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Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

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Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#261

Post by wpietri »

sage76 wrote: post #54
fortydegrees wrote: post #33

Earlier quoted context omitted.

Suppose I did have some bucks in the bank and did get a lawyer - how would they help? So far my co-founder has been pretty unreasonable with regards to compromising and/or negotiaton. The investor so far has also been very neutral and I think will remain so.

I have worked with lawyers. Once litigation is threatened, everyone suddenly loses all the neutral stuff and becomes reasonable. If you can afford it, find a good lawyer.

100% true. The non-technical cofounder is doing this because he thinks he can get away with it easily. The investor will go along because he's in it for the money. Involving a good lawyer makes it clear that you won't go down without a fight. A fight that could destroy the business. It's amazing how reasonable people can be when they realize that it's in their best interest to be reasonable.

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#262

Post by drtillberg »

ohyes wrote: post #248

It sounds like you own 40% of something fairly valuable and now that it's 11 months into your contract other founder who needed your help is getting greedy and trying to push you out before you are owed anything. You said it yourself, you've grown hugely, you're dominating SEO since you joined, and built loads of products. This is your 'partner' getting greedy after you've done a lot of hard work. It wouldn't have ha…

Not clear who actually owns the equity outright. If its the OP, based on what's written and nothing more it sounds like a racket the non-technical founders are running. I personally would identify the laziest path for you to exercise your rights to extinguish the entire venture, ideally with counsel, and then tell the other people what you've decided to do, let them name their price.

If things roll your way, maybe you resurrect the business later buying its assets out of bankruptcy. Either way, think lazy; this looks like a scam for your time; the more you put into it at any price, the worse off you are.

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#263

Post by gkoberger »

thomasahle wrote: post #234
gkoberger wrote: post #209

Earlier quoted context omitted.

Yeah, but each share is valued at a fraction of a cent. The company will have to cut a check for a few dollars. (Happy to explain more if you’re interested!)

If the company has already taken investor money, say x dollars, for 10%, doesn't thst mean the company is worth 10x dollars?

It's complicated! I'll do my best to explain it simply, but there's a lot of nuance.

There's a few different valuations. There's how investors value it, which can be different between investors. There's also a 409a valuation, which is what the government deems it to be "actually worth".

But since the OP hasn't vested, the number that matters here is the strike price at the time the OP got their shares, which is likely ~$100. At some point the OP wrote the company a check for $49 (or so) to "legally buy" their shares (49%). But they haven't vested, so these shares are in a sort of "limbo".

So, the company can't just take them back, since it would be stealing $49. The OP also hasn't earned the shares, per the vesting contract.

This means the company has to pay back the $49 if they're going to take the shares back. It might seem silly to be talking about so little money, but that's all the OP means (even if they don't realize it) when they say the company has the right to buy back the shares.

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#265

Post by the_cat_kittles »

gkoberger wrote: post #117

Can I give you some advice that really sucks? Walk away. It's not fair, but starting a company isn't like getting a job. It's a relationship and a risk that doesn't always work out. Sometimes you find more money and success than you could ever dream of, and other times you waste 11 months. Here's my thought process. You and your cofounder aren't going to be able to work together after this. The company has no money a…

if you can emotionally check out but legally remain, thats ideal. you are mostly likely getting pushed out, so recognize that you are in a 100% adversarial relationship and separate yourself from any kind of personal emotional investment. a completely detached self interested approach is totally warranted given the circumstances, and would significantly increase the probability that you will be compensated more fairly.

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#266

Post by mattmaroon »

gkoberger wrote: post #117

Can I give you some advice that really sucks? Walk away. It's not fair, but starting a company isn't like getting a job. It's a relationship and a risk that doesn't always work out. Sometimes you find more money and success than you could ever dream of, and other times you waste 11 months. Here's my thought process. You and your cofounder aren't going to be able to work together after this. The company has no money a…

I know you mean well, but this could not possibly be good advice because there isn’t enough information in that post for even a lawyer to give good advice. You don’t know what’s In his contract. Maybe his cofounder can’t fire him. Maybe He could but that would trigger the vesting. Maybe he could put it to the board and fire his cofounder.

Maybe his cofounders threat that it’s 3% or nothing is bluffing. It doesn’t really make sense for his cofounder, because that guy maybe is in the same situation if OPs contract is favorable. Maybe It’s 40% or nothing for him.

The only acceptable advice here is to go talk to a lawyer. That’s it. Internet advice about things like this is always bad even when it is meant well

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#267

Post by ufmace »

fortydegrees wrote: post #33
gwbas1c wrote: post #23

Earlier quoted context omitted.

I think this works if fourtydegrees has some bucks in the bank. Reading between the lines, I suspect fourtydegrees is young and doesn't have the kind of money to do this. (I also suspect that lawyers may be out of fourtydegrees' budget.)

Suppose I did have some bucks in the bank and did get a lawyer - how would they help? So far my co-founder has been pretty unreasonable with regards to compromising and/or negotiaton. The investor so far has also been very neutral and I think will remain so.

Exactly what you should do depends on a lot of details about exactly what your business setup looks like, what your personal situation is, and what the other parties to the situation think. Way more detail is needed than you'd provide to any of us internet randoms. A good lawyer who understands these kinds of contracts is somebody you can actually give all of the important details to and who can give you accurate advice for your situation. This is not a good time for some weird quirk of your contract or any related laws to surprise you. If your co-founder is being unreasonable, you need to know what your escalation options are, and you may need to communicate that you are prepared to execute on them promptly if they don't give you what you feel is a reasonable deal.

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#268

Post by krrrh »

jedberg wrote: post #105

It sounds like you and the investor together control more than 1/2 the shares. Is the investor a friend of your cofounder or more neutral? If they're a neutral party, it might make sense to get them involved, or at least threaten to get them involved. You and your investor could potentially vote out your other cofounder, and knowing that might make your cofounder change their tune. On the flip side, if the investor i…

There’s a good chance that the seed investment was made via a SAFE, which means the investor doesn’t yet own shares, just convertible debt.

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#269

Post by nickff »

ohyes wrote: post #248

It sounds like you own 40% of something fairly valuable and now that it's 11 months into your contract other founder who needed your help is getting greedy and trying to push you out before you are owed anything. You said it yourself, you've grown hugely, you're dominating SEO since you joined, and built loads of products. This is your 'partner' getting greedy after you've done a lot of hard work. It wouldn't have ha…

Where are you getting the idea that the tech co-founder (TCF) owns "40% of something fairly valuable"? It seems the TCF currently owns 0%, and will go to ~10% (25% of 40%) if they don't get laid off/fired in the next month.

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#270

Post by talkingtab »

Don't agree to anything. That is all you have to do. When the company tries to raise money later, they will be asked about any other people who have an interest. At that point your company will need to address your issues and they will have money/incentive to do it. You don't need to be mean spirited, just say "Okay, I have my 40% and let me know if in the future you want to buy me out." And be fair.

Don't walk away, don't sign anything that isn't fair to you, don't be mad, just be patient.

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