What are other startups / companies where the founder is in full control?
Is it possible, as a founder, to maintain complete control of the board and the company through Series A - E ?
I've seen several short answers on this in other threads, but I want to know more about this.
"Zuckerberg owns or controls 88.1% of Facebook’s Class B shares, which each have 10 votes at the annual meeting — 3.98 billion votes overall. There are only 2.4 billion Class A shares, which are the only shares ordinary investors can buy. So any proposal Zuckerberg doesn’t like will fail by nearly a 2-1 margin, assuming all Class A investors vote together, which never happens. (Zuckerberg owns 0.5% of the Class A shares.)"
Clearly all throughout the funding rounds he made sure he controlled the shares that mattered.
Zuckerberg and other very early people had Class B stock so they can continue to have more than 50% of the vote even when they own less than 50% of the stock.
This was a really popular stock structure in Silicon Valley for a while because it cements founders in control - Evan Siegel at Snap has the same deal, and Adam Neumann at WeWork was about to do it. But now there's a lot of push back against it, and some indexes like the S&P 500 refuse to list new stocks with this dual class structure.
It's his company. When you make the company and give out shares, just get the lawyers to agree to allow you to keep control. Its just legal documents. If you have a good startup VCs and angels may be willing to give you better terms.
> Is it possible, as a founder, to maintain complete control of the board and the company through Series A - E ?
Sure. I've noticed several company IPO announcements on HN lately included the founder-control shares in their IPO prospectus, so it can't be too unique.
The way they do this is by having share classes. Eg Class A shares each gets x% of company and y% of votes. Class B shares get X% of company and [Y/20]% (or 0 sometimes) of votes. The 1/20 is arbitraty btw, it can be any ratio. Sometimes i see A, B, C shares where A is founder/vc tier with extra votes, B is "regular" with smaller votes, and C is no-vote shares, and often C is sold through IPOs into the exchanges.
I have no data on how common these different schemes are, but they're things ive seen in HN-announced start-ups and IPOs in the last year, so take that as anecdotal.
And the investors here are very sophisticated venture capitalists. They understand very well what deals look like, and risks, and whatever else. Probably better than the founders themselves.
And they wanted in badly enough that they were willing to sign on terms that kept Zuck in control. And that decision made them very, very, obscenely, filthy, rich. Not a bad investment decision at all.
Minority shareholders do have rights, but keeping control as a founder is easy if the VCs want in badly enough. With facebook, they did.