Mark Zuckerberg Got Founder’s Stock—Should I?
When startup founders hear that Mark Zuckerberg received “founder’s stock” with 10-to-1 voting rights, the natural reaction is: Should I get that too? The impulse is understandable. As a founder, you may worry—sometimes rightly—that as you raise capital and bring on investors, you’ll lose control over the direction of the company you created. But before you ask your lawyer to draft a dual-class structure, it’s worth unpacking what founder control really means, how it can be structured, and when it makes sense.
What Is “Founder’s Stock”?
Legally speaking, “founder’s stock” is just common stock issued early—typically at a nominal price and usually subject to vesting. But what people usually mean when they refer to “founder’s stock” is something more: equity with enhanced control features that let founders maintain decision-making authority even after raising outside money or going public.
That control often comes in the form of:
These rights are typically embedded in the company’s charter or bylaws, voting agreements, or investor rights documents.
Why Zuckerberg Got It
When Facebook reincorporated in Delaware and raised institutional capital, it created a dual-class structure that gave Zuckerberg 10-to-1 super-voting shares. This preserved his control even as the company took on venture capital and, later, public shareholders.
This structure wasn’t about ego; it was about vision. Early venture capital funds bet on Zuckerberg’s leadership and wanted him to have the runway to execute it, even if later stage investors disagreed in the short term. Similar structures are now common among iconic tech companies like Google (Alphabet), Snap, Airbnb and Palantir, all of which implemented dual- or multi-class structures to entrench founder control well into the public company phase.
Should You Have It?
Before pushing for your own founder-friendly voting structure, ask these key questions:
When to Implement a Dual-Class Structure
Timing matters. The best time to put a dual-class structure in place is when you still control the cap table—typically at incorporation. Once you’ve issued stock to co-founders or brought on investors, making changes becomes exponentially harder.
Here are the common inflection points:
In practice, very few early-stage startups implement a dual-class structure at formation due to pushback from investors and lack of need. But if founder control is central to your strategy—and you have the leverage—it’s much easier to put the structure in at the beginning than to retrofit it later.
Alternatives to Dual-Class Stock
Even if super-voting shares aren’t on the table, founders can still retain meaningful control using other mechanisms. These tools may not provide permanent entrenchment, but they can be highly effective—especially in the early and growth stages:
2. Stockholder Voting Agreements
Voting agreements can consolidate the voting power of common stockholders or early investors into the hands of one or more founders. For example, all common stockholders might agree to vote their shares in favor of a designated board slate or to follow the founder’s lead on key votes. These agreements are private contracts but can be powerful tools, especially before a company brings on institutional capital.
3. Protective Provisions Requiring Founder Consent
These are contractual provisions that prevent certain corporate actions—like issuing new preferred stock, selling the company or replacing the CEO—without the founder’s prior written consent. While often subject to negotiation, these provisions can give founders functional control over major strategic decisions even without super-voting equity or board control.
4. Time- or Performance-Based Governance Rights
Instead of granting founders permanent control up front, some companies implement conditional governance rights:
This approach can strike a balance: Investors get assurance that founder control isn’t indefinite or unconditional, while founders retain influence as long as they continue delivering.
Final Thought
Zuckerberg got special founder stock because he had leverage, vision and investors who believed in both. You don’t need to be Zuckerberg to protect your company’s mission—but you do need to think carefully about governance from the start.
If you’re considering how to structure control—whether through super-voting shares, board rights or voting agreements—talk to your legal team early. The best time to design governance is before you have to fight for it.
What Is “Founder’s Stock”?
Legally speaking, “founder’s stock” is just common stock issued early—typically at a nominal price and usually subject to vesting. But what people usually mean when they refer to “founder’s stock” is something more: equity with enhanced control features that let founders maintain decision-making authority even after raising outside money or going public.
That control often comes in the form of:
- Super-voting shares (e.g., 10 votes per share instead of one)
- Board appointment or veto rights
- Voting agreements that consolidate power
- Protective provisions requiring founder consent
These rights are typically embedded in the company’s charter or bylaws, voting agreements, or investor rights documents.
Why Zuckerberg Got It
When Facebook reincorporated in Delaware and raised institutional capital, it created a dual-class structure that gave Zuckerberg 10-to-1 super-voting shares. This preserved his control even as the company took on venture capital and, later, public shareholders.
This structure wasn’t about ego; it was about vision. Early venture capital funds bet on Zuckerberg’s leadership and wanted him to have the runway to execute it, even if later stage investors disagreed in the short term. Similar structures are now common among iconic tech companies like Google (Alphabet), Snap, Airbnb and Palantir, all of which implemented dual- or multi-class structures to entrench founder control well into the public company phase.
Should You Have It?
Before pushing for your own founder-friendly voting structure, ask these key questions:
- Do you need long-term control to protect your mission?
If you’re building something disruptive, or pursuing a long-term vision that may not align with short-term investor returns, maintaining control can be important. - Will your investors support it?
Many venture funds, especially at the seed and Series A stages, push back on dual-class structures. Unless you’re a second- or third-time founder with a track record, or you’re building something uniquely compelling, expect strong resistance. And even if they agree, they may limit how long your super-voting shares survive (e.g., until an IPO or upon transfer). - What’s your cap table and co-founder dynamic?
Dual-class structures can create tension among founders and early team members—particularly if only one founder gets super-voting shares. Careful communication and alignment are key.
When to Implement a Dual-Class Structure
Timing matters. The best time to put a dual-class structure in place is when you still control the cap table—typically at incorporation. Once you’ve issued stock to co-founders or brought on investors, making changes becomes exponentially harder.
Here are the common inflection points:
At Formation:
This is the cleanest moment to create a dual-class structure. You can bake it into the original certificate of incorporation before any third-party money comes in. But if you raise outside capital later, investors may push to collapse the structure.
At or Before Series A:
Some founders try to negotiate dual-class terms during or just before their first priced round. You’ll need strong leverage—a hot deal, multiple term sheets or a differentiated profile—to succeed. Even then, investors may insist on sunsetting provisions or parity rights.
At IPO:
This is the most common time for dual-class structures to go public. By then, founders may already have outsized voting rights through other mechanisms discussed below. Going dual-class at IPO allows public investors to knowingly accept a governance structure with limited voting rights in exchange for buying into a founder-led vision.
This is the cleanest moment to create a dual-class structure. You can bake it into the original certificate of incorporation before any third-party money comes in. But if you raise outside capital later, investors may push to collapse the structure.
At or Before Series A:
Some founders try to negotiate dual-class terms during or just before their first priced round. You’ll need strong leverage—a hot deal, multiple term sheets or a differentiated profile—to succeed. Even then, investors may insist on sunsetting provisions or parity rights.
At IPO:
This is the most common time for dual-class structures to go public. By then, founders may already have outsized voting rights through other mechanisms discussed below. Going dual-class at IPO allows public investors to knowingly accept a governance structure with limited voting rights in exchange for buying into a founder-led vision.
In practice, very few early-stage startups implement a dual-class structure at formation due to pushback from investors and lack of need. But if founder control is central to your strategy—and you have the leverage—it’s much easier to put the structure in at the beginning than to retrofit it later.
Alternatives to Dual-Class Stock
Even if super-voting shares aren’t on the table, founders can still retain meaningful control using other mechanisms. These tools may not provide permanent entrenchment, but they can be highly effective—especially in the early and growth stages:
1. Board Seat Rights and Board Voting Weight
Founders can negotiate the right to designate one or more board seats as long as they hold a certain percentage of stock, remain employed or otherwise meet defined criteria. These rights are often enshrined in voting agreements or investor rights agreements.
Beyond just board seats, some founders negotiate enhanced board-level voting power—for example, a single founder-appointed director may be given the equivalent of two or three votes in board decisions. This “weighted voting” at the board level can tilt control in the founder’s favor even if they don’t hold a board majority. It’s rare, and typically seen only when a founder has strong leverage or significant investor alignment, but it’s a viable alternative to super-voting stock.
You can also structure board composition such that:
Founders can negotiate the right to designate one or more board seats as long as they hold a certain percentage of stock, remain employed or otherwise meet defined criteria. These rights are often enshrined in voting agreements or investor rights agreements.
Beyond just board seats, some founders negotiate enhanced board-level voting power—for example, a single founder-appointed director may be given the equivalent of two or three votes in board decisions. This “weighted voting” at the board level can tilt control in the founder’s favor even if they don’t hold a board majority. It’s rare, and typically seen only when a founder has strong leverage or significant investor alignment, but it’s a viable alternative to super-voting stock.
You can also structure board composition such that:
• A majority of seats are held or controlled by the common stockholders (i.e., the founders and early employees)
• Certain key decisions (e.g., CEO removal, financing, M&A) require unanimous or supermajority board approval, effectively giving the founder a veto if they control one seat
2. Stockholder Voting Agreements
Voting agreements can consolidate the voting power of common stockholders or early investors into the hands of one or more founders. For example, all common stockholders might agree to vote their shares in favor of a designated board slate or to follow the founder’s lead on key votes. These agreements are private contracts but can be powerful tools, especially before a company brings on institutional capital.
3. Protective Provisions Requiring Founder Consent
These are contractual provisions that prevent certain corporate actions—like issuing new preferred stock, selling the company or replacing the CEO—without the founder’s prior written consent. While often subject to negotiation, these provisions can give founders functional control over major strategic decisions even without super-voting equity or board control.
4. Time- or Performance-Based Governance Rights
Instead of granting founders permanent control up front, some companies implement conditional governance rights:
• A founder might retain the right to appoint one or more board members only so long as they remain CEO or employed full-time.
• A right to control the board might sunset if the company fails to hit defined milestones—such as revenue targets, product launches or funding goals.
• Alternatively, board control might phase out after a certain number of years post-formation or post-IPO.
This approach can strike a balance: Investors get assurance that founder control isn’t indefinite or unconditional, while founders retain influence as long as they continue delivering.
Final Thought
Zuckerberg got special founder stock because he had leverage, vision and investors who believed in both. You don’t need to be Zuckerberg to protect your company’s mission—but you do need to think carefully about governance from the start.
If you’re considering how to structure control—whether through super-voting shares, board rights or voting agreements—talk to your legal team early. The best time to design governance is before you have to fight for it.