Ask HN: Should founder / CEO be the Chairman of the board?
Basically the subj. We are setting up the board for the startup and are wondering if we should work to get the founder-CEO to be the chairman. Investors want to have outside director to be the chairman and we, frankly, are not sure if this is worth negotiating over or is that just some kind of formality.
6 comments
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.
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.
According 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.
Perhaps a better question to ask is what is really the role of the chairman vs the CEO in the company.
The 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).
I’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.
It may be worth thinking about hypothetical future scenarios where the interests of the chairman of the board and the founder-CEO and the company are not all aligned.
There's a quora post by Dale Strickler that gives one perspective: https://www.quora.com/Does-a-Chairman-of-the-Board-have-more...
There's a quora post by Dale Strickler that gives one perspective: https://www.quora.com/Does-a-Chairman-of-the-Board-have-more...
If you're Carlos Ghosn its a no brainer.