191–200 of 435 posts
A lot of us have zero idea about your situation and we are speaking from the gut. That said, fuck that cofounder, I would rather burn it to the ground than let him get his way and regret it for the rest of my life.
Almost all the advise here is bad. Without legal review of what you signed how can anyone know what your negotiating position is?
Hire an expert to help you navigate this, or you'll probably regret it.
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…
Maybe it's just because I'm an outsider, but startup finance is complete nonsense to me. >Same goes for giving you the 40%... there's no way they can build a company when someone not involved owns a huge stake. This actually happened to one of my professors, which represents the opposite end of the absurdity. He started the company with a friend. The company pivoted to a completely different direction and the friend…
As people mentioned, you don’t want to stay because the relationship is broken. It’s not worth your time.
In terms of getting fired before 1 month is over, get an employment lawyer and talk this over with him. Most likely, you will have a case if they fire you just to save 7%.
Get the lawyer first, before responding to your cofounder.
If you think this business is going places, that will change my advice.
In this case, get a lawyer and negotiate a higher % or assurance that you will stay at the company and continue to get vested. Maybe you will get more than 10%?
Remember, investors/executive team will dilute you by issuing extra shares to the people who stay.
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Wish I had downvote powers to downvote this because it's horrible advice. You literally have nothing to lose by just waiting for the equity to vest and keeping your 40%. Fuck the co-founder. Fuck 3%. Worst case you end up with 40% of nothing. Walking away you end up with 0% of nothing. If you don't stand up for your equity no one will. And if you let him get away with this, down the line he'll do the same shit to som…
Your theory of the case here being that this company has managed to find a set of contracts that establishes 4/1 vesting and enabled a seed funder to invest $100k, but somehow didn't designate any officers of the company or any authority to terminate members of the company. It could happen! They might reasonably spend $400-$500 figuring that out.
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I mean, maybe. But that is not a reason to follow your advice and just "give up". If the choice is between "giving up" or getting as much equity as possible, for example by stalling for a month until he vests, but also causing those other problems that you mentioned, then the choice should be clear. Stall, and get the larger amount of equity. He's got nothing to lose, right? If you have nothing to lose, then there is…
This is a partner we all agree is ruthless enough to terminate a productive partner prior to a cliff, but somehow either lacks enough clue or holds on to just enough ruth not to be able to simply fire the partner before the cliff elapses. They probably don't have to accept a deal in order to be terminated.
Because if they were to fire him, then they'd basically have to fire them like a week or 2 before his vesting cliff, with an establish history of an attempted negotiation.
Firing someone a week before they vest, in order to claw back the shares, because the other person refused your offer, is likely illegal, and not "good faith".
If he is already in a situation where he has nothing to lose, you may as well force the other person to engage in the possibly illegal action against you.
Or, at the very least, get them to make the illegal threat in a way that you can document it.
Even the bluff, or threat of legal action, against a questionable practice, is a huge problem for a company, that most founders do not want to have to deal with. And he doesn't have anything to lose anyway...
That doesn't mean you have to sue them right now. Even the threat of mentioning that this might be illegal, and that you are at least considering legal action, could force the other person to give in, and not do the possibly illegal thing.
Or even beyond that, if there is a documented evidence of these illegal actions, what you can do is simply not sue now, and only sue later on, if the company is actually worth something in the future, and it makes sense to do so. All upside, and no downside. Don't pay the court costs, unless there is something to gain.
Could anyone tell me what this means in plain English (preferably, ELI5)? I have no idea what term sheets look like in detail but I would really like to learn.
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I disagree - keep the 40%, this will at least force them to come to you with why they want you to leave. The obvious answers are - they are a jerk to work with and they won't admit it - you are a jerk to work with and they won't tell you - something else If it's something else and there is real money at stake both of you should be able to work something out. Otherwise it's one of the first two - which is much harder…
What "40%"? The entire point of the vesting agreement, bog standard in every competently run startup, is that he doesn't have 40%. In fact, if he's leaving less than a year in and his partner has the contractual authority to sever his employment, what he actually has is zero.
There should be a buyout at this point. Valuation based on income result in 5k * 12 * 15 * 40% = 360k, which should be a fair price. valuation based on funding would be around 400k, which would be similar.
You can have that written down as a contract, not necessarily direct cash payment, but cash payable, and have your co-founder to sign as guarantor, which would not be a bad price for him, and not a bad price for you too. Deduct the 3% if you want.