I think it's less about the power relationship, exactly, and more about the way VC-funded companies are setup to be run. As part of raising a round, you prepare a business plan that involves aggressively spending the money over a couple years. You're committed both internally and to your board to execute that plan, and it's cognitively difficult to do something different as there's social pressure to do so (and one of your VC's greatest sources of power over you is they're the reference for your next fundraising round).
The result is that your company has planned to run out of money with potentially a multi-million dollar annual burn rate in two years. If as those two years are approaching, the company and/or market situation don't support raising more capital and the company isn't close to profitable, the momentum of that burn rate applies a great deal of pressure for a sale, destructive layoff, or total change in goals to "anything that improves the bottom line".
Also, the search for a story to help raise your next round can have a big effect on companies -- my view is most of Dropbox's problems when I was there (2012-2014) resulted from the search for a totally new business bigger than Dropbox Business that could justify a bigger valuation than $10B starving more obvious investments (Carousel, the now-dead photo sharing app, at one point had ~10x the engineering resources of Dropbox Business).
> Reading about Zulip - didn't you get bought by Dropbox before being open source? Is your current situation a lucky outcome - or was it a condition of the sale?
It's an extremely lucky outcome. There's a combination of factor that made this possible:
* Dropbox leadership prioritized doing the right thing by their users, and so we were able to get permission from both leadership and legal. I'm sure my personal position as a leader at the company who had a personal relationship with the people who had approve it made a difference (Though Luke Faraone made a big difference by asking legal if we could and inviting me to the meeting!). But I think Dropbox deserves a lot of credit, because they spend significant time from expensive resources (legal, etc.) making this happen, and I don't know of many companies that would ever do that.
* Our users were big fans, enough so that 10 of them flew to Dropbox HQ for a week to help us do the technical work required to do an open source release with all 10,000 commits of history intact and with a scripted installation process. This was essential to Zulip being usable after that release.
Thank you - I really appreciate the detailed answer.
I think I have a better understanding of how the incentives to cooperate would be hard to overcome even if you technically have the power as a founder (and even if you’re already financially independent).
The personal experience was also interesting - thanks!
I think it's less about the power relationship, exactly, and more about the way VC-funded companies are setup to be run. As part of raising a round, you prepare a business plan that involves aggressively spending the money over a couple years. You're committed both internally and to your board to execute that plan, and it's cognitively difficult to do something different as there's social pressure to do so (and one of your VC's greatest sources of power over you is they're the reference for your next fundraising round).
The result is that your company has planned to run out of money with potentially a multi-million dollar annual burn rate in two years. If as those two years are approaching, the company and/or market situation don't support raising more capital and the company isn't close to profitable, the momentum of that burn rate applies a great deal of pressure for a sale, destructive layoff, or total change in goals to "anything that improves the bottom line".
Also, the search for a story to help raise your next round can have a big effect on companies -- my view is most of Dropbox's problems when I was there (2012-2014) resulted from the search for a totally new business bigger than Dropbox Business that could justify a bigger valuation than $10B starving more obvious investments (Carousel, the now-dead photo sharing app, at one point had ~10x the engineering resources of Dropbox Business).
> Reading about Zulip - didn't you get bought by Dropbox before being open source? Is your current situation a lucky outcome - or was it a condition of the sale?
It's an extremely lucky outcome. There's a combination of factor that made this possible:
* Dropbox leadership prioritized doing the right thing by their users, and so we were able to get permission from both leadership and legal. I'm sure my personal position as a leader at the company who had a personal relationship with the people who had approve it made a difference (Though Luke Faraone made a big difference by asking legal if we could and inviting me to the meeting!). But I think Dropbox deserves a lot of credit, because they spend significant time from expensive resources (legal, etc.) making this happen, and I don't know of many companies that would ever do that. * Our users were big fans, enough so that 10 of them flew to Dropbox HQ for a week to help us do the technical work required to do an open source release with all 10,000 commits of history intact and with a scripted installation process. This was essential to Zulip being usable after that release.
https://zulipchat.com/history/ has a bit more background on the early history (though it's a bit out of date).