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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

#331

Post by gonehome »

tptacek wrote: post #323
gonehome wrote: post #251

Earlier quoted context omitted.

Yeah - I don't see how people can tell them to just give up. Go scorched earth - what do you have to lose? Know the other guy is hostile and don't trust them to do the right thing. Consider your options outside of that and talk it over with the other investor. If you're the technical cofounder here you're probably in a stronger position to negotiate. If you can get the other investor to see what's happening here (you…

People keep saying this person has nothing to lose, but that's obviously not true. I think comments like these are mostly based on we, as a "technical cofounder" cheering section, want to see happen in the world. What's important about that is that the outcome for this particular person is an externality to us. If the whole company blows up and all equity is worth zero, that's great for the cheering section, even if…

I think this is a reasonable point and depends a lot on the OP's financial situation (and it sounds like OP's is better than the non-technical cofounder).

If they're reasonably secure they have more ability to fight for a better outcome, risking the 3%.

I would do that myself because having a cofounder tell me 1 month before vesting that they want me to leave with less than half of our deal is unjust and wrong. I'd do what I could to avoid that outcome, if the company blows up as a result it's the cofounder's fault - I'd sleep fine.

I would never do what the non-technical cofounder is doing to someone I partnered with.

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

#333

Post by swat535 »

I'm going to go against the grain here and say that you shouldn't make decisions based on what random people on the internet say. By all means read all the replies but the best course of action is to seek professional counsel and guidance from an attorney.

You may or may not have to go through a legal battle to get your share.

You should document everything as soon as you can, text messages and emails. The more paper trails you have, the better. Don't agree to anything verbally or sign anything.

Finally, don't make hasty decisions on an impulse. It would be best to be cautious and consider all possibilities.

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

#334

Post by CyberDildonics »

nickff wrote: post #304
ohyes wrote: post #296

Earlier quoted context omitted.

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…

> There are all kinds of ways NTF can reduce/destroy NTF's equity

What are those ways? The only sane thing is to go and talk to lawyers. In what world is it going to be the best option to let yourself be used and abused?

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

#335

Post by Talanes »

mattmaroon wrote: post #266
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 know you mean well, but this could not possibly be good advice because there isn’t enough information in that post for even a lawyer to give good advice. You don’t know what’s In his contract. Maybe his cofounder can’t fire him. Maybe He could but that would trigger the vesting. Maybe he could put it to the board and fire his cofounder. Maybe his cofounders threat that it’s 3% or nothing is bluffing. It doesn’t rea…

>Internet advice about things like this is always bad even when it is meant well

Even if it's telling you to get a lawyer?

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

#336

Post by valuearb »

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.

The founder and investor can fire him and easily dilute him down to 3% without violating any agreement. He’s got zero leverage here unless his agreement had anti dilution protections.

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

#337

Post by valuearb »

isatty wrote: post #173
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 am not a founder but this does not seem like sound advice. In a month, that 3% pittance becomes 10%. Also, it does not seem that the company has no value at all, if it is primed to make money. The extrinsic value on the 40% is worth negotiating over and not giving it up and walking away. Nobody should do that unless there is gross misconduct or negligence involved.

Unless his agreement has anti-dilution, or a favorable termination clause, the Technical founder owns nothing. The investor & founder can fire him/her, then dilute their vested shares to 3%, 1%, or even less.

Meanwhile, at most the company can generate $5K a month in revenues. That’s not a business, that’s a part time job with a partner you cannot trust.

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

#338

Post by valuearb »

jacquesm wrote: post #295
tptacek wrote: post #168

Earlier quoted context omitted.

What "40%"? The entire point of the vesting agreement, bog standard in every competently run startup, is that he doesn't have 40%. In fact, if he's leaving less than a year in and his partner has the contractual authority to sever his employment, what he actually has is zero.

"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.

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

#339

Post by rsweeney21 »

A lot of people saying you own 40% of this startup so you need to fight for it are giving you bad advice. Based on what you said, you don't own anything yet because you haven't vested any shares.

If you are a Corporation, and your corporation is setup in a standard way with your partner as the CEO, he can fire you. They only thing you can do is go to your board of directors and plead your case. The board has the ability to fire the CEO, so they can force him to retain you.

If you are an LLC, then you don't really have a cap table and there is a good chance there is no vesting. You have something else. You need to read your operating agreement. It will define who has the real ownership and how the buy out process works.

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

#340

Post by valuearb »

newen wrote: post #176
tptacek wrote: post #134

Earlier quoted context omitted.

"I would spend $15,000 of my own money and 8 more months of my life during which I deed control of my adrenal system to this stupid controversy and get little else done, and ultimately reach at best the same outcome as I'd have achieved walking away amicably, less expenses, before I would allow someone to take advantage of 11 months of my work".

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.

Successful??? They don’t have the revenues to hire a single employee!
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