231–240 of 435 posts
Earlier quoted context omitted.
Ok, but he already has nothing to lose, right? I had the choice between accepting a pittance, or forcing the other person to take actions that would make them possibly legally liable, then I'd choose to force the other guy to take on the legal liability. 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 negoti…
He has a lot to lose: * The 3% he's been offered, which while paltry compared to the 40% he had if things had gone better is still not a small amount of equity to hold in a successful company. * Many thousands of dollars in legal fees. * Many months of effort and stress. People on message boards have weird ideas of what does and doesn't constitute lawful termination. Hiring in the US (I'm assuming this is the US, bec…
Sorry but this is simply not true regarding vesting specifically. There are laws that prevent someone from being fired 1 day before vesting for the purpose of clawback.
EX: This source is about retirement vesting. Not exactly the same, but close.
https://jimgarrityonline.com/2014/10/08/fired-just-before-ve....
This source says the following "assuming this termination is made for good-faith reasons, such as business downsizing or poor work performance.", implying that if it is not for good faith reasons, and just for getting back the shares, that this is illegal.
Also from this source: " In general, to avoid costly lawsuits, companies consider future vesting dates when terminating employees. They may delay the termination date, extend it by using "paid time off" days, or accelerate the upcoming vesting to avoid appearing to terminate an employee merely to forfeit soon-to-be vested shares."
So companies specifically try to avoid this situation, because they know it is illegal.
https://www.mystockoptions.com/content/can-company-fire-me-o...
Here is a source that says the following:
"These cases provide very powerful ammunition to employees who are either negotiating for additional severance or engaged in litigation with their employer.
First, Kelly and Newberger provide an employee who was wrongfully terminated with a legal basis to become fully vested in any options that were previously granted."
https://sebastianmillerlaw.com/fired-employee-entitled-accel...
And here are a bunch of lawyers agreeing with me that this is illegal:
"AT will is one thing, this is quite another. This is an obvious scam by the employer to avoid having your stock vest, which is not only not fair, its illegal in my view"
"In Mass., if an employer terminates an employee for the purpose of preventing a right to compensation to vest, the employee has a claim for the compensation. "
"There are certain kinds of showings that you need to make in order to be able to collect in this circumstance. The short answer is that you may very well be entitled to the stock."
https://www.avvo.com/legal-answers/i-was-terminated-one-day-...
Thats why I am saying that this threat needs to be documented. It is quite clear, that there are many cases where terminating someone, for the purpose of getting back shares or retirement or bonuses, is very illegal.
If he leaves, can you run it yourself and do you want to do that? My guess is that you would have to bring in someone to do whatever the co-founder was doing.
Your equity ownership is worth something if you have 60k users. You have a subset of them paying something already it sounds like. This is a great thing, if you enjoy it and believe in it. If that is correct, then if your partner has a problem, and you think he is replaceable, then you don't seem to have to do anything related to his demands.
I think this is also a good lesson in needing to have a really good relationship with the investors as well. If it is correct that they are the swing vote on decisions, you want them to appreciate you, know you well and understand the value you add.
Earlier quoted context omitted.
It's a little more complicated than that. As they described it, they own 40%, but if they leave early the company has the right to buy back certain numbers of the shares at the original price. The one year cliff suggests that at this point, the company can buy back everything, but in another month, they will have 10% that's not touchable.
Yeah, but each share is valued at a fraction of a cent. The company will have to cut a check for a few dollars. (Happy to explain more if you’re interested!)
Earlier quoted context omitted.
> This isn't sabotage, it's a labor strike Exactly. Big difference between breaking something and letting something break .
You can frame it that way if you want but it's just not true. OP has been doing X for 11 months, for free (well, for equity). Right now - today - he owns that equity, regardless of what his partner is asking him to do. If he stops doing X what is his argument against his partner and the investor - who own 50-60% of shares - saying that he's abdicating his duties?
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…
Earlier quoted context omitted.
Ok, but he already has nothing to lose, right? I had the choice between accepting a pittance, or forcing the other person to take actions that would make them possibly legally liable, then I'd choose to force the other guy to take on the legal liability. 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 negoti…
He has a lot to lose: * The 3% he's been offered, which while paltry compared to the 40% he had if things had gone better is still not a small amount of equity to hold in a successful company. * Many thousands of dollars in legal fees. * Many months of effort and stress. People on message boards have weird ideas of what does and doesn't constitute lawful termination. Hiring in the US (I'm assuming this is the US, bec…
Earlier quoted context omitted.
He has a lot to lose: * The 3% he's been offered, which while paltry compared to the 40% he had if things had gone better is still not a small amount of equity to hold in a successful company. * Many thousands of dollars in legal fees. * Many months of effort and stress. People on message boards have weird ideas of what does and doesn't constitute lawful termination. Hiring in the US (I'm assuming this is the US, bec…
> There is likely no such thing as a "bad faith" termination Sorry but this is simply not true regarding vesting specifically. There are laws that prevent someone from being fired 1 day before vesting for the purpose of clawback. EX: This source is about retirement vesting. Not exactly the same, but close. https://jimgarrityonline.com/2014/10/08/fired-just-before-ve... . This source says the following "assuming this…
Here's a Santa Clara Law Review article (take that for whatever it's worth) on almost exactly this scenario, in the context of Zynga, citing Newberger, and suggesting that "company determines employee is not worth the equity they were originally allocated" is a valid reason to terminate an at-will employee (even if it is, as I'm sure we all agree, bad business):
https://digitalcommons.law.scu.edu/cgi/viewcontent.cgi?artic...
But look, I'm not saying that this person shouldn't talk to a lawyer; in fact, I'm saying the opposite. Find out if the termination is valid. But be clear-eyed: when you get a straightforward answer to whether you can be terminated, and it confirms that the termination is valid, stop there, and don't spend a fortune in money and time fighting a foregone conclusion.
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…
In the early phase of a startup it quite often happens that equity is given on very relaxed way on good terms. For example someone can work only short time in the company and still get nice piece of equity, just because other founders are lazy or careless.
A lot related to startups is "play stupid games, win stupid prizes". Sometimes you can get lot of equity & money if you just happen to be in the right place at the right time. Other times you end up working a lot and get nothing.