Venture Hacks

“During the whole funding process they said, ‘We’re interested in you guys because of your management team; we think you’re fantastic…’ Two weeks later they pull me into the office – before even the first board meeting – and say, ‘We want to replace you as CEO.’”
– Mark Fletcher, Founders at Work
Summary: You made a [...]

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“By the time we did the financing we had been working on [the company for] 2 years, but they only vested us a year. So, they got a year of free vesting from us.”
– Joe Kraus, Founders at Work
Summary: Don’t agree to vest all of your shares just because it is supposedly “standard”. Get [...]

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Summary: Focus on your share price and the number of shares you own — metrics like valuation and percent ownership can fool you.
If valuation is your only pespective on a company’s capital structure, you can get fooled by games like the option pool shuffle which make your valuation seem large but actually depress your share [...]

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“Follow the money card!”
– The Inside Man, Three-Card Shuffle
Summary: Don’t let your investors determine the size of the option pool for you. Use a hiring plan to justify a small option pool, increase your share price, and increase your effective valuation.
If you don’t keep your eyes on the option pool while you’re negotiating valuation, your [...]

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“Because we weren’t having success finding a CEO, [our investors] insisted that we hire these managers [a temporary CEO and CFO]. That didn’t go great.”
– Tim Brady, 1st employee at Yahoo, Founders at Work
Summary: Create a new board seat for a new CEO. Don’t give him one of the common seats.
Whether you negotiate a [...]

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“Good boards don’t create good companies, but a bad board will kill a company every time.”
– Old Silicon Valley Saying
Summary: Create a board of directors that reflects the ownership of the company and don’t let your investors control the board through an independent board seat.
The composition of the board of directors is the most important [...]

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“Having information that the other side doesn’t have gives [VCs] an advantage… they take advantage of entrepreneurs who haven’t been through this before… they were totally willing to take advantage of us.”
– Mitch Kapor, Founders at Work
“Knowledge is Power.”
– Sir Francis Bacon
In this series of articles, we’re going to explain how to negotiate a great [...]

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