Ask HN: Am I getting hosed by a CEO?

I've gone back recently to try to change the equity share I get, as I understand that most founders on board when I was typically receive anywhere from 10 to 30%. The CEO tells me that I'm the only one with any kind of agreement, and that makes me far better off (?!). Apparently, no one else has anything in writing. When I ask the CEO about this, he not only seems to hint that people will be very tied to the company (executives will have a 6 year vesting schedule...what?), but he seems to think that if anyone gets any equity now, it will turn off investors. He wants to maintain majority control in the company so no investors can come along and "steal" it from him, AND he wants to set aside a monstrous chunk of equity for these investors. He hints that employees will get some "down the road", but that this is an effective way to get investment. He tells me I'm too "9 to 5" security focused (which, honestly, I do tend to be. I'm working at a full time "real" job while doing this near full time).

He keeps telling me that I need to trust him and that he'll reward people down the road based on their performance.

I'm all for tying incentives to actual performance, but this is just so loosely defined.

Am I being overly rigid not trusting this guy while proving my worth? The more I read, the more it seems this is a bogus deal. Is there any merit to this idea that having employees with equity will turn off investors?

Does this make any kind of sense, or am I completely a chump?

Thanks

Stop hanging out with this loser, build up your technical skills so you have a track record of projects built from scratch that you can show people, and then partner with someone who'll actually value you like a partner.

3% though? Not in bounds. If you're the technical guy there on day one and you don't receive a market salary or reasonable facsimile thereof every two weeks, you're a technical co-founder whether you want to be or not. Your deal is exploitative. You will likely not successfully negotiate a non-exploitative deal. (Presumption should be 33%, not 30%, and very definitely not 10%. No difference between the cofounders is meaningful as T approaches 5 years from now; if there is a meaningful difference, that person probably shouldn't be a co-founder.)

Everyone in this conversation is a businessman. They've underbid for your services. I strongly advise turning in your two week's notice and washing your hands of this. Your equity, whether or not you've actually been issued it, is equity in a company run by operators who are not dealing fairly with their technical co-founder and who are either comfortable with lying or clueless. No fact which I've just recited would cause me to think "This equity is worth more than typical startup equity", which is worth nothing.

>> He tells me I'm too "9 to 5" security focused

This is a common line. It is just that: a line. It gets cynically deployed against engineers on a regular basis by people who are not willing or able to pay market wages. You should interpret this line as nothing other than "I am unwilling or unable to pay market wages" and act accordingly.

>> He keeps telling me that I need to trust him and that he'll reward people down the road based on their performance.

99% of the people told variants of this line will be screwed by the people offering this term. As a direct consequence, entrepreneurs who are presently cash-poor but who want to incentivize employees/partners/etc do not say this; they say variants of "Here's a third of the company" or "I will commit to consequential cash payments in writing contingent on us achieving milestones together."

"I will pay you a number amenable to me, at a time of my choosing, if and only if I feel like paying you" is not an offer.

I will close with the observation that now is among the best times in the history of ever to be an engineer capable of shipping projects. You have better options. Exploring them for two weeks ROFLstomps the value of continuing to work for this company.

It's human nature to trust people, until proven otherwise.

Your CEO might even have magnetic charm on par with Richard Branson or Steve Jobs. Their gift for words hit the right buttons. Who wouldn't want to go into partnership with those guys? Time reveals if they actually make good and deliver.

We should all think in terms of highest & best use of our time. Relative to proving your worth-- imagine what this position might have yielded had you been paid at contractor rates. You've invested your time in the CEO. Has he proven his worth back to you?