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Ask HN: Co-Founder pivoting, what are my options?

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Re: Ask HN: Co-Founder pivoting, what are my options?

#41
post #2

I've counseled a number of founders on co-founder breakups. It's hard to tell you what I think without knowing more detail, but based on what you wrote, and assuming you both signed customary IP assignments and RSPAs at incorporation, the simplest way to move on would be for the other founder to resign as an employee and director. That would enable the company to repurchase his shares and you would own 100% of the co…

> When I asked my co-founder for rights to use the existing code in my new venture, he refused, citing concerns over sharing IP.

OP seems to imply that their co-founder intends to use much of the existing code base they've developed over the last 6 months for the proposed pivot. If that's the case, it doesn't seem like co-founder would be open to resigning as an employee and director and creating a new code base from scratch, especially considering that the co-founder seems to have control of the existing company.

Re: Ask HN: Co-Founder pivoting, what are my options?

#42
post #12

You are not a co founder, you are an employee. hint. founders get shares, employees get options. you are now in the situation of whatever you can bargain for, you can get, whatever you can't bargain for, you don't get. Dealing with what you call a highly risk adverse person makes it hard to negotiate, because the most risk adverse action is bury the code and say goodbye (what they have proposed). It is likely you can…

YC and every other Vc recommends founders to vest

Re: Ask HN: Co-Founder pivoting, what are my options?

#43
If your co-founder "decided" without you, you aren't co-founders and he/she doesn't view or respect you as a true partner.

If they viewed you as a true co-founder and partner they would have phrased it as an ask. "Hey, I've been pondering pivoting us to this, what do you think, should we consider it?".

In the end it's so much more than the idea, it's about the team. If your co-founder doesn't view you in that way then that's not really a problem you can solve.

Re: Ask HN: Co-Founder pivoting, what are my options?

#44
post #10
post #4

>My co-founder has written all of the code >he holds a majority of shares >My co-founder has decided he wants to pivot >My co-founder has said he would be fine with me pursuing the initial idea >asked my co-founder for rights to use the existing code in my new venture, he refused Are you sure you are a co-founder? It sounds like you are an employee

I kinda disagree with this. Depends what percentage of the company OP has. Growth + marketing + content are critical functions despite what the HN crowd thinks.

Sure, but if they don't have a majority of the company and are being told they can't use the existing code and can't invest the time/resources to reproduce it, does it really matter how critical those other functions are?

Re: Ask HN: Co-Founder pivoting, what are my options?

#45

You both want different things. You've only been doing this 6 months. Move on. Forget about it and move on. There is nothing worth fighting for and the stress it will lead to is not worth it. >> [...]and don’t love the idea of walking away with nothing to show for my time That's how it goes running a business. Most of the time you will end in failure and have and you need to learn to be ok with that. Hopefully you've…

> with nothing to show for my time

If you haven't learned a ton of stuff during this process you've been doing it wrong. That experience should be invaluable to your future career prospects.

Re: Ask HN: Co-Founder pivoting, what are my options?

#46
post #41
post #2

I've counseled a number of founders on co-founder breakups. It's hard to tell you what I think without knowing more detail, but based on what you wrote, and assuming you both signed customary IP assignments and RSPAs at incorporation, the simplest way to move on would be for the other founder to resign as an employee and director. That would enable the company to repurchase his shares and you would own 100% of the co…

> When I asked my co-founder for rights to use the existing code in my new venture, he refused, citing concerns over sharing IP. OP seems to imply that their co-founder intends to use much of the existing code base they've developed over the last 6 months for the proposed pivot. If that's the case, it doesn't seem like co-founder would be open to resigning as an employee and director and creating a new code base from…

Thank you for these super helpful comments.

This is correct, my co-founder isn't pulling out all of the existing code, he wants to have a "product" at the center of the staffing agency, and is planning to re-use some stuff. He would not be open to resigning, and I think because he wrote the code there is a level of ownership he feels, regardless of the value being limited (or 0 - as many have noted).

Re: Ask HN: Co-Founder pivoting, what are my options?

#47
post #4

>My co-founder has written all of the code >he holds a majority of shares >My co-founder has decided he wants to pivot >My co-founder has said he would be fine with me pursuing the initial idea >asked my co-founder for rights to use the existing code in my new venture, he refused Are you sure you are a co-founder? It sounds like you are an employee

Music groups tend to have the same issues; it's rare to find a band like U2 that equally shares credit regardless of who is doing what, which normally builds resentment when one or more members are seen as sole contributors (or 'stars').

It's also equally rare to find a group where each member can split off and form their own successful group (e.g., The Beatles, Genesis). The 'right' answer is that's it's usually somewhere in between. Freddie Mercury and Mick Jagger failed at solo careers because they didn't have their friends to tell them that their music stunk. Of course Top 40 has been broken into a formula that primarily benefits music companies, but that's different story.

In the same way, you and your business partner may have relied on each other to achieve a whole that is more than the proverbial sum of the parts. Your partner's new venture may fail without someone such as yourself, since it really is a common blunder by technical people to underestimate the value of sales and other soft skills, and your venture may fail without strong technical backing.

As usual, you can throw money at the problem to see what works, but in my experience when people 'grow up' organically as opposed to in a lab, the resulting bonds are much stronger.

All of that said, my former business partner surreptitiously formed another company and lost interest in our shared venture, which ultimately killed what was a great niche product. I consider myself a fairly average coder, but he was brilliant, and although I could have bought him out and maintained and expanded the codebase, it wasn't fun anymore, so we sold to another company and went our separate ways. Regardless, I had fun and learned a ton along the way, and that's part of the journey.

Re: Ask HN: Co-Founder pivoting, what are my options?

#48
Many people in the comments seem to confuse what it means to be a co-founder, have ownership of a company, and have control over that company's direction.

- If a founder sets up a company with other people, they are both a founder and a co-founder [source](https://www.startups.com/library/expert-advice/startup-found...). It is inaccurate to say that OP is not a co-founder but rather an employee because they have less equity. It both violates the commonly accepted definition of co-founder AND if true would mean that there's no such thing as a co-founder unless equity were perfectly divided. OP is a co-founder. What it means to be an employee has its own specific meaning, too.

- In the case of startups, ownership is best determined by setting percentage ownership between founders along with a vesting schedule (i.e. when each founder will receive those shares). In OP's case, their co-founder was provided more equity.

- Control of a company, either direct or indirect, is determined by voting shares. These are not always the same as shares, but in the early stages generally are. Unless OP has the same number of voting share by way of dividing board seats equally, we can assume that all share in this company are voting shares. Therefore, co-founder likely has a controlling interest.

Therefore, OP is a co-founder. They do have ownership of the company. They likely do not have control of the company. It would be very helpful to keep this in mind when offering advice on how to approach the situation.

I'm sure there are quite a few gaps in what I've written above, I appreciate any feedback or input!

Re: Ask HN: Co-Founder pivoting, what are my options?

#49
You failed your marketing/growth part. You have a minority stake if vested. Your cofounder doesn’t want to work with you anymore and starts something else.

You had a free shot at your idea. It failed. Better luck next time.

If you really think you’ll make it work, make the guy an offer for the company, and continue.

Re: Ask HN: Co-Founder pivoting, what are my options?

#50
post #34

Earlier quoted context omitted.

Where does it say the OP has options and the co-founder has shares? I think he explicitly said his _shares_ haven't vested yet...

If it needs to vest, it’s not a share.

According to the post, neither of them have vested shares:

> We signed a founders agreement, we each have a seat on the board, and he holds a majority of shares. None of our shares have vested - my first vesting date is in 6 months when ¼ of my shares vest.

Unvested shares are still shares. All that being unvested means is that the shares are subject to conditions such as a repurchase option that gives the company a right to buy your shares if you leave the company.

Unvested shares still have the others rights of shares, such as voting and sharing in dividends.

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