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Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
421–430 of 435 posts
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#422Earlier quoted context omitted.
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.
You do if you have no other funding.
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#423I will say something immoral to many: Leave him, walk out, and build a business in the same niche with contacts and know-how you already have. There’s one advantage of this: You can start from scratch, build it faster, and better without starting with a baggage. And, have fun doing it. I’ve done this, and couldn’t be happier. Business I left is nonexistent anymore.
Very unlikely to work. His contract will have a non-compete and as a founder probably enforceable
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#424A meta-comment here: Beware the advice you might glean here. Often, surveying HN for the consensus provides a signal; more often, skimming the cream of the commentary provides a better signal. Here, a lot will be misleading, particularly to the kind of founder who would otherwise be inclined to seek some direction from HN commentary.
Here's my best try as an antidote:
Remember that as a technical founder, unlike almost any other kind of knowledge-worker, you have a non-zero chance of generating $1 B in equity value for yourself in every new company you start. But for a company to do so, it will require getting enormously lucky and getting you strapped in for years of extremely intense work along with your team (and likely, investors & board). You should never bail because of mere problems with product-market fit or current sales traction, because those things can change dramatically and swiftly. You should always bail if your faith in, and interest in working with, the people around you goes to zero. When you do bail, go graciously and negotiate some kind of spiff on the way out, but don't belabor it. Your mental energy is far, far better spent preparing for the next big thing, and you are getting the better end of the bargain, for you have now denuded yourself of the albatross of a team you won't succeed with.
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#425Earlier quoted context omitted.
It's not OP's ask! Please explain more what you mean about the valuation being underwater. I don't understand how that is, nor how that is even possible.
The investment was at a $1 million valuation and the company currently has 40k cash + allegedly, the possibility of 60k/year from ads. Unless there is significant growth potential, the net present value of the company is much less than $1 million.
ah thanks. yes, all startups operate "underwater" then. that is the operating model.
as to the use of venture capital, indeed, no investor will ever allow this -- if they have a say. seed stage funding is most often convertible debt, and the investor does not have a say (legally; but you damn well better do what they say anyway). i'm actually quite surprised that a seed investor would be noncommittal on it. however,
1/ that's the other cofounder's problem, not OPs. the way you phrase it is as if the OP is putting the other cofounder out on a limb with an unreasonable request; that is not the situation here.
2/ the other cofounder doesn't have to use capital, they can take on debt (convertible or straight debt).
It's an absolutely wonderful tradeoff if the business will be run better and more efficiently with just the one cofounder. A no-brainer really. Not doing it indicates a scam. In both cases, OP should insist on a buyout. So there's really no difficult decision here -- on OP's part anyway.
Of course with the business being "underwater" we are talking about a personal guarantee on straight debt. So again, how much does the other cofounder believe in the business and that his motives are pure?
The other cofounder can sidestep this whole thing with various shenanigans, however that doesn't mean OP should just submit. A year of OPs life is worth it to stick to his guns, even if the outcome is inevitable. It's not as if OP has to invest any effort to see through his position.
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#426Earlier quoted context omitted.
This advice will almost certainly result in no deal and leave all parties worse off. Instead, I would have an open, honest conversation, listen from a place of empathy and generosity and seek a compromise. The truth is, unless your cofounder has the right to terminate your employment, then continue working and try to create as much harmony as possible. Co-founder disputes are awful and usually result in the death of…
No. The co-founder is not coming into this negotiation seeking an agreement amenable to all parties, but rather to get their way. They are a hard bargainer (in the sense that they are attempting to push the needle as much to their side as they can, rather than find something equitable). They are the person coming in to the yard sale, seeing the sign that says "$5", and saying "I'll give you 30 cents for it". You don'…
I think there's a middle ground, and my thinking here is inspired by Chris Voss, that there's a good strategy in being both reasonable, calm, and resolute, as well as helping the other co-founder get to the decision. You don't need to be "aggressive," you need to be "the immovable nice person."
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#427Earlier quoted context omitted.
With a 1 year cliff, I’m pretty sure he effectively owns 0 right now.
With a reverse vest, you own the shares immediately, and the vesting schedule defines how much of the shares you retain if you leave (i.e. if he quits now, 100% will be clawed back).
Yep, which means he effectively doesn’t own them right now, in any meaningful financial sense. For the purposes of control, sure.
The parent comment of this thread was talking about keeping 40% of nothing.
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#428Earlier quoted context omitted.
Sometimes it is not just about the money. Believe me you won't be able to sleep well after walking away from something I this. I would not want any techie to walk away something like this. You gotta fight for what is rightfully yours. This person created this valuable asset, giving his time and effort. The other person's effort to create it might be non zero but so are OP's and therefore, there is no reason why OP sh…
How many nights of bad sleep, vs months of conflict or being in court and tens of thousands of dollars for lawyers? It’s a calculation. And it’s not a binary fight-or-flight situation. There’s room to maneuver - legal maneuvers, speaking with the investor, etc.
Doing things in order to achieve your goals and priorities comes AFTER you set your goals and priorities.
These comments here merely suggest that the goal should be to fight for what the OP rightfully earned, and that hostile actions and a threat for war should not be left unanswered if you have the capability to answer, both in order to retain the value the OP has at this moment and in order not to hinder their reputation in future endeavours - and, also very important, to have peace of mind (sleep at night). Feeling like a piece of sh!t guarantees lifelong bad sleep nights, incomparable to having to wake up early to go to the court.
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#429Earlier quoted context omitted.
No. The co-founder is not coming into this negotiation seeking an agreement amenable to all parties, but rather to get their way. They are a hard bargainer (in the sense that they are attempting to push the needle as much to their side as they can, rather than find something equitable). They are the person coming in to the yard sale, seeing the sign that says "$5", and saying "I'll give you 30 cents for it". You don'…
I think there's a middle ground, and my thinking here is inspired by Chris Voss, that there's a good strategy in being both reasonable, calm, and resolute, as well as helping the other co-founder get to the decision. You don't need to be "aggressive," you need to be "the immovable nice person."
Nowhere did I say to be unreasonable, aggressive, or rude. Just that being kind and compassionate is not what you need to be. As you say, "an immovable wall", which is hardly kind or compassionate. By "nice", if you mean polite, of course. By "nice", if you mean kind and compassionate (reiterating those adjectives), no, unless you mean "polite" by those as well.
"Helping the other co-founder get to the decision" is only going to be achieved with leverage given that it's clear they're not looking to find an equitable (hah!) solution. They're trying to get as much control and equity as possible. It may be the OP has no option but to accept it (keeping 3% and moving on). Or it may be the OP has better options. But the point is that the other party has made their intentions known. They haven't come to the negotiating table saying "This is what I want, how can I get you to agree", they've come to it with "This is what I want; accept it", and when provided what the OP wants in return, turned it down, rather than seeking some middle ground or otherwise budging.
Re: Ask HN: Co-founder wants me to leave but won't entertain a buy out offer
#430Earlier 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…
This advice will almost certainly result in no deal and leave all parties worse off. Instead, I would have an open, honest conversation, listen from a place of empathy and generosity and seek a compromise. The truth is, unless your cofounder has the right to terminate your employment, then continue working and try to create as much harmony as possible. Co-founder disputes are awful and usually result in the death of…
No deal is better than a bad deal and a compromise is a bad deal for both parties.
Cit. "Never Split the difference".
Something important I learned over time. Sure, listen, but don't take a deal that doesn't make you happy.