12 ms·

We obviously only know one side here, and this issue will doubtless bring all the contrarians and tinfoil-types to the yard. However, even if we entertain the

We obviously only know one side here, and this issue will doubtless bring all the contrarians and tinfoil-types to the yard. However, even if we entertain the notion that Jeremy had some sort of de-facto equity interest in the company (a claim for which there is seemingly zero present evidence); can we at least agree that is uniquely shitty to suddenly level these claims days after the acquisition is announced? One does wonder why this moral injustice wasn't righted promptly in the days, weeks, months, or years following his involvement in the company. More facts will likely emerge, but the timing alone seems like prima facie evidence of rank opportunism on his part.

nsedlet 10y ago
I agree with you, although: it's got to be a pain in the ass and a huge expenditure of social capital to try to negotiate some equity in a contentious situation like this. Most startups will not result in a meaningful financial outcome, so it sort of makes sense waiting to go through this mess until it's clear that it's going to matter because there's money on the table. (Whether the claim is legit is another matter...obviously extraordinarily shitty to do this if your claim is bogus)
- _sentient 10y ago
  > Most startups will not result in a meaningful financial outcome, so it sort of makes sense waiting to go through this mess until it's clear that it's going to matter because there's money on the table. That's not how it works. We have great, special-built instruments for this purpose, commonly known as stock options. They come in many flavors, but all of them share the important feature of defining terms of ownership before it's obvious what the final value of a company will be. These tools exist for the express purpose of avoiding shadow claims and massive litigation every time a company is bought or sold.
  - nsedlet 10y ago
    Unfortunately, very early-stage founders don't always do paperwork before starting to work together (which seems to be the case here, although it seems very little work was done). Obviously, it would be easier if they did.
pron 10y ago
> but the timing alone seems like prima facie evidence for rank opportunism on his part. Or a result of feeling the full weight of his mistake/perceived injustice.
- jsprogrammer 10y ago
  Or, a result of the fact that there is now something to receive. Why waste everyone's time correcting stock accounting if the stock is effectively worthless?
  - pdonis 10y ago
    > Why waste everyone's time correcting stock accounting if the stock is effectively worthless? If you know for sure that the stock is effectively worthless, obviously there's no point. If the stock might be effectively worthless, or might not, then there is a point: you are establishing your claim before its value is known. That puts you in a much better position to rebut accusations that you don't really have a valid claim but are trying to milk it for whatever you can.
    - infinite8s 10y ago
      There's no accusations to rebut. He either has a valid claim to that equity or he doesn't (as determined by a court of law, if it gets to that point).
      - pdonis 10y ago
        > There's no accusations to rebut. It certainly looks like there are in the court filing that sama's article links to.
awakeasleep 10y ago
I think there are many valid ways to attack this behavior, but I don't believe you chose one. It could be as simple as the plaintiff living a busy life and realizing this was his last chance to make things right before he'd be facing GM's lawyers. GM is definitely of the size where they can bring a trial outside the means of an individual to litigate. The valid reasons to attack are listed at the bottom of Sam's article.
downandout 10y ago
>can we at least agree that is uniquely shitty to suddenly level these claims days after the acquisition is announced? Would you prefer that he wait until after the acquisition closes and then have to fight a multi-billion dollar corporation and a newly minted billionaire cofounder? He obviously feels he is owed something, and strategically, it was now or never. I cofounded a company, named it, was listed as the inventor on the company's patents, wrote its first product, had a written equity deal, and still got screwed on an acquisition like this. It wasn't for billions, but it was for more than $60 million. The acquirer was a multi-billion dollar company and once the deal was done (I didn't find out about the acquisition until after the fact) it was impossible for me to fight them. I don't know what the merits of his case are, but looking at this from Jeremy's side, having been similarly positioned, he had no choice but to do this right now. Once GM has the company, unless Jeremy has some insanely wealthy backers willing to fund a very expensive legal fight for many years, all bets are off.
- pj_mukh 10y ago
  "He obviously feels he is owed something" Does he feel he is owed something just now? Why didn't he feel he was owed something at their sizable Series A [1]? It all just seems Opportunistic, someone just waiting to maximize their returns. [1] http://techcrunch.com/2015/09/18/cruise-2/ http://techcrunch.com/2015/09/18/cruise-2/
  - bhouston 10y ago
    I find that business is opportunistic in general, and those who are successful are generally opportunistic. To constrain oneself and to not take advantage of opportunities likely means your going to get beat by those that do.
    - pj_mukh 10y ago
      I meant opportunistic in the "You knew you had no leg to stand on but are now trying anyway because the stakes are higher", sort of way, not the "This is the right time to start a certain business" kind of way
ryanbrunner 10y ago
If we were being 100% generous to Jeremy, one possible explanation is that he legitimately believed he held stock in the company, and wasn't made aware of the fact that he didn't until he inquired about it prior to the merger. It's not like it's typical to be in physical possession of stock certificates or anything like that. In any case, it's just more evidence that getting something in writing re: ownership is worth it from the first conversation you ever have about a potential startup. If these two guys did something simple and standard like 50/50 with vesting, this wouldn't have been a problem.
- drostie 10y ago
  I would guess that from his perspective (which may not be what the court decides is the right perspective, of course) he might be thinking something like, "hey, we started this together, I had these 10 ideas, we parted ways because we have the wrong personalities to work together, now I see 8 of my 10 ideas in the finished product (even if it's out of, say, 100 total ideas or whatever) -- and I feel like you never actually compensated me for about a month of genius that I provided. By helping you start this thing it was secretly our baby all along, and I was okay with you doing whatever you pleased with it while it was a bunch of crazy ideas that hadn't proven their mettle; but now that they have, this is my last chance to speak up for my fair share." Again, that's not necessarily the truth, but if you want to understand the psychology of how someone can claim this stuff and feel reasonable about it, that's how. We've very much only heard one side of this discussion and while Altman's side is very reasonable, it'd be interesting to see the other side.
  - abraae 10y ago
    Well stated. We were involved in a fracas something like this, but on a smaller scale. One of my key learnings was exactly this. Our lawyer (a magnificent guy who stewarded through the ugly process) said early on "you can bet that the other guy's lawyer is getting an entirely different story from what you've told me". Much as we (especially techies) like to think of ourselves as binary,rational types, the fact is that two intelligent people can each hold conflicting, but sincerely held worldviews. Its very hard to get your head around this - the natural thing is to got full on fight instinct - he's a bastard, he's lying, he's out to screw me and my family, he'll say anything. Add on top the fact that things often are gray - likely in this case there are two sides to the story, other guy probably has a rightful beef about this.
rayiner 10y ago
> One does wonder why this moral injustice wasn't righted promptly in the days, weeks, months, or years following his involvement in the company. Both the following statements are true: 1) lots of these cases are filed right before a merger because plaintiffs hope to maximize defendants' incentive to settle a weak claim; 2) lots of these cases are filed right before a merger or acquisition because until then the defendant has no money and there is little incentive to bring even a strong claim against them.
fiatmoney 10y ago
"can we at least agree that is uniquely shitty to suddenly level these claims days after the acquisition is announced?" Assuming someone has been legitimately wronged, they are entitled to surface their claims at the time that would give them the best chances of righting that wrong - ie, the time at which they have the most leverage. There are legal arguments bearing on delayed claims (eg laches) but those are for the court to resolve. https://en.wikipedia.org/wiki/Laches_(equity) https://en.wikipedia.org/wiki/Laches_(equity)
- deleted 10y ago
  [deleted]

nsedlet 10y ago

I agree with you, although: it's got to be a pain in the ass and a huge expenditure of social capital to try to negotiate some equity in a contentious situation like this. Most startups will not result in a meaningful financial outcome, so it sort of makes sense waiting to go through this mess until it's clear that it's going to matter because there's money on the table. (Whether the claim is legit is another matter...obviously extraordinarily shitty to do this if your claim is bogus)

_sentient 10y ago
> Most startups will not result in a meaningful financial outcome, so it sort of makes sense waiting to go through this mess until it's clear that it's going to matter because there's money on the table. That's not how it works. We have great, special-built instruments for this purpose, commonly known as stock options. They come in many flavors, but all of them share the important feature of defining terms of ownership before it's obvious what the final value of a company will be. These tools exist for the express purpose of avoiding shadow claims and massive litigation every time a company is bought or sold.
- nsedlet 10y ago
  Unfortunately, very early-stage founders don't always do paperwork before starting to work together (which seems to be the case here, although it seems very little work was done). Obviously, it would be easier if they did.

pron 10y ago

> but the timing alone seems like prima facie evidence for rank opportunism on his part. Or a result of feeling the full weight of his mistake/perceived injustice.

jsprogrammer 10y ago
Or, a result of the fact that there is now something to receive. Why waste everyone's time correcting stock accounting if the stock is effectively worthless?
- pdonis 10y ago
  > Why waste everyone's time correcting stock accounting if the stock is effectively worthless? If you know for sure that the stock is effectively worthless, obviously there's no point. If the stock might be effectively worthless, or might not, then there is a point: you are establishing your claim before its value is known. That puts you in a much better position to rebut accusations that you don't really have a valid claim but are trying to milk it for whatever you can.
  - infinite8s 10y ago
    There's no accusations to rebut. He either has a valid claim to that equity or he doesn't (as determined by a court of law, if it gets to that point).
    - pdonis 10y ago
      > There's no accusations to rebut. It certainly looks like there are in the court filing that sama's article links to.

awakeasleep 10y ago

I think there are many valid ways to attack this behavior, but I don't believe you chose one. It could be as simple as the plaintiff living a busy life and realizing this was his last chance to make things right before he'd be facing GM's lawyers. GM is definitely of the size where they can bring a trial outside the means of an individual to litigate. The valid reasons to attack are listed at the bottom of Sam's article.

downandout 10y ago

>can we at least agree that is uniquely shitty to suddenly level these claims days after the acquisition is announced? Would you prefer that he wait until after the acquisition closes and then have to fight a multi-billion dollar corporation and a newly minted billionaire cofounder? He obviously feels he is owed something, and strategically, it was now or never. I cofounded a company, named it, was listed as the inventor on the company's patents, wrote its first product, had a written equity deal, and still got screwed on an acquisition like this. It wasn't for billions, but it was for more than $60 million. The acquirer was a multi-billion dollar company and once the deal was done (I didn't find out about the acquisition until after the fact) it was impossible for me to fight them. I don't know what the merits of his case are, but looking at this from Jeremy's side, having been similarly positioned, he had no choice but to do this right now. Once GM has the company, unless Jeremy has some insanely wealthy backers willing to fund a very expensive legal fight for many years, all bets are off.

pj_mukh 10y ago
"He obviously feels he is owed something" Does he feel he is owed something just now? Why didn't he feel he was owed something at their sizable Series A [1]? It all just seems Opportunistic, someone just waiting to maximize their returns. [1] http://techcrunch.com/2015/09/18/cruise-2/ http://techcrunch.com/2015/09/18/cruise-2/
- bhouston 10y ago
  I find that business is opportunistic in general, and those who are successful are generally opportunistic. To constrain oneself and to not take advantage of opportunities likely means your going to get beat by those that do.
  - pj_mukh 10y ago
    I meant opportunistic in the "You knew you had no leg to stand on but are now trying anyway because the stakes are higher", sort of way, not the "This is the right time to start a certain business" kind of way

ryanbrunner 10y ago

If we were being 100% generous to Jeremy, one possible explanation is that he legitimately believed he held stock in the company, and wasn't made aware of the fact that he didn't until he inquired about it prior to the merger. It's not like it's typical to be in physical possession of stock certificates or anything like that. In any case, it's just more evidence that getting something in writing re: ownership is worth it from the first conversation you ever have about a potential startup. If these two guys did something simple and standard like 50/50 with vesting, this wouldn't have been a problem.

drostie 10y ago
I would guess that from his perspective (which may not be what the court decides is the right perspective, of course) he might be thinking something like, "hey, we started this together, I had these 10 ideas, we parted ways because we have the wrong personalities to work together, now I see 8 of my 10 ideas in the finished product (even if it's out of, say, 100 total ideas or whatever) -- and I feel like you never actually compensated me for about a month of genius that I provided. By helping you start this thing it was secretly our baby all along, and I was okay with you doing whatever you pleased with it while it was a bunch of crazy ideas that hadn't proven their mettle; but now that they have, this is my last chance to speak up for my fair share." Again, that's not necessarily the truth, but if you want to understand the psychology of how someone can claim this stuff and feel reasonable about it, that's how. We've very much only heard one side of this discussion and while Altman's side is very reasonable, it'd be interesting to see the other side.
- abraae 10y ago
  Well stated. We were involved in a fracas something like this, but on a smaller scale. One of my key learnings was exactly this. Our lawyer (a magnificent guy who stewarded through the ugly process) said early on "you can bet that the other guy's lawyer is getting an entirely different story from what you've told me". Much as we (especially techies) like to think of ourselves as binary,rational types, the fact is that two intelligent people can each hold conflicting, but sincerely held worldviews. Its very hard to get your head around this - the natural thing is to got full on fight instinct - he's a bastard, he's lying, he's out to screw me and my family, he'll say anything. Add on top the fact that things often are gray - likely in this case there are two sides to the story, other guy probably has a rightful beef about this.

rayiner 10y ago

> One does wonder why this moral injustice wasn't righted promptly in the days, weeks, months, or years following his involvement in the company. Both the following statements are true: 1) lots of these cases are filed right before a merger because plaintiffs hope to maximize defendants' incentive to settle a weak claim; 2) lots of these cases are filed right before a merger or acquisition because until then the defendant has no money and there is little incentive to bring even a strong claim against them.

fiatmoney 10y ago

"can we at least agree that is uniquely shitty to suddenly level these claims days after the acquisition is announced?" Assuming someone has been legitimately wronged, they are entitled to surface their claims at the time that would give them the best chances of righting that wrong - ie, the time at which they have the most leverage. There are legal arguments bearing on delayed claims (eg laches) but those are for the court to resolve. https://en.wikipedia.org/wiki/Laches_(equity) https://en.wikipedia.org/wiki/Laches_(equity)

deleted 10y ago
[deleted]