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Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

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Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#301

Post by fizx »

fortydegrees wrote: post #33
gwbas1c wrote: post #23

Earlier quoted context omitted.

I think this works if fourtydegrees has some bucks in the bank. Reading between the lines, I suspect fourtydegrees is young and doesn't have the kind of money to do this. (I also suspect that lawyers may be out of fourtydegrees' budget.)

Suppose I did have some bucks in the bank and did get a lawyer - how would they help? So far my co-founder has been pretty unreasonable with regards to compromising and/or negotiaton. The investor so far has also been very neutral and I think will remain so.

The typical tech lawyer has seen this exact scenario ~20 times. You probably have some leverage, and spending $1-2k to figure out how much and how best to apply it, given the lawyer's experience, makes tons of sense.

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#302

Post by visarga »

rat9988 wrote: post #14

Do 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.

What if the other party switches activity over a new company in the meantime?

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#303

Post by pdutt111 »

gkoberger wrote: post #117

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…

I agree to the point that the company is probably done at this point, but of the off chance that it succeeds I'd get the 10% and then walk. if he raises another round etc. then that's a bargaining chip to get something (probably would amount to 0 but better to have it)

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#304

Post by nickff »

ohyes wrote: post #296
nickff wrote: post #269

Earlier quoted context omitted.

Where are you getting the idea that the tech co-founder (TCF) owns "40% of something fairly valuable"? It seems the TCF currently owns 0%, and will go to ~10% (25% of 40%) if they don't get laid off/fired in the next month.

It's not clear the other founder actually owns any more than TCF does. What makes you think TCF can be so easily pushed out or that the other founder has significantly more leverage? It isn't clear to me that they have different deals. Honestly, if non-technical thought he could fire this guy, he probably would have already. That's why TCF is being bullied into resigning. What is non-technical going to tell the inves…

Non-tech founder (NTF) started it, so I'm guessing NTF is CEO. NTF is probably on similar vesting schedule, but won't fire himself. The fact they're having these conversations means that NTF has probably made up his mind, and decided this is not going to end on mutually amicable terms.

It's possible that TCF can hang on until the cliff, but I doubt that'll happen, and it's not going to be pretty if they do. There are all kinds of ways NTF can reduce/destroy TCF's equity; I'd take 3% and move on with my life.

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#305

Post by doonesbury »

ohyes wrote: post #248

It sounds like you own 40% of something fairly valuable and now that it's 11 months into your contract other founder who needed your help is getting greedy and trying to push you out before you are owed anything. You said it yourself, you've grown hugely, you're dominating SEO since you joined, and built loads of products. This is your 'partner' getting greedy after you've done a lot of hard work. It wouldn't have ha…

Whatever the root reason this is now conflict over control. Therefore you need to know your legal contractual options and obligations and his plus whatever poison pills or repercussions for out of contract behavior. Who owns the IP is key. What is that? No need to necessarily write here but to bolster your resolve. Now if the contract allows bad actors without downside risk ... There are no good answers except experience. Watch out for attrition by tying you up on legal fees. But then call BS on him not having buyout proceeds. Finally, maybe you need to press him and not let him set the context. Saying no is but one play his side. You can put him in a box too All this assumes an adversarial process. Good luck to you.

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#307

Post by gabereiser »

phkahler wrote: post #231
mooreds wrote: post #99

Earlier quoted context omitted.

Unfortunately it doesn't sound like an option: > They will not entertain the idea of me buying them out for cash.

Then they have established a lower bound on the value of their shares.

Bingo! Now you know it’s BS. This really sucks. It’s not a good place to be. The fact that they won’t take a buyout from you means they are pulling a fast one and someone probably said “You know, it would look better if it was just you” somewhere down the road.

Don’t sell, don’t give, don’t walk away. Stand firm. This was a binding agreement they can’t get out of. You have all the power here. You know you have something. They have established a lower bounds on its value. It’s way more than 40% of 400k.

Best of all. Don’t let your customers know it’s founders are going through this. It’s obvious, but make sure you keep your cool and composure. It will pay off in the long run.

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#308

Post by theptip »

nickff wrote: post #269
ohyes wrote: post #248

It sounds like you own 40% of something fairly valuable and now that it's 11 months into your contract other founder who needed your help is getting greedy and trying to push you out before you are owed anything. You said it yourself, you've grown hugely, you're dominating SEO since you joined, and built loads of products. This is your 'partner' getting greedy after you've done a lot of hard work. It wouldn't have ha…

Where are you getting the idea that the tech co-founder (TCF) owns "40% of something fairly valuable"? It seems the TCF currently owns 0%, and will go to ~10% (25% of 40%) if they don't get laid off/fired in the next month.

> I'm the technical co-founder of a pre-revenue startup. We were 51/49% to them and took a small round of pre-seed funding (~$100k) so our cap table is approx 40% for me and co-founder, 10% option pool and 10% investor. We have very standard shareholder agreements for 4yr reverse vesting with 1yr cliff.

Note the “reverse vesting” bit, this caught me out too. This is not the standard employee “you have zero until your 1yr cliff” deal, it’s the opposite in some sense, the founders own their shares unless they leave, in which case they are clawed back, and the clawed back amount goes by the 4yr period.

In this case if the investor has voting rights, neither founder has a controlling share, and the investor is the tiebreaker. So OP can fire the other founder with the investor’s vote.

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#309

Post by danielovichdk »

This is not sound advice nor is it mentally sober. But this is what i came to conclude.

I once had a partner where we had a good business. After some years he fucked me.

What matter to me is personal values and virtue, and even though he took a shortcut, i am going to catch him one day and make him understand tht history will catch up and he will be sorry he ever fucked me.

I am not in a hurry. The longer time goes by, the more i am looking forward to the encounter.

Money is not just money. It's also about being cool and having a good heart.

Fuck em

Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer

#310

Post by nickff »

theptip wrote: post #308
nickff wrote: post #269

Earlier quoted context omitted.

Where are you getting the idea that the tech co-founder (TCF) owns "40% of something fairly valuable"? It seems the TCF currently owns 0%, and will go to ~10% (25% of 40%) if they don't get laid off/fired in the next month.

> I'm the technical co-founder of a pre-revenue startup. We were 51/49% to them and took a small round of pre-seed funding (~$100k) so our cap table is approx 40% for me and co-founder, 10% option pool and 10% investor. We have very standard shareholder agreements for 4yr reverse vesting with 1yr cliff. Note the “reverse vesting” bit, this caught me out too. This is not the standard employee “you have zero until your…

The non-tech founder is likely CEO (as they started in, and likely got the investor on-board), so they can likely fire the TCF without a vote. The board, likely made up of NTF, TCF, and investor could then fire the NTF.

In any case, this is not going to end nicely, and I would recommend walking away with whatever equity can be had without setting the counter-parties against TCF. If NTF and investor get really mad, they can easily dilute or destroy TCF's equity, so I'd try to avoid that.

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