The Forgotten Founder: A Silicon Valley Tale of Humiliation and Revenge

Great read. I feel for the guy. It was a foolish decision, but I sympathize with his continued struggles and wish he and his family all the best.

It seems to me that the lesson to learn here is to be careful about agreeing to vesting. Pre-series A, the three founders owned most [1] of a company which had a $6M pre-money valuation and was "on track to hit $1M in revenue" for the year. Post-series A, they each owned less than 3% of the company outright, with the rest of their shares vesting over four years [2]. What sort of idiot takes a deal which reduces them from owning stock valued at $1.5M to owning stock valued at $300k and an employment contract which gives them $300k/year of stock if they stay at the company?

Obviously if you're running out of runway, you take whatever terms you can get, since your company is worthless if it goes bankrupt; but if your company is profitable and your only concern is about allowing it to grow faster, why the heck would you take a deal which is practically begging your investors to fire you?

[1] We're not told how much Cambrian Ventures took, but for $250k it presumably wasn't a huge amount. I'm going to arbitrarily guess 25%.

[2] Based on the way the numbers work out, I'm guessing they kept 20% of their stock outright and gave back the remaining 80% to be four-year vested. This fits with the fact that the company was about a year old when they took the funding.

The only reason to post the article on multiple pages is to expose readers to more ads.

I don't know... You should probably subject everyone to vesting everyone at incorporation - to keep people from ditching early with a huge slug of equity. Good investors know this, and will often rightfully insist on some sort of vesting reset - depending on circumstances. It doesn't make you an idiot to take that deal. It makes you a part of the VC machine. It's just how it works.

That said, I've seen people raise (smaller amounts) of money without any vesting provisions at all (i.e. the founders owned their shares outright). That, to my way of thinking, makes the investor the idiot.

EDIT: I don't mean to imply that resets are a given. Only that they make sense in certain situations, both for founders and investors. There is no "standard", but there are "ways things are often done" for a reason.

Ditto. The guy bled for the company yeah, but the reason why I feel sympathy for him is not because he was kicked out despite working so hard. Even though he might have bled for the company and worked with executives with questionable integrity and technical appreciation, he deserved to be kicked out as soon as he stole the switches and put them up on eBay.

No, the reason why I feel sympathy for this guy is that he was so socially inept that he couldn't figure out how to talk with other people, build business relationships, build team relationships, and manage others without being a two-faced jerk (don't take it personally, Mahler, I want to prove to Koon that I care only about success and will sacrifice anyone for it?). The guy was just too out of his element for the battles he needed to face.

He may have been technically very good, despite being socially awkward, and some jerks may have taken advantage of that. But that in no way justifies or accommodates the bad decisions he made. He's essentially taking the stance that two wrongs make a right, and so I think he has a really poor sense of right and wrong.