I agree with you that maximizing profit as the sole metric is a myth, which is perhaps why I didn't mention it.
However, in practice if one has taken $10m from investors looking for a big payday, one can't just do any old thing. Doing something sufficiently contrary to the interests of minority shareholders could certainly result in a lawsuit. Could the shareholders win? Who knows! As you say, it's a murky area. But winning in that case isn't what matters. The lawsuit will tie the company up for years, forcing significant spending. And if they include the CEO in the lawsuit, it will mean personal expense and an enormous headache. So in practice, the Keybase execs couldn't just say, "Fuck it, we won't sell to Zoom, everything is open source now." Not without talking it through with the investors, anyhow.
>Doing something sufficiently contrary to the interests of minority shareholders could certainly result in a lawsuit.
I suppose, but does it? Ever? Not to be antagonistic but your entire paragraph is a hypothetical which is substituting for anything from the real world, which leads me to believe that it's either not a risk at all, or such a small risk as to be invisible and still effectively not a risk. I mean, I'm sure we would have heard some cautionary tales by now!
What sort of examples are you finding yourself unable to Google for? There are plenty of lawsuits out there for breaching the rights of minority shareholders. Mostly with public companies, but private companies too.
If you're specifically asking about VC-vs-founder lawsuits, I think we don't see many of those because everybody has strong incentives not to let it get to that stage. Founders really want to keep on good terms with VCs. VCs want to be seen as pro-founder. Their incentives are generally aligned right up until things start going south.
And once we get to the on-the-brink-of-failure stage, the VCs hold all the cards. Any continued investment requires the VCs to at least approve. If a founder ever might want to do something venture-backed again, they need to stay in their VC's good graces. If the investors don't have majority control, they at least have board seats and the ability to disrupt any deals or other actions the CEO might make against their interests, both internally and by threatening deal partners. The CEO also probably can't afford a lawsuit either with the company's funds or on their own.
So I don't think we see the cautionary tales because few who have been selected by investors and spent years dancing to their tune turn out contrary enough to set those relationships on fire when it doesn't really get them anything.
However, in practice if one has taken $10m from investors looking for a big payday, one can't just do any old thing. Doing something sufficiently contrary to the interests of minority shareholders could certainly result in a lawsuit. Could the shareholders win? Who knows! As you say, it's a murky area. But winning in that case isn't what matters. The lawsuit will tie the company up for years, forcing significant spending. And if they include the CEO in the lawsuit, it will mean personal expense and an enormous headache. So in practice, the Keybase execs couldn't just say, "Fuck it, we won't sell to Zoom, everything is open source now." Not without talking it through with the investors, anyhow.