When a founder is giving birth to their new baby, he or she is filled to overflowing with the giddy excitement of creating life. Sure, they may create Corporate Bylaws, Articles of Incorporation, a Shareholder Agreement, or even an Operating Agreement — really good companies have Employment Agreements which subsume job descriptions with each of the co-founders — but there is one necessary element they typically fail to contempate.

OK, I’ll bite, what is it, Big Red Car?

Ahhh, dear reader, it is the escape hatch by which I mean the issue of who is in control and how is it done if the founders should have a spat or decide they need to part company. I think of it as the startup pre-nup.

This should be attacked right up front when there is nothing but goodwill about because if you don’t and such an eventuality befalls you, there will be no goodwill nor reason upon which to resolve the dispute. I have seen some brutally ugly disputes. Continue reading →