Ask HN: Startup stopped paying my salary • Hacker News Board

Re: Ask HN: Startup stopped paying my salary

#61

Post by tomjen3 » Sun, Aug 29, 2010, 4:51 PM UTC

techiferous wrote: post #27

tomjen3 wrote: post #24

Earlier quoted context omitted.

Make it their fear - they are still in business, so somebody is getting paid. Call them up and tell them straight out that they have a week to get the money otherwise you go after them in court, which will throw the company into banckruptcy.

"they are still in business, so somebody is getting paid." It's actually possible that no one is getting paid and equity and commitment are driving the ones that are left.

I doubt - that, they would have to pay for rent, utilities, internet, etc.

Getting paid isn't just workers, but is also the other businesses.

Re: Ask HN: Startup stopped paying my salary

#62

Post by focusaurus » Mon, Aug 30, 2010, 10:02 AM UTC

trizk wrote: post #23

I am going to have to go against the grain on this one. Yes you are owed money that is rightfully yours. But you wanted to be part of a startup with all the associated glory and rewards. That means you also assumed some risk and realized you might have to be flexible based on the circumstances handed to the startup. Remember, Amazon almost went under. The founders are not jerks. They spent what they had on you and tr…

I went through the poster's exact situation in 2002 after my first company slowly died following 9/11.

I think the assumptions you are making about the Founders are not well grounded. How do you know they are not jerks? Here's how I see it. Employee wages are fixed costs and easy to predict. If you know ahead of time (extremely likely) that you can't make wages, you MUST immediately notify your employees and put them on unpaid leave. You can't just implicitly ask them to work for uncertain future compensation based on not-booked revenue. It's incompetent and unethical. There's no excuse for that. As the poster has said, he was a straight salaried employee, not a founder in any way expected to have variable income. That would be different, but that's not the case. Go get more funding if needed, but don't exploit your employee's loyalty.

I'm glad that the poster quit because that's the right thing to do, and the sooner the better. If this ever happens to me again, I'm gone when the first check doesn't show up.

In the end, my employer went into bankruptcy, which is probably the best in this situation. I got a lawyer and made sure my back wages priority claim was registered. Yes, it's true that employee back wages are high priority and get paid earlier than many other outstanding debts, BUT, this doesn't just happen automatically. I only got paid (a fraction of what I was owed) BECAUSE I got myself active in the legal process. All the other employees who just moved on and didn't get involved didn't get anything. You need to stand up for what you are owed and work in the legal system to get (a fraction of) it.

FYI this didn't entirely destroy the relationship in the long run. I still talk with one of the founding partners on good enough terms. There's nothing wrong with asking to get paid what you were promised. That's not burning a bridge. In the big picture, honestly this is a bridge that you probably need to burn and that's OK in this case, but you're relationship surviving depends more on how they handle it. If you walk away quietly like a chump, how does that make you appear to them for your future relationship?

Re: Ask HN: Startup stopped paying my salary

#63

Post by kls » Mon, Aug 30, 2010, 3:19 PM UTC

mgkimsal wrote: post #13

I was in their shoes once, and it was a horrible experience. I had paychecks bouncing at the end, some tempers flaring, and overall was about as miserable as could be. I'd suggested that people start looking for other jobs - there was no turnaround in sight. This was just a group of 5 of us - not some huge office, so we were closer (physically, if nothing else) than some other larger orgs that have gone through this.…

I have seen this problem all to often and unfortunately the onus is on you to cut people. Entrepreneur and gamblers have a lot in common, one of them is the feeling of the big hit around the corner. The problem with Entrepreneur is many times they have others that depend on their direction.

People who have no vesting in the company other than a pay check, receive nothing from the gamble and in many cases don't even know they have money in the race. So the person that decides to do this is gambling the employees money and giving them no up side. They are exposing them to the risk and keeping all of the reward if it pays off.

Worse yet the fear of unemployment puts them at a deep psychological disadvantage so any gravy coating or straw of hope becomes bloated in their mind. It is a human trait that helps shield us from traumatic events.

In the end, at the first sign on trouble it is up to the vested parties to trim the company to the capital available. Unfortunately, as happens far to often, the rats on the mast leave the ship first. In other words those at the top start bailing while the gravy coating is being dished to the bottom. When you see the COO, CFO, VP's leaving the company it is time to go. It means the money has run out and there are no real talks from investment sources.

The worst offenders by far are those principals that leave and give a pep talk, to the guys in the field, going out the door to secure their package of the last remaining scraps.

Never work for future funds from a company with money troubles, investors do not invest in companies that get themselves into money troubles and do nothing to correct the imbalance.

9 times out of 10 these companies are run by megalomaniacs who want to play big business on investor funds.

If you do secure a contract for hard asserts in the event of default. In other words you walk out with servers, hardware or transferable software licenses. Ensure that the execution of the contract becomes valid 6 mo before any bankruptcy filing. To keep it clear of claw-backs.