Am I a CEO or COO?


1

Am I a CEO or COO?

I am running a LLC that is a spin off of another LLC. I was working for the original LLC for 1 year when the 2 partners decided to start the spin off LLC. I let the partners know I wanted to be involved and they decided to let me run the spin off LLC by myself, which I've been doing for the last 2 years (learn more by reading my last post:
http://www.brightjourney.com/q/partner-without-putting-money )

Because of my lack of experience and the fact that there was no actual business yet, just a product to potentially sell, I started running the spin off LLC without a title, payment structure, or contract. I picked a title after I made the first few sales (I still do not have a contract). At the time, I was trying to decided between CEO, President, or Director. I chose Director, becuase it sounded better for our industry.

Now, 2 years later the 2 partners and I are in equity talks. They are playing hard ball on how much equity they want to give me, so to mount a strong argument during equity talks I need to define my role at the firm in a more useful way. Defining my title at the firm using CEO or COO terms will help me use Executive Compensation Surveys in my talks with the partners.

Below is information about my role at the firm. Let me know if you think I would fall more in the CEO category or COO category:

Me:

  • Ran entire business since start of spin off LLC
  • Run Marketing
  • Online Marketing
  • All Sales
  • Customer communications
  • Creative Vision
  • Business development
  • Website development and design (online business)
  • Managing the teams hired to execute upon development tasks and marketing work
  • Develop products
  • Improve upon original products
  • Solely responsible for facilitating main product, a training program, to customers
  • Never paid salary, because profits from spin off LLC was needed to pay debt in original LLC
  • Made commission off sales (5%-7%). Made 2X more in last job though.

Partners:

  • Focus on running original LLC while I run the spin off LLC
  • Promote original LLC which in turns promotes spin off LLC
  • Extensive self promotion which in turns promotes spin off LLC
  • Developed original product concept for spin off LLC
  • Gives me guidance on challenging business decisions
  • Partners are the investors.
  • Develop products
  • Improve upon original products

Other Facts:

  • I run most large expenses by the partners, but not all. Have taken over control of most expenses over last year, but partners still use large amount of profits to pay off debt of original LLC making it difficult to control all expenses.
  • We have not taken outside investors yet. Partners will be looking for investors in Q1. Partners may lead the search for investors, but I will be involved after equity talks.

Overall, I feel the partners are more like the board of directors or investors since their primary task is to run the original LLC and I run the spin off LLC. When everything is said and done, I do report to them, but it would seem weird to me to say that someone else other than myself is responsible for the creative vision and running the spin off business.

Am I a CEO or COO?

(Secondary question: Am I a Founder of the spin off LLC?)

thx

Equity CEO COO

asked Aug 4 '10 at 15:39
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Anthony O
51 points

2 Answers


4

Small companies don't have COOs as a rule. Until you reach a certain size the CEO is the COO.
If I understand things right, you're the only employee, in which case, it doesn't really matter if you're the COO or the CEO. Correct me if I'm wrong since a scenario where you're managing 30 people is really different from your being the only employee.

Everything in your posting and my reply above is really irrelevant. It doesn't matter if you're the CEO, COO, director or chief bottle cleaner. You and your partners know what you do and what value you've brought to the company.

The main issue is that you've fallen into the classic problem of being involved in a startup where your share wasn't defined ahead of time.
The good news is that this happens all the time. More good news is that while you probably lost some money and equity in this deal, you've gained a lot of experience both in running the business, and learning that you need to define these things in advance.

Now it's time to stop beating around the bush, and figure out if you can reach an agreement with the partners or not.

  1. Figure out what's the minimum you're willing to take as equity, let's say 33%.
  2. Add a little padding and call it 40-45%, because some people love to negotiate.
  3. Go to the partners and explain that this you'd like to get 40% equity and explain why you think that's reasonable.
  4. If they offer something like 10% or 15%, you can start negotiating towards the 33%.
  5. If they offer a lot less and won't budge, it's time to look at a different opportunity.

Good luck.

answered Aug 4 '10 at 17:42
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Dror
1,833 points
  • +1 for Chief Bottle Cleaner (CBC) – Jeff O 9 years ago

2

This appears to be a framing issue rather then a title issue. I'd say always go in with an agreement prior when your going to head something. Water under the bridge but upfront clarity is always prefered.

So what do you know and have that they can't do themselves with the LLC? They already have articles of orginization and such so this is all about modifing it. You can point to two things in negotiations what you've done and what you can do. For what you've done you can list the successes, the risks you took and if there was any implied bennefit that you working from that they made you believe you would get (be as specific as possible to why you believed you would get something more though). The real negotiating strength though comes from what you can do with this business that they can't do without you. You got the sales, you wrote the product, you exceuted created the marketing plan, etc... They do this and they won't get the same result. So this is the type of thing I'd focus on for aruguing your position. How do they need you for tomorrow allows you to go after a 1/3 equity position.

Best of luck.

answered Aug 5 '10 at 03:15
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John Bogrand
2,210 points

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