[HN Gopher] Being on a board as an employee
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Being on a board as an employee
Author : mooreds
Score : 114 points
Date : 2022-10-17 15:28 UTC (7 hours ago)
(HTM) web link (paulosman.me)
(TXT) w3m dump (paulosman.me)
| pge wrote:
| The statement that he is the first employee at a US venture-
| backed software company to sit on the board is comically wrong.
| Venture-backed companies have had employee board members as
| regular practice for at least as long as the 20+ years I have
| been in the industry. While not necessarily the norm, it is
| certainly not uncommon for an employee other than the CEO to have
| a seat (often a co-founder). The seat is usually designated as
| elected by the holders of Common Stock (which usually is the
| founders and employees with stock). The only thing I see unique
| here is that he was elected by the employees with one vote per
| employee, rather by common shareholders with one vote per share.
| [deleted]
| duxup wrote:
| I don't even know how anyone would prove that claim.
| [deleted]
| paulosman wrote:
| Added a clarification: first non-founder/executive employee to
| sit on a board. If there's another venture-backed software
| company in North America who's put a rank and file employee on
| their board, I'd love to hear about it!
| [deleted]
| eatonphil wrote:
| That's a pretty massive statement to make that is almost
| impossible to prove correct and needs only one counterexample
| to be proven incorrect (which has already been provided in
| this thread).
| ska wrote:
| This is probably worth an application of a much more general
| principle: if you have experienced something directly it's
| quite likely to be fairly common, however if you haven't
| experienced something it's not good evidence that it isn't
| fairly common.
|
| Path dependence means personal experience is rarely very
| generalizable.
|
| Of course if you've made a systematic study of corporate
| governance and have data on thousands of companies, things
| are different.
| ihm wrote:
| I mentioned in another comment but at O(1) Labs (which is VC-
| backed) we've had a board composed of employees for about a
| year. I'm not sure about the timing of your situation, but
| also I'm sure we're not the first company to do so.
| aerosmile wrote:
| Your reasoning in this discussion is unbecoming of a board
| member. In your activity on that board you're involved in a
| lot of open-ended conversations with a lot of ambiguity and
| high cost of failure. I hope you express yourself in that
| setting with a bit more humility and introspection.
| xapata wrote:
| Why do you think you're the first? Did you perform a
| systematic survey?
| tptacek wrote:
| _Please don 't pick the most provocative thing in an article or
| post to complain about in the thread. Find something
| interesting to respond to instead._
|
| https://news.ycombinator.com/newsguidelines.html
|
| In particular: it's clear from the context they're talking
| about non-founder employees; simply by the principle of charity
| you should assume the author --- who sat on the board of a
| pretty successful VC-funded company --- knows that founder
| employees are often on boards.
|
| Mostly though, this "who was first" discussion is an attractive
| nuisance for us to bicker on about, and we're asked by the
| guidelines not to take the bait on that stuff.
| ihm wrote:
| Great to read about. At O(1) Labs[^0] we've had a board that
| consists only of employees for about a year now. Employees who
| have been around for at least 1 year can run and vote. It's one-
| person-one-vote and we use Scottish Single Transferrable
| Vote[^1].
|
| We also have a biannual meeting we call our General Assembly in
| which anyone can make proposals, and then we debate and vote on
| them as a company. For anyone trying to inject more democracy
| into their company, I think having a structure like that which
| more explicitly empowers workers to shape company policy is
| essential.
|
| [^0]: https://o1labs.org/
|
| [^1]: https://www.opavote.com/methods/scottish-stv-rules
| dheera wrote:
| What are the arguments for incorporating democracy into a
| company? Why must it be a democracy? What if your employees all
| have short term personal interests in mind, want 6 months a
| year of PTO, and overthrow the CEO to get it?
|
| I always felt like seeking input from employees, especially
| those who have contributed significantly and that you value a
| lot, is extremely important, but it's not necessary for them to
| have board seats and votes to consciously take steps to obtain
| their feedback and make good use of it.
|
| Since participation in a company is entirely at-will, what's
| wrong with "Join if you agree with the founders' vision, leave
| if you don't"?
|
| Too many cooks spoil the broth.
| thesuitonym wrote:
| Employees aren't idiots. They'll realize that the business
| still needs to run, but instead of a top-down approach from
| someone who thinks they're smarter that the people actually
| doing the work, the decision making is made by people who
| really know what they're deciding on.
| dnissley wrote:
| Not malice, not stupidity, but a third even more prevalent
| failing: incentives.
| dheera wrote:
| I'm suggesting NOT being top-down, getting their feedback
| and letting them make decisions, without formal board seats
| and votes.
|
| It's possible to not have a top-down approach on a day-to-
| day basis, but for the founders to still maintain veto
| power at the end of the day if shit happens.
| ghaff wrote:
| I guess the question I would ask is the following.
| Assuming you're already doing a decent job of soliciting
| feedback from employees, what's the argument for
| effectively giving one employee a louder voice than
| everyone one else? Because I don't see how that doesn't
| happen to at least some degree.
| cool_dude85 wrote:
| What kind of honest feedback can a manager get from the
| employee he has firing authority over?
|
| And what employee would prefer a promise to represent
| their best interests on the board over actual
| representation?
| marcinzm wrote:
| The issue is that they're not idiots but rational
| intelligent people that can understand different rewards.
| They can always get a new job and if the payout if higher
| from nuking the company along the way then it's rational
| for them to be biased that way.
| valleyer wrote:
| Next, describe traditional board members and CEOs.
| marcinzm wrote:
| Exactly my point except their interests tend to be
| aligned with the other stockholders of the company since
| they all make money from the stock. The cases where they
| don't are well known such as VCs insisting on massive
| growth (go big or go bankrupt), activist investors and so
| on.
| hither_shores wrote:
| > Exactly my point except their interests tend to be
| aligned with the other stockholders of the company since
| they all make money from the stock.
|
| ...because of how executive compensation is typically
| structured. Non-executive employees can also receive
| stock grants.
| Hermitian909 wrote:
| Board members often have the same issue, but in a
| different way. Probably the favorite two step approach:
|
| 1. Guide the company to do things that boost the stock
| price in the short term (1-3 years) but destroy the
| company's ability to compete on longer time lines
|
| 2. Dump your stock position
|
| This doesn't usually happen with founders, but I can
| personally attest to the fact that this has been done
| intentionally by board members of billion dollar
| businesses.
|
| There are also more subtle approaches, e.g. board members
| pushing for strategies that hurt the company, but boost
| the board members' other holdings.
| [deleted]
| bigbillheck wrote:
| What are the arguments for incorporating democracy into a
| state?
| dheera wrote:
| In many cases, you don't have a choice to be born into a
| state. You're subject to it just by virtue of being there.
| It's not a choice. That's the difference.
|
| That said, like pure authoritarianism, pure democracy as a
| state governance system also has failure modes, and its
| merits are also debatable.
| dnissley wrote:
| Quite different than those arguments for incorporating
| democracy into a company, and also quite different to those
| arguments for incorporating democracy into a family
| structure.
| ralph84 wrote:
| > What if your employees all have short term personal
| interests in mind, want 6 months a year of PTO, and overthrow
| the CEO to get it?
|
| How does being a non-employee make an outside board member
| less self-interested? What if an outside board member wants
| to get paid $500K a year in cash for serving on the board and
| overthrows the CEO to get it?
|
| At the end of the day board members have a fiduciary duty to
| shareholders that applies regardless of whether they're an
| employee.
|
| The idea that someone who spends almost all of their waking
| hours on a company would be more likely to tank a company
| than someone who spends a few hours a month as an outside
| board member seems odd to say the least.
| dheera wrote:
| > What if an outside board member wants to get paid $500K a
| year in cash
|
| That's the thing, they (assuming you're talking about an
| investor or cofounder) wouldn't want to. They're holding
| onto a chunk of equity that would be worth maybe $10M,
| $100M, maybe even $1G, if the company gets to IPO, so they
| would NOT want to sabotage the company by taking a $500K
| salary from it now and have their shares be worth nothing.
|
| Employees who have peanuts in equity have different
| incentives. They couldn't give three hoots about the
| company's long term success if they can get $500K this year
| for a downpayment on a house to send their kids to a good
| school district.
| archarios wrote:
| Participation in a company is not entirely at will. We all
| have to work for some company to survive. If all companies
| that I have access to are all authoritarian dictatorships,
| I'm forced to live under that kind of rule.
|
| Your thinking doesn't seem to take into account the social
| and economic power dynamics at play. The working class has
| less bargaining power than the capitalist class right now in
| general. We are forced to live under their terms and have
| very little say in what the status quo is.
| paulosman wrote:
| That's awesome! Thanks for sharing - it's great to see
| companies that are willing to embrace more representative
| governance.
| unity1001 wrote:
| Pretty rad...
| RcouF1uZ4gsC wrote:
| One thing about an employee being on the board, especially if it
| is a large company, is that the board is not going to be where
| the real decisions are being made.
|
| Many of the board members are together a lot outside the board.
| Many board members serve on the boards of several different
| companies. These board members likely see each other at expensive
| charity events and political events and cultural/art events.
| Their kids likely attend similar private schools or colleges.
| They will often go to the to the same ski resorts in Colorado or
| Switzerland.
|
| Having a board member who is not part of that socio-economic
| class, sounds nice in theory, but in practice will get left out
| of the real decision making and real discussions.
| JumpCrisscross wrote:
| > _the board is not going to be where the real decisions are
| being made_
|
| Are you basing this on supposition or experience? Yes, Board
| business happens off the clock. But that's prep. If a Board
| member is being systematically excluded from material
| negotiations, that exposes the Board to a host of liability.
| throwaway2037 wrote:
| _Bump_ Everything that I have seen and heard from Charity Majors
| (cool name, right?) is a good listen / read. She is amazing.
| Honeycomb.io is lucky to have someone like her on the board of
| directory.
| [deleted]
| NovemberWhiskey wrote:
| Are readers clear on whether the author was appointed as a voting
| member of the board or not?
|
| I read the whole article and I didn't have any sense of the
| author performing the activities that directors are generally
| expected to perform and there was some discussion about non-
| voting members being asked to leave during "administrative" parts
| of the meeting but not whether that included him.
| johannes1234321 wrote:
| In Germany some companies (depends a bit on size, form of
| incorporation and industry) employees by law can elect members to
| the board. In some cases 1/3 of the members, sometimes 7/15. But
| then a German board is more distinct from operational business
| and executives can't be on the board. (Thus no CEO&Chairman etc )
|
| https://en.m.wikipedia.org/wiki/Supervisory_board#Germany (not
| exactly correct i.e. misses the special rules for coal and steel
| industries)
| brnt wrote:
| For those interested, the Rhineland model, or Rhineland
| capitalism are useful keywords.
| eatonphil wrote:
| See also: shareholder (US-model) vs stakeholder
| (German/European-model) debate.
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