data from similar companies, but usually you just compare to your own company over time. E.g. if you do a new marketing campaign and conversion rates go down, then you are probably introducing relatively more bad leads rather a sudden poor performance from sales. Although, in the same situation, an influx of a new kind of customer might just need a different sales strategy without changes to product or marketing.
I have lots of thoughts about the necessity to work and how that can drain a lot of enjoyment out of intellectual pursuits, but I will say that, of profit motivated companies, Honeycomb is an exceptional one to work for filled with wonderful humans who care about each other. I really enjoyed my tenure there, made lifelong friends, and became a better engineer. It's a really special place and I hope they keep that up as they grow.
The other 2/3rds are divided equally between our restaurant and consumer members. Each member class votes exclusively for their portion of the board seats.
We’re nearing year three, and this arrangement has been working well for us. We’ll see if it can continue to scale as we expand geographically.
Path dependence means personal experience is rarely very generalizable.
Of course if you've made a systematic study of corporate governance and have data on thousands of companies, things are different.
Please review the HN Guidelines and ask yourself if posting your comment added to or detracted from the value of this discussion:
I’ll help you out. A bunch of us here deal with board members on a daily basis. Some board members are great, others not so much. To hear that there is a board out there that gave voting rights to an employee makes us experience two simultaneous sensations: 1. Hell yeah!, and 2. I wonder if they picked the right employee.
I’ll leave it at that.
Do you think I, in 20 years of working in the industry, haven't dealt with bad board members? How about a little curiosity instead of whatever the hell you're dishing in this thread.
Let me help you out: you're a stupid little troll and your contributions to this discussion are like little turd droppings that just stink up the room. Please kindly contribute constructively or fuck the hell off.
https://news.ycombinator.com/newsguidelines.html
In particular: it's clear from the context they're talking about non-founder employees; simply by the principle of charity you should assume the author --- who sat on the board of a pretty successful VC-funded company --- knows that founder employees are often on boards.
Mostly though, this "who was first" discussion is an attractive nuisance for us to bicker on about, and we're asked by the guidelines not to take the bait on that stuff.