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Who controls a startup? January 30, 2007

Posted by jeremyliew in startups, Venture Capital.
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Ask the VC points to a good post by Matt Macall at his blog VC Confidential about why startup entrepreneurs should not get too focused on the issue of control and of owning more than 51%.

In a nutshell, he says that “control” is a bit of an illusionary concept, and that in reality having everyone aligned around a startup’s strategy is far more important than either company management or investors being able to “force” their point of view on the other side. We completely agree.

Comments»

1. jeff barson - January 30, 2007

Control is like security… there is none. Everythings fine as long as everythings fine.

2. lucinda - January 31, 2007

when boards or investors squabble, it’s because they are greedy, afraid, or directionless. structural control is only important when greed (i.e. you’re selling) or fear (you’re in the death zone) take over. the rest of the time, ceos have real control unless we forfeit it by failing to lead effectively. it’s our job to stay out ahead of our teams, boards, and investors – to solicit then meld their input into a cohesive vision and plan. when everyone is executing against the plan, “control” is irrelevant.

3. james - February 1, 2007

what about the situation where founders are forced out by the board. wouldn’t 51% control have helped in those situations? having 51% essentially gives you control of the bylaws, which can make a difference in a founder not being kicked out should his/her judgement differ from the investors.. basically, what about mid flight corrections? running a startup and flying a plane along a predetermined route are not the same.


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