Lenny Rachitsky warns founders that delaying mission-protective provisions is a losing move. Only 20% of founders remain CEO three years after going public. Secure these protections at incorporation, before lawyers and investors convince you it's too early.
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The most important question about how to protect a product is not what protections it needs, but when those protections need to be enacted. It is always too early until it's too late. Only 20% of founders are still the CEO 3 years after going public. If you don't get this right, no other decision you make about your company will matter for the long term because you're not gonna be the one making it. I've seen this hundreds of times myself personally. You're incorporating your company. You talk to your lawyer, hey, I want to have, these are called mission protective provisions in the law. And your lawyer's like, oh, not again. He'll pat you on the head and be like, get product market fit, get some success. Success is ultimately your source of leverage. Now you raise some money, you got these VCs on your board, you say the same thing. They're like, yeah, I totally am with you. We want the same thing. We invested because we believe in you as the founder. There's no need to do this now. Let's just do it later. This is a great thing to bundle with the IPO itself. The founder sits with the CFO and the founder's like, hey, whatever happened to those mission protective provisions? The CFO's like, oh, you were serious about that? Oh, sorry, man. You should have said something. Now it's too late. You're like, wait a minute, but when I talked to you about it last year, you said it was too early. Yeah, it was, but now it's too late. Was it ever the right time? No, it is never the right time to do this. If you put this off, you will eventually find yourself in a situation where you can no longer do it. You will have lost the leverage.
