Sometimes conceding to a point is more important

Every start – up has issues. And it is a lot of fun to be locked in a battle on issues concerning your company. But, there are times when the consequences of being right are not great enough, and being graceful and conceding is a better option.

There will be times when you will not agree with your colleagues. There are times when our economic interest are not on the same page. It is quite healthy to voice your opinions and stand up for what you believe in. but, there will come a time when, even though you believe right down to your bone marrow that you are right, it is just not worth, economically, to keep fighting.

There are about a million examples where something like this comes up, irrespective of with whom you are speaking. One example is where investors want to protect themselves from the consequences of the company getting sold before the next round of financing comes through and leaving them without adequate returns. The biggest questions are regarding the content of the right return and what would happen if an acquisition were to take place.

The acquiring company will want all the proceeds to go to the founders, irrespective of the cap table. This is because the buyers are more worried about incentivising and locking in founders, than they are about the returns of venture capitalists or of the legal provisions available to protect them.

If a founder wants his co – founder to leave and the agreement you signed says that you can take back all of his uninvested stock. This makes you, as the venture capitalist, the bad guy. It seems obvious that peace at the time of leaving is preferred than fighting over relatively small amounts of stock. This things become difficult when the subjects are emotional, and money and prestige is involved. The absence of any black and white answers complicates matters.

This is just one of those situations where there is no right answer and each case depends on the situation. You might be right and have all the facts correct. But, you might just end up pissing people off. Also, it will not matter to your returns to be worth it. It is always better to never burn bridges, for you might need to work with them in the future.

Anyway, chalk this up as one of those questions where there is no clear answer because every case depends on the situation. But, in this case, I remember going to a friend of mine for advice on how to go about it. He said, “I agree you are 100% correct on the facts. But, it is not worth fighting over.

People will just get irritated and angry, and it will not matter to your returns to be worth it.” In retrospect, I think he was right. After all, those people are wonderful entrepreneurs and I would like to work with them in the future.