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There are several strategies that founders can use to maintain control in a startup. These include: 1) Retaining majority voting rights: Founders can retain control by holding onto a majority of the company's voting shares. This allows them to make key decisions and steer the company's direction. 2) Dual-class stock structure: Some companies, like Facebook, use a dual-class stock structure. This gives certain shares (usually those held by the founders) more voting rights than others. 3) Board control: Founders can also maintain control by holding key positions on the company's board of directors. 4) Protective provisions: Founders can include protective provisions in their company's charter that give them veto power over certain decisions. 5) Building a strong team: By building a strong team that shares the founder's vision, the founder can maintain influence over the company's direction even if they don't hold majority voting rights.
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Why do some companies, such as Airbnb, Facebook, and SpaceX, remain under the control of their founders, while others transition into the hands of their investors? Take Tesla, for instance: the original founders were Martin Eberhard and Marc Tarpenning. After three years of developing a prototype from 2001 to 2004, they met Elon Musk, an early investor who now controls and serves as the CEO. How and why do these shifts in control happen? What determines who ultimately controls a company?
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Ever wondered why some companies stay under the control of their founders, while others shift into the hands of their investors? Our Cap Table Templat...
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