Company By-Laws, as discussed in the SmartUp curriculum, establish the formal governance framework of a company, including voting rights, board powers, and protective provisions. Yonatan Stern emphasizes that while bylaws provide a legal structure, their practical power is often secondary to financial leverage. Investors’ influence is most pronounced when a company needs additional funding; if a company is profitable and self-sustaining, even restrictive bylaws cannot force the founder’s hand.
Bylaws can include clauses such as protective provisions and special voting rights, designed to safeguard founders. For example, Stern recounts that at ZoomInfo, a clause requiring the approval of Class A shareholders to fire the CEO allowed him to veto a board attempt to remove him. This illustrates that early negotiation of governance rules can provide strategic control, though financial independence remains the ultimate safeguard for founders.
