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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

#381

Post by kotxig »

"Take the 3% otherwise you'll own 40% of nothing"

I would call the bluff. It doesn't look like you have many options to exit with a cash settlement unless you're allowed to sell your own equity. I wouldn't take 3%, 15% minimum.

Have you talked to your investors? They might be able to provide some guidance. It's possible that they know nothing or they are responsible for the move, so you need to figure out where they stand. I would personally be looking to kick the CEO out with support from the investors. See how the CEO behaves when the shoe is on the other foot.

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

#382

Post by ZephyrBlu »

idlewords wrote: post #299
newen wrote: post #176

Earlier quoted context omitted.

People talk about how a startup being successful is 90% luck and you want OP to walk away from a successful startup and try again.

Their main claims to success based on OP's description are that they show up in search engine results and are only $60K in the red. If that's success in 2020 then I can launch a dozen successful startups by January 1.

They said they have 60k users. If you can acquire 12 * 60,000 = 720,000 users for 720k in less than a week I think you'll have a lot of people beating down your door.

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

#383

Post by mawise »

Disclosure, I have no specialized knowledge or experience.

I wonder if he's already worked a deal with the investor? If he's offering the investor half of your stake to push you out (for example), you might be able to turn the tables and offer the investor 3/4 of his stake (or all of it) to push him out. This depends on your ability to have a frank conversation with the investor and their faith that you can continue to drive the company. If that's the case it also means the investor is probably toxic which doesn't bode well for the future relationship but it might at least prevent your co-founder from getting away with this.

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

#384

Post by jacquesm »

valuearb wrote: post #338
jacquesm wrote: post #295

Earlier quoted context omitted.

"Accelerated vesting". Typically: in the case of a liquidity event or if there is a termination without cause in order to gain control of the co-founders shares. Those terms are pretty common, and without having seen the vesting agreement we shouldn't make any guesses as to what is in there. Leaving can be many things, and co-founders typically don't have the authority to fire each other at will without grave consequ…

If he/she has these protections, they would not have posted asking for help. Truth is they likely have very few options, can be terminated any time the shareholder & founder want, and whatever shares they own will be diluted to 3% or less if they choose.

People are rarely aware of all the details of their contracts. I know that must sound funny to those who won't sign anything without reading it and understanding it but it is't rare at all for someone to be handed a 'standard' contract and signing it without fully understanding all the implications. Hence my first advice to hire a lawyer.

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

#385

Post by gkoberger »

nickff wrote: post #310
theptip wrote: post #308

Earlier quoted context omitted.

> 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, th…

You don't give up a board seat for $100k. At least, you definitely shouldn't.

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

#386

Post by Rastonbury »

cwkoss wrote: post #235
pc86 wrote: post #230

Earlier quoted context omitted.

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?

"This is a complex technical issue, and I'm still investigating to find the right solution"

"It seems this role is too much for you to handle which is why we need someone else, we'll let you keep 3%, sound good?"

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

#388

Post by alisonkisk »

valuearb wrote: post #338
jacquesm wrote: post #295

Earlier quoted context omitted.

"Accelerated vesting". Typically: in the case of a liquidity event or if there is a termination without cause in order to gain control of the co-founders shares. Those terms are pretty common, and without having seen the vesting agreement we shouldn't make any guesses as to what is in there. Leaving can be many things, and co-founders typically don't have the authority to fire each other at will without grave consequ…

If he/she has these protections, they would not have posted asking for help. Truth is they likely have very few options, can be terminated any time the shareholder & founder want, and whatever shares they own will be diluted to 3% or less if they choose.

OP doesn't really understand their situation or their rights; that's why the submission was created. Also considering the OP's writing, they probably don't fully grok the legalese of their contracts.

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

#389

Post by bufferoverflow »

moomin wrote: post #19
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.

I’ll just add: write down everything. Guy is trying to run a bait and switch on you and there’s a very good chance this ends up in court. Be ready.

I'd say audio-record everything if your state allows one-party consent.

https://www.mwl-law.com/wp-content/uploads/2018/02/RECORDING...

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

#390

Post by orthecreedence »

tptacek wrote: post #90

Lots 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…

Yeah, I have to kind of echo this.

I've run into things like this in the past, and the legal stuff is expensive, depressing, and draining. It really weighs down on you. I'm confident making the claim that anyone in the thread screaming for blood has never dealt with this kind of thing before. It's not like you pay $500 and a week later your settlement is ready. No, it's in the tens of thousands, and it drags on. And on. And on. And on.

So, yes, please hire a lawyer and make sure they are well-versed in SV-type investment/startup bullshit. Have them review your contract and tell you where you stand. This will likely cost under $1000 and you won't spend two years fighting for a slice of a pie that has a 98% chance of being worthless.

This kind of stuff is horrible and can make you feel powerless, but it's important to know when to walk away. Not every hill is worth dying on.

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