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Comment by js440 | Hacker News Reader

Long time listener, first time caller. Sorry that I didn't put the Ask YC (didn't know if it added it automatically or not).

I finally found a few potential cofounders, quit my job, and started working obsessively on my ideas. I'll have a demo in a few weeks and I need to make a decision about whether or not I actually want to go through with this.

My main concern is with the funding/stock/control issue. Ignorant or not, I (and the other founder hackers) need to have complete control over things from top to bottom. I am certainly open to suggestions & advice from a board, but the decisions ultimately have to rest with me.

In your experience, has this been an issue? Is this an unrealistic expectation?

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From what I've seen, most Angels will be fine in and "advisory" role, and don't expect to be given the right to make decisions for the company.

But with money raised by serious venture capital firms, they definitely expect more control. It isn't so much direct as it is indirect. The VC firms will have control over a significant portion (if not a majority) on the Board of Directors. As such, they'll likely have power to hire and fire top-level managers. Including yourself. Therefore, while you're not obligated to obey them, you'll be more inclined to follow their advice since your job is, essentially, in their hands.

That, in its essence, is why you should 1) avoid VC cash unless completely necessary, and 2) pick your VC firm carefully (don't always go with the highest valuation or biggest name).

Do you need funding? If so, you're going to lose some control.

In all seriousness, the odds of finding an investor who will hand over money with no strings attached are miniscule -- most investors (quite reasonably) want to avoid the "I think I should get a big bonus this year... oh look, the company has run out of money, too bad guys" scenario. (And this scenario isn't necessarily quite so blatant -- sports teams, for example, are notorious for "losing" money while they funnel inflated contracts to other companies with the same owners.)

That said, not all companies need funding. Do you have enough money saved to let you survive while you write code? Can you avoid capital costs and long-term leases by working out of your home(s) and renting servers instead of buying computer hardware?

If you can bootstrap, do it. If not, accept that you're going to have to give up some control; and try to find the funding which will let you retain as much control as possible.

Yes, it's unrealistic.

Here are things that founders could do that might upset an investor:

1. Selling your company to someone else for a tiny sum. 2. Issuing stock in peculiar ways. 3. Issuing stock to yourselves without any vesting plan. 4. Jacking up your own compensation at the expense of runway.

Much of the "control" they want is to keep you from doing something unethical. Some of the control they want is to keep you from compromising their investment.

There are plenty of great stories where entrepreneurs had such a great idea/startup that they were able to push for pretty great terms (Google).

The best way to insure control is to insure that you don't NEED the investment.

It's not an unrealistic expectation at all, as long as you never raise a serious Series A. Once someone gives you a bunch of money, you have to listen to what they say, even if you still own 70% of the company.

Unless you have bona-fide, proven successes (plural), you'll probably end up losing ultimate control at some point, and it will probably be the best thing for everyone involved.

Why do you need to maintain control? Greed? Paranoia? The idea is too complex for others to understand? (note: none of these are good reasons ;) )

As a leader, you should always strive to ensure that you can be replaced, and that the company can and would continue without you. This is often a big hurdle for many entrepreneurs to wrap their head around, but it is almost always critical to the success of the company.

In the beginning, the founders maintain full control simply because they are the only ones that fully understand the idea and market. Over time, you need to do less innovation, and more operation of the business. Founders rarely make good full-time CEOs, and "professional CEOs" rarely make good founders, but they both play their part in the on-going success of the company.

> Why do you need to maintain control? Greed? Paranoia? The idea is too complex for others to understand? (note: none of these are good reasons ;) )

Note that maintaining control is different from hoarding all the money. The people who understand it best should be in control, regardless of how much equity they give to investors. This is not just in the early stages -- look at Steve Jobs calling the shots at Apple.

> As a leader, you should always strive to ensure that you can be replaced, and that the company can and would continue without you.

That's just not how startups work, at ALL. Losing a founder basically dooms a startup.

It only applies much later on, when the company has a huge bankroll and a life of its own.

And even then, sometimes you still need Steve Jobs.

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