This is a bait and switch. Talk to a lawyer. Wow, just absolutely scummy.
Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
81–90 of 435 posts
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#82This is a delicate and nuanced matter that's hard to know the right answer without all the details. I've gone through this 4 times, and also recently talked to 20 people who went through it, specifically about this topic. Feel free to email me and we can have a call and talk you through the options (paul.biggar@gmail.com)
First thought: You don't have 40%, you have at most (11 months / 48 months vesting) * 40% = 9%. But, at 11 months you haven't hit your cliff, so you actually have 0%. That is, if they can fire you. It sounds like they're the CEO so they probably can, but if not the board can.
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#83Can you expand on why they want you out and what happens if you stay?
We've spoken a fair bit and they don't have anything specific to say. It's mainly that they don't like or want the stress of working on a startup, and want to run it more as a lifestyle business.
They are trying to kick you out a month before you vest! These guys are not acting in good faith. Do not trust them. Wait a month and vest. Then quit.
You were the technical lead. More than anyone, you built it. Don't let these suits steal it from you or bluff you. So often business types take advantage of financially unsophisticated technical people.
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#84I'd say first things first. You have 11 months and a one year cliff. Find a way to stall for a month and your position gets much stronger. This is a great environment to find a way to stall. Tell your co-founder to write up a proposal so that you can have a lawyer look at it. That's easy to turn into a month of stalling.
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#85Are you the CEO? And does your vesting agreement have any provision for accelerated vesting if your employment is terminated without cause?
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#86Stories like this make me wonder if there's a form of pre-business counseling much like premarital counseling where you discuss with your cofounder expectations going into the business and talk about worst-case scenarios like this and how each party would handle it at the time of the counseling (considering people change over time).
I thought that's what involving a lawyer in these kinds of negotiations is supposed to do? That requires having the bucks in the bank to pay for a lawyer. If fourtydegrees is young with a thin wallet, I don't think lawyers were involved.
Not all lawyers will cost 100k. You can get a good lawyer for 2-3K for basic consultation and if you don't even that type of cash, then it is tough for sure.
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#87Do NOT sell. keep 40% of nothing, matter of pride first and for all. Secondly, they are more than likely bluffing. They don't want to put advertising that would generate 5k/mo means they are trying to make things look artificially worse so you leave and keep the rest for themselves. Don't fall for the 40% of nothing once you are close of making money. They just don't want to share the pie.
If it really were 40 percent of nothing, the other party wouldn't want it so bad ;-)
This. 100% this. No sell, no deal, that’s not in the contract...
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#88Do NOT sell. keep 40% of nothing, matter of pride first and for all. Secondly, they are more than likely bluffing. They don't want to put advertising that would generate 5k/mo means they are trying to make things look artificially worse so you leave and keep the rest for themselves. Don't fall for the 40% of nothing once you are close of making money. They just don't want to share the pie.
If it really were 40 percent of nothing, the other party wouldn't want it so bad ;-)
Try turning the tables and offering them a buyout.
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#89If you're willing to buy out his share, I would approach the investor, explain the current dead lock, and get his support to force your partner to do a BMBY (Buy Me Buy You), where you offer him a price per his shares, which he either accepts or have to pay the same sum to you and buy your part.
This is commonly referred to as a shotgun clause.
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#90Lots of really bad advice on this thread. Something to keep in mind is that people venting about how unfair this is and how you shouldn't give an inch as a matter of principle are writing that to gratify their own emotions more than they are honestly trying to help you in this situation.
You need to talk to a lawyer, strictly to figure out, given the structure of the company, what your partner has the authority to do. It sounds like they have an edge in ownership and are likely set up as the firm's CEO, in which case it's very likely that they can sever you from the company.
You can probably get a cost-effective answer to that question, especially if you're willing to accept the most straightforward answer (ie, if you're just using the lawyer as a sanity check, and not tasking them with pursuing weird theories of why you'd be impossible to fire). You probably cannot get cost-effective answers to the rest of your questions from a lawyer; be prepared to sink 5 figures into legal, speculatively, to pursue anything past that. On the firing, figure high hundreds of dollars. On the equity negotiation, figure $10,000.
At 11 months in to a 12 month cliff, you are going to get 0 if you're terminated. Maybe you can slow roll past the cliff?
Even if the paperwork is locked down on their side, your partner is likely going to offer you that 3% just to avoid the drama; your argument may be doomed legally, but you can easily inflict 5 figures of legal expense on them. So there's a negotiation here. It may be that as soon as you start to sound reasonable --- not asking to assume control of the company yourself, not expecting to walk away with all your shares vested --- they quickly become amenable to improvements in the deal, just to get this over with.
While you think this through, remember that it is also very early in the life of this company to have a departed founder with a huge equity stake. A lot of reasonable people in that situation would just wind down the company and restart it; why plow forward while encumbered the way they are now? You're (justifiably) thinking about the 11 months you just spent, but if the company has legs, those 11 months are not much compared to the person/years that are going to be invested down the road.
Nobody is going to raise money to liquidate your position in the company.
Nobody is going to court. Lawsuits that actually get litigated take years and cost more money than anybody in this story have.
It also doesn't seem realistic to expect investors at this stage of the company to buy out your partner. How would that even work? You'd end up working for the investor. Probably nobody wants that outcome, including the investor, but also: with the low revenue you're talking about, your investors are unlikely to waste their time.
I've been a party to some similar situations and my advice is just to keep things simple. A good mental model of the legal services you have available here is a complicated divorce: only the lawyers win, and they know it. Your time is worth a lot, and dragging this out will eat a lot of your productive time. You suggest downthread that you're not all that interested in the equity and think your partner is going to fly the company into terrain. I think you answered your own question with that. You can fight a little bit, especially if it makes you feel better, but it sounds like you'd be kind of crazy to fight a lot.