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Co-founders tried to reduce my equity after company was accepted into YC

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Re: Co-founders tried to reduce my equity after company was accepted into YC

#11

Post by gogopuppygogo »

908B64B197 wrote: post #6

The startup is effectively doomed at this point. It's almost impossible to recover from > We get accepted and he calls me on to a meeting with the other founder just 2 days ago and essentially tells me that in order for him to quit google and be fully committed to our company he thought he deserved more equity so that he could feel like he’s valued here. CEO and COO proceeded to tell me that at that point i was less…

Terrible advice.

Not a lawyer here but get counsel and do not do anything to harm the other company harming you.

Re: Co-founders tried to reduce my equity after company was accepted into YC

#15

Post by mxcrossr »

I can’t read the comments without an account, but it seems that from the main post:

1. This company will fail

2. YC invested a lot of money in it (a room full of employees)

3. The author admits that his company lied about their sales to get investment

That seems like a bad position to be in…

Re: Co-founders tried to reduce my equity after company was accepted into YC

#16

Post by jimhi »

YuriNiyazov wrote: post #3
nibsfive wrote: post #2

Alt account. This happened to a few companies in our batch too. It seems normal that 5-10% of companies game the character test. 100% of these companies basically end up with solo dictator CEO/founder and underperform. 100% of big companies from our batch had difficult founder heart to hearts on level ground, equal equity, and are still together.

Landing an opportunity or a windfall sometimes wakes up new extreme character traits that previously were either dormant or perceived as minor "idiosyncratic inconveniences". I've seen it happen before as well.

It constantly surprises me how some % of people I know will change completely if they suddenly land a lot of money or a hot girl

Re: Co-founders tried to reduce my equity after company was accepted into YC

#17

Post by airhead969 »

It doesn't help in retrospect of unfortunate circumstances, but it does for the future and the big picture:

Don't be friends, or get "in-bed," with greedy, selfish a*holes. Sales is notorious for attracting people with win-lose, psycho/sociopathic tendencies that would destroy a venture because they can't help themselves. In the end, their myopia and morale-murdering behaviors win 95% equity in a dumpster fire where they poured the gas and they threw the lit match. They're losers. Avoid these kinds of people as much as possible.

Re: Co-founders tried to reduce my equity after company was accepted into YC

#18

Post by airhead969 »

mxcrossr wrote: post #15

I can’t read the comments without an account, but it seems that from the main post: 1. This company will fail 2. YC invested a lot of money in it (a room full of employees) 3. The author admits that his company lied about their sales to get investment That seems like a bad position to be in…

Yep. I would want to hold the CEO's passport and bank account credentials because they seem like a flight risk.

(Something similar happened to a friend of mine who lost a $300k final payment because their friend/roommate took it and fled the country.)

Re: Co-founders tried to reduce my equity after company was accepted into YC

#19

Post by redis_mlc »

sneak wrote: post #10

I forget where I read it (venture deals, perhaps?) but it has always stuck with me: founder stock should vest! Nobody should get any equity whatsoever until and unless they've been working full time on the project for a year or more, founders included! That wouldn't have solved the problem here, however, where blowing up the whole company is the best outcome, as you don't want to be in business with greedy, dishonest…

> founder stock should vest!

That's not obviously true.

An example when it doesn't make sense is if you already spent a significant amount of time, or got results.

From an investor standpoint, they like founder vesting because they're essentially wiping out (zero-timing) whatever initial ownership you had, and getting cheap employees (founders) on an employment contract. Investors get a significant power advantage at founder expense.

But hey, if you don't know any better, sign on the dotted line.

For those who aren't sophisticated with business contracts, there's no such thing as a "standard contract." You can find out if the other party is flexible or not by saying, "I'll redline this and get back to you." If they refuse, then you know where you stand.

Re: Co-founders tried to reduce my equity after company was accepted into YC

#20

Post by jimhi »

I’ve been through YC twice now and have had this happen to me before in different ways and heard many stories firsthand. Some people just seem to drop whatever mask they had as soon as they see one ounce of success.

There is even one case of a yc company where the cofounder went off and made a complete clone of the company a year later. Then an intern of that new company went off and made a third clone within a year. I just checked and all 3 are dominating the market and still running.

For my own story, I partly blame myself as the signs of this type of person are pretty obvious in retrospect. I was able to do much more with another company 6 years later while my cofounder ran an mvp I built with 10 customers I got with millions of funding right into the ground.

Good for this guy on finding out and acting quickly. It would have been so much worse with millions of dollars on the line. He has a good attitude, I hope he realizes he could start a similar company if need be or approach a competitor.

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