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Has it occurred to you that this person is actually entitled to hang on to their shares? You all made the choice to start the business together. You had the o

by hoodoof 11y ago

Has it occurred to you that this person is actually entitled to hang on to their shares? You all made the choice to start the business together. You had the opportunity to work out ironclad provision for founders exiting. You all worked to get it to this point. Even if you have lost your respect for this persons contribution, it was part of the deal that they get these shares. I understand totally if you don't like it, but have you considered that in fact this person might actually be in the right? Lesson learned, give them the shares, live with the consequences of your decisions. If your company is going as well as you say then it is not the end of the world. The co-founder you are referring to probably describes you guys as scumbag cofounders unfairly and unjustly booting him out. Alternatively, get rid of the damn lawyers and ask this person what he wants to make a clean exit deal - it may be less than the full share entitlement and if that is the case then maybe you should take the deal. And for gods sake stop spending money on lawyers - you are destroying your company firstly via time dilution and secondly by wasting money. Part of running a company successfully is to know exactly what it means to win, to compromise and what it means to take a pragmatic outcome that lets you get on with the job.

deleted 11y ago
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- hoodoof 11y ago
  If your vesting agreement is as ironclad as you say then what the heck are we even talking about? Just finalise his paperwork according to the terms. Just because he says he doesn't want to accept that outcome means nothing if you have such ironclad paperwork in place. Which leads to the second question - if your paperwork is ironclad, why are the lawyers talking about a court battle? Does not make sense. Either the lawyers are right and you do not have an ironclad agreement in place, or the lawyers are wrong and you should ask them why they have not brought it to your attention that this is fully covered by the agreement. Also all disputes have a time profile. What is the time profile here? Does it NEED to be resolved quickly? Or can it be drawn out for a long time, to your advantage? Or should it be resolved quickly, to your advantage? Don't forget that if this person says what they actually want to finalise, and you agree, or if you put a finalisation offer to them, put a relatively short time limit on it. AND if this cofounder is smart then he will know that you are trying to raise money and that raising money can't be done whilst there is a legal dispute outstanding. This puts you in a risky position. If they choose to stall then you could be in dispute for a long time. You need an absolute plan to resolve this quickly and if that means shutting down and restarting with a new company structure and freshly built cleanroom software now that you have proven the concept then you should consider doing this sooner rather than later. And its worth remembering that you are not good and he is not evil. You are equally responsible for creating this situation so take responsibility when you resolve it.
- csa 11y ago
  > This person signed a vesting agreement that agrees to a 36 month vesting schedule with a 12 month cliff. This was agreed to in advance by all parties. I have no qualms with him retaining what was earned under the agreement. I'm curious about how the vesting agreement was written. I think that many people write these assuming that any shares not vested will be due to someone separating voluntarily. In this case, was it specified what happens if the separation was involuntary? Assuming that involuntary separation was not specified in the vesting schedule, then I think that you should just move on. Maybe talk to him to see if the separation can be on better/nicer terms. As a thought/empathy exercise, how would you feel if it was you who was being ousted? Keep in mind that you certainly wouldn't think you would deserve to be let go (just like he thinks). What would you think is fair? On a more constructive note, I suggest you ask your mentors/investors about expanding the share pool (esp. if you get more funding). It is not uncommon for founders who are no longer affiliated to get diluted quite a bit (imho rightly) when compared to the founders who stayed and built the business. This perfectly reasonable dilution can be done in a professional way or a spiteful way -- I suggest taking the high road. In the event that you reach a liquidity event, I think that you will be very happy with what you get, and you will probably be happy with what the person who left gets (i.e., a relatively small windfall for getting a business off the ground in its most fragile stage).

by hoodoof 11y ago

deleted 11y ago

[deleted]

hoodoof 11y ago
If your vesting agreement is as ironclad as you say then what the heck are we even talking about? Just finalise his paperwork according to the terms. Just because he says he doesn't want to accept that outcome means nothing if you have such ironclad paperwork in place. Which leads to the second question - if your paperwork is ironclad, why are the lawyers talking about a court battle? Does not make sense. Either the lawyers are right and you do not have an ironclad agreement in place, or the lawyers are wrong and you should ask them why they have not brought it to your attention that this is fully covered by the agreement. Also all disputes have a time profile. What is the time profile here? Does it NEED to be resolved quickly? Or can it be drawn out for a long time, to your advantage? Or should it be resolved quickly, to your advantage? Don't forget that if this person says what they actually want to finalise, and you agree, or if you put a finalisation offer to them, put a relatively short time limit on it. AND if this cofounder is smart then he will know that you are trying to raise money and that raising money can't be done whilst there is a legal dispute outstanding. This puts you in a risky position. If they choose to stall then you could be in dispute for a long time. You need an absolute plan to resolve this quickly and if that means shutting down and restarting with a new company structure and freshly built cleanroom software now that you have proven the concept then you should consider doing this sooner rather than later. And its worth remembering that you are not good and he is not evil. You are equally responsible for creating this situation so take responsibility when you resolve it.
csa 11y ago
> This person signed a vesting agreement that agrees to a 36 month vesting schedule with a 12 month cliff. This was agreed to in advance by all parties. I have no qualms with him retaining what was earned under the agreement. I'm curious about how the vesting agreement was written. I think that many people write these assuming that any shares not vested will be due to someone separating voluntarily. In this case, was it specified what happens if the separation was involuntary? Assuming that involuntary separation was not specified in the vesting schedule, then I think that you should just move on. Maybe talk to him to see if the separation can be on better/nicer terms. As a thought/empathy exercise, how would you feel if it was you who was being ousted? Keep in mind that you certainly wouldn't think you would deserve to be let go (just like he thinks). What would you think is fair? On a more constructive note, I suggest you ask your mentors/investors about expanding the share pool (esp. if you get more funding). It is not uncommon for founders who are no longer affiliated to get diluted quite a bit (imho rightly) when compared to the founders who stayed and built the business. This perfectly reasonable dilution can be done in a professional way or a spiteful way -- I suggest taking the high road. In the event that you reach a liquidity event, I think that you will be very happy with what you get, and you will probably be happy with what the person who left gets (i.e., a relatively small windfall for getting a business off the ground in its most fragile stage).