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Ask HN: Those who've joined a friend's startup as an employee, how did that go?

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Re: Ask HN: Those who've joined a friend's startup as an employee, how did that go?

#291

Post by eastbound »

antihipocrat wrote: post #93
eastbound wrote: post #74

Earlier quoted context omitted.

I’m not the parent, but it’s really hard to pull a future-proof contract about stock grants. The most frequent shenanigan is probably to dillute the employee shares. Even if you are the CEO, investors can get you fired-in-bad-terms just to cancel out your shares.

If the founder retains a controlling interest in the business (say 51% stock ownership) are they safe from these shenanigans?

Some contracts require 66% or 75% of votes to be able to change the repartition of shares or extend capital, or even any shareholder can veto. Some contracts don’t have conditions.

Philosophically, even if not written in the contract, someone could convince you to dilute at the last minute. The best interest of a buyer is to put the target in close bankruptcy before buying it. Anything is possible in peer-to-peer negotiations, and legal framework can only go so far.

Re: Ask HN: Those who've joined a friend's startup as an employee, how did that go?

#292

Post by lobati »

I actually have a success story. A woman I started dating was the CTO of an early stage startup. I gradually started helping her with some coding on the side and it grew to the point where I left my day job and went on full time at her company. I've been working at the company for more than a decade at this point. It's gone from just the 3 of us, including her cofounder, to a 70+ person company. We're married now with 2 kids.

There was a good amount of conflict between us during the early stages of the company, so it's important that your relationship is sturdy if you are going to put yourself in that sort of situation. Now things are running pretty smoothly, so we actually don't talk as much about the company in off hours.

We've interviewed and hired a number of friends as well, mostly with good outcomes. We had to fire one friend, unfortunately, and another relationship soured as a result of how the interview process went. But several others are still with the company, and a couple have come and gone onto other things.

One thing to note, though, is that for the friends we've hired, they often morph into more professional relationships. Now that the company is settling down a bit, we're trying to rekindle some of the friendship piece.

Re: Ask HN: Those who've joined a friend's startup as an employee, how did that go?

#293

Post by jongjong »

Gooblebrai wrote: post #173
navane wrote: post #162

Earlier quoted context omitted.

>>BUT, if you decide to sell them, you can't just sell them to a specific person over the counter. You'd have to sell on a market so that anyone can potentially buy them and potentially outbid your intended investor. >So if I was looking for someone who would build a company with me, someone who would take on an entrepreneurial role, provide expertise, labour or personal connections, I wouldn't be allowed to do that.…

I prefer the world where I can decide who I sell shares to. If my investors are going to bug me over returns eventually, I prefer to have control on who they are rather than leaving it to strangers in the open market that may be misaligned. That's one extra reason many companies don't go public nowadays.

You're looking at this wrong. The investor could just sell their shares to the market with minimal disruption to your business if they don't like your approach.

Re: Ask HN: Those who've joined a friend's startup as an employee, how did that go?

#294

Post by averageRoyalty »

catlifeonmars wrote: post #187
xrd wrote: post #180

Earlier quoted context omitted.

It's wild that you said that amount because that was exactly the number. I have other friendships that have been tested for similar amounts that have survived. But, it leaves a mark. I had an ex-employee who worked for me under starvation wages in a startup long ago. He was upset about that and some tax implications, and brought it up with me. I gave him a smallish lump sum and enabled him to put a down payment on a…

Wow. $20k seems like a paltry sum to end a friendship over.

I'm unsure why my sibling comments seem to think the sentence ends at "sum".

Is it possible to buy a real friendship for $20k? Is a friendship of many years worth more to you than $20k - would you stop being friends if someone else offered you that much to do so?

This isn't a paltry sum of money, it is a paltry sum to end a friendship over.

Re: Ask HN: Those who've joined a friend's startup as an employee, how did that go?

#295

Post by tessier0ashpool »

actually i had a very good experience. the biggest learning was to separate our work and play communication methods. we don't talk about serious work stuff if we're having lunch on the weekend, but if it's during the week in a 1:1 - it's all business. our friendly conversations are over a different messenger app than work conversations. so it's been much easier to not mix the two.

Re: Ask HN: Those who've joined a friend's startup as an employee, how did that go?

#296

Post by lr4444lr »

bdjsiqoocwk wrote: post #261
lr4444lr wrote: post #198

The saying (I paraphrase), "a good business relationship can be a the foundation for a later friendship, but a friendship is a terrible foundation for a good business relationship" is true in my experience.

Why is this? I find it counterintuitive. I would've thought that friendship gets you trust, that's useful in business.

Because running a business is stressful and requires a certain amount of mental synchronicity/complementarity on mercilessly hard choices.

Someone you discover you can do this with, you can of course handle easy low stress times with.

A friend-first person on the other hand is usually someone you make non-economical choices with, for the sake of pure enjoyment. It doesn't translate well to the rigor of making money, and they may very well have different, incompatible ideas about how to do that.

Re: Ask HN: Those who've joined a friend's startup as an employee, how did that go?

#297

Post by jongjong »

fauigerzigerk wrote: post #151
jongjong wrote: post #139

Earlier quoted context omitted.

>> If I start a company on my own and I provide all the equity then I own all the "shares". What would it mean for those shares to "be on the open market"? If I'm not selling them then no one can buy them. If you own all the shares initially, it means you get to set the price to whatever you want (and hope that someone is willing to pay that price), or you can just hold them and keep them all to yourself. BUT, if you…

>BUT, if you decide to sell them, you can't just sell them to a specific person over the counter. You'd have to sell on a market so that anyone can potentially buy them and potentially outbid your intended investor. So if I was looking for someone who would build a company with me, someone who would take on an entrepreneurial role, provide expertise, labour or personal connections, I wouldn't be allowed to do that. I…

>> If I owned shares in Microsoft, would I have to provide a payslip and a bank statement to Microsoft's bank? Would they do a credit check? And if I sold my shares, would Microsoft have to pay back part of a bank loan if the buyer's net worth was less than mine?

No, the company would still do its own accounting with its own income, balance, cashflow ledgers... Banks would have to look at the company's net assets to loan against. If the company goes bankrupt, however, and the bank cannot recover the collateral from the company itself, then it should be allowed to pursue the shareholders (who would be liable in proportion to how many shares they hold).

Another major difference would be that if the company was negligent or committed a crime, then all shareholders could potentially be held personally liable to some extent. IMO, purely passive investing should not be allowed. The shareholder should be responsible for staying up to date about what their company is doing.

Re: Ask HN: Those who've joined a friend's startup as an employee, how did that go?

#298

Post by geraldhh »

polynomial wrote: post #177
michaelt wrote: post #166

Earlier quoted context omitted.

> nevertheless this person probably never was your friend. sry No, it's completely common for friendships to break down over business. Very few friendships are robust enough to survive one party costing the other $20,000.

So we can put a price on friendship? (/s)

obviously we can't.

hence no money can be enough to compensate for a friendship

Re: Ask HN: Those who've joined a friend's startup as an employee, how did that go?

#300

Post by geraldhh »

xrd wrote: post #183
geraldhh wrote: post #116

Earlier quoted context omitted.

> As it was it left me scrambling with three small kids. you did not mention whether this early termination was communicated beforehand. nevertheless this person probably never was your friend. sry

When we started working together I suggested a six month trial, and he said let's do 12 months. That role was perfect and I had the skills for it. 6 months in his business priorities changed, so he pushed me into a new role. Then, at the ten month mark said "I just don't have any more work for you." It all depends on what is a friend. Your statement makes me question what makes a good friend. I don't really know righ…

"friends are people that show up when it's not convenient for them" - my mum
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