A few early-stage-company-related thoughts (in no particular order).

Some prelim. thoughts: Maximizing shareholder value is accomplished by increasing the value of shares, and presumably share value is the most widely-agreed-upon way to value a business - whether or not it is accurate or takes into account everything it should is another matter, but if you assume that share value is intended to capture the financial value of the business, then to say I want to max. SH value is basically the same thing as saying I want to increase the value of the business, which I think for the most part is a good and acceptable goal.

Here's what I think some of the problems are:

1. Conflation of SHs/Board/Managers.

To me, the real issue here is more that people in power (who are often SHs themselves - CEOs, boards, large SHs) use the "SMV" principal to hide behind self-interested actions - I totally admit this is there prerogative, but it's pretty annoying to see them try to dress it up in some abstract corporate governance value system.

This happens a lot for public companies with activist SHs and/or PE firms - see: Carl Icahn, who buys big stock positions, then publicly pushes management to take actions like sell or spin-off segments in the name of "shareholder value" when just the act of this publishing an open letter or pushing for his own board candidates, etc. will increase the value of his holdings in that very same company - yes, he is trying to max. SH value because he is a major SH!

This also happens with public company CEOs whose comp. is tied to and/or made up of equity, as is pretty much always the case these days. Lots of interesting literature out there about how careerist CEOs (who don't plan on staying at one company for more than a few years) will take highly risky short-term-stock-value-increasing actions that are bad for long-term value, etc.

Interestingly, this is especially true in early-stage companies, where Founders/VCs are often the biggest SHs, on the board and in key management positions (VCs sometimes take operating roles in companies as they hit growth stages or if there has been founder trouble, etc.)

This conflict comes into relief w/r/t to exits where liquidation preference get triggered: sometimes happens that VCs who control the board and hold preferred stock push for a deal where the preferred get $$ back but common gets nothing, even if the common think that it's a bad deal and want to keep pushing ahead in hopes that they can improve the business and exit with some value going to all stakeholders, not just preferred. This was litigated in Trados (see link below), and the court said that in that case, it was OK that the VCs made the deal happen.

Trados summary: http://www.bingham.com/Alerts/2013/10/In-Re-Trados-Incorpora...

(Not equity related, but a new instance of this is the reverse, and plays out in acqui-hire deals: founders are given great job opportunities and RSUs from acquiring company, but VCs get very little if anything and non-technical employees are out of the job. I think in most cases it's a totally fair outcome, just interesting to think about how it works in other instances where the value measurement is different - in acquihires, skill of individuals is the value, not the business, so stock value of the co. plays a much smaller role and the power then rests in the individual holding the skills/ability, not the VCs or the employees running business operations, etc.)

2. Even if it is not the stated or intended goal (as I sincerely believe most good entrepreneurs start business for more than pure financial gain - easier to just work for a hedge fund), almost all tech startups rely on maximizing shareholder value to properly incentivize founders, early employees and attract capital to a much higher degree than public companies. The interesting difference at the early-stage as compared to public companies is that, with no public market, the constituencies are relatively few in number and far more concentrated (founders are board members, managers and SHs, VCs are SHs and board members and advisors, employees are equity holders, very few customers at first, if at all, etc. - as discussed above, this happens a bit in the public market but not in such a concentrated way), so the incentives are much more easily aligned.

VCs are pretty-much-always looking for equity upside, and founders & employees (to significantly varying degrees haha) are more-often-than-not foregoing secure/higher salaries in exchange for potential equity upside - put another way, all founders, VCs and employees pretty much hope for an exit in which their equity is 10X what they had to pay for it.

Again, no founder/VC is saying the goal is to maximize SH value, but at the end of the day we as a community more or less measure success through share value.

That all being said, I love to think about exceptions to this rule: Craiglists = awesome (I hope they beat eBay in court), Kahn Academy is amazing.

Would love to learn about some more!