It does, because having a small percentage of the equity accelerates the pace at which the thing becomes "not yours". My only point is that it's almost impossible to grow a complex entity to the point of "bigness" and retain total control. The Iron Law of Oligarchy sets in.
Even if you are a CEO with total control, there are information problems that limit your true power. Sure, you have lieutenants who will furnish you with the answer to any question you desire-- biased and dishonest information. I heard someone once say that the hardest thing about being a CEO is that "everyone is fucking lying to you" and that sounds about right. I would add "... and wants your job" to that.
People talk about "giving up control" as if it were a loss. Even if I built the business from the ground up, I'd rather have control of my life than the business. $10 million would mean that I own my life instead of renting it from a boss. Selling control of a corporate entity and code for someone else's use is easily worth that, from my perspective. I now own my life, you now own (partially) a couple years of my work... seems like a fair trade to me.
Mentioning the Iron Law of Oligarchy in a comments thread about Techcrunch and fundraising gets you a vote up from me.
For those who didn't study sociology or political science at some point, the Iron Law of Oligarchy describes the apparently inevitable tendency of organizations to centralize power towards leaders by a process of increasing bureaucratization, decentralization and specialization. It was developed primarily to study political parties, but it is believed to apply to all organizations.
I can't help but think that Michels missed one strategy which can defeat "power corrupts". The solution is to structure the organization such that each agent has identical power. And better yet, organize the agents into small groups (and those groups into groups of the same size) which require consensus among the members. Perhaps even consensus at each subsequent level of groupings.
In other words, a fractal (self-repeating) organization.
What's most interesting to me about it is that the convergence occurs from both sides. Both autocracies and democracies converge toward an oligarchy. Democracies devolve because there are a lot of people who don't care enough about most issues, which means there are "cheap votes" that are extremely easy to sway. Access to cheap votes (control of the press, political party leadership) is not democratically distributed, but the opposite. On the other hand, even the most vicious autocrats need lieutenants who eventually learn how to take advantage of them. Either way, you get to something that looks like the "square root of N".
TechCrunch is powerful because it has a nut-hold on the cheap votes. The same goes with the prominent VCs who lead the herd.
The best you can do, often, is to create genuine competition among the oligarchs. Then there is a real market for talent, which often comes from the common people (the demos) and this means that the oligarchs can't treat them too badly, because pissing on the people is a sure way not to be able to recruit talent when you go to war against other oligarchs.
That's one thing I dislike about VC-istan. Rather than competing with each other, the VCs talk to each other about who's hot, who's not, and what kind of terms to offer. So you get vertical competition (class warfare) instead of the horizontal kind.
Even if you are a CEO with total control, there are information problems that limit your true power. Sure, you have lieutenants who will furnish you with the answer to any question you desire-- biased and dishonest information. I heard someone once say that the hardest thing about being a CEO is that "everyone is fucking lying to you" and that sounds about right. I would add "... and wants your job" to that.
People talk about "giving up control" as if it were a loss. Even if I built the business from the ground up, I'd rather have control of my life than the business. $10 million would mean that I own my life instead of renting it from a boss. Selling control of a corporate entity and code for someone else's use is easily worth that, from my perspective. I now own my life, you now own (partially) a couple years of my work... seems like a fair trade to me.