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Can I ask why Jeremy would be entitled to anything since nothing was ever signed? If Kyle had a verbal agreement with Jeremy to pay him X or give him Y equity i

Can I ask why Jeremy would be entitled to anything since nothing was ever signed? If Kyle had a verbal agreement with Jeremy to pay him X or give him Y equity in exchange for the work he did, I don't see that in Sam's post or in the complaint that was filed. Without a signed agreement nor a verbal agreement, why would the courts give Jeremy anything?

morgante 10y ago
You and I work on a company together for 10 years. We never sign a legal document determining the equity structure. You then incorporate and sell the company. Do you think I shouldn't be entitled to a portion of those proceeds? Stock agreements amongst founders largely exist to limit your claim to equity. Without them, everyone working on a project is essentially an equal partner.
- mr_luc 10y ago
  That's an interesting point, thank you. I find myself agreeing with sama on this (if the facts are at all how he presented them, that is). But ... I agree for moral reasons, not legal reasons. And despite the relative moral high ground that the startup world seems to occupy in business, morality != legality. Morally, if things are as they seem from here, and someone completely left and checked out, having contributed essentially some whiteboarding and finding an office, then I'd feel that morally speaking they're owed some compensation but not necessarily equity. However, legally, the principle you mention seems sound. And morals vary from person to person, which is one of the basic reasons societies need legal systems. It seems kinda shocking that they never signed anything explicit about Jeremy's equity. But if they didn't, then yeah, maybe he has a case.
  - trhway 10y ago
    >having contributed essentially some whiteboarding and finding an office reminded about that story of a guy painting a wall at a startup here around 10 years ago. Though the equity in that case was done in writing. In the case of Cruise, without even going into detailed merits of the case - there are lawyers and judges for that after all - i think Cruise has simple question - go for less than 100% of $1B or go for the whole 100% of nothing. Do they honestly think that their half-baked system - at best practically equivalent to the system of an average Grand Challenge team 10 years ago - is really worth $1B? They got lucky that GM is that stupid, desperate and rich. Greed can scare easily that luck away.
    - kristjansson 10y ago
      https://en.wikipedia.org/wiki/David_Choe https://en.wikipedia.org/wiki/David_Choe > Choe, ..., chose to receive company stock in lieu of cash payment for the original Facebook murals. A different thing entirely, if that's what you were thinking of.
- confiscate 10y ago
  There is a tree outside my house. I never signed anything with the owner of the tree, but I took care of the tree watering it everyday for 10 years. The owner of the tree now sells the tree. Am I now entitled to a portion of those proceeds?
  - threesixandnine 10y ago
    Yes.
    - confiscate 10y ago
      I washed your car once. The car was clean. You own the car and all the papers are under your name. I did not immediately ask for payment, and did not sign anything. 5 years later, when you sell your car, I show up and say I am entitled to ownership of your car because I washed it 5 years ago. There is a photo of me washing your car, so I am clearly involved. Do I own a part of your car?
      - plskthx 10y ago
        You and I planted a tree together. It looked like it was going to be a nice tree, so we filed a joint application for funding from the city. The application was successful but I left before the funding came through. Years later, it turns out that this was a bona fide money tree. I think you and the city should put my name on some branches, since I was there in the beginning. If it takes 48 months for the tree to reach maturity, and I was there for the first month, then 1 branch for every 48 of your branches seems fair.
        confiscate 10y ago
        You and I planted a tree together, and applied for funding from the city. You didn't show up for the interview. In the end the application was successful because of the effort of others on the team. At this point, no one owns the tree. I decide to officially file for ownership of the tree from the city government, paid all the filing fees, and was granted 100% of the tree with all the papers from the government. 5 years later, on the day I am about to sell my tree, you sue me for ownership of the tree. Does that seem fair? Or let's put this another way. I go on crunchbase, find 30 startups in Palo Alto, take their team info and write an application to an incubator and put myself as co-founder. I tell these startups about this and some of them decide to just ignore me because it's not worth the effort to tell me to go away. Years later, one of the startups is about to get sold. I have made zero contributions to the startups, but there is an application saying I had the title of co-founder. I decide I am entitled ownership of the company, because I helped them apply to an incubator. I sue them to block their acquisition. Would you allow me to do this?
geofft 10y ago
Silly question: if he did in fact work on it for a month, isn't he legally entitled to minimum wage, even in the absence of any employment agreement? (Obviously that's very different from, and much smaller than, a nontrivial equity stake.)
kiiski 10y ago
You're thinking it the wrong way around. The default is that a person always owns the result of his work. Employees sign an agreement to give that result to their employer in exhange for a wage. If there is no agreement, the person who did the work will keep owning the results.

morgante 10y ago

You and I work on a company together for 10 years. We never sign a legal document determining the equity structure. You then incorporate and sell the company. Do you think I shouldn't be entitled to a portion of those proceeds? Stock agreements amongst founders largely exist to limit your claim to equity. Without them, everyone working on a project is essentially an equal partner.

mr_luc 10y ago
That's an interesting point, thank you. I find myself agreeing with sama on this (if the facts are at all how he presented them, that is). But ... I agree for moral reasons, not legal reasons. And despite the relative moral high ground that the startup world seems to occupy in business, morality != legality. Morally, if things are as they seem from here, and someone completely left and checked out, having contributed essentially some whiteboarding and finding an office, then I'd feel that morally speaking they're owed some compensation but not necessarily equity. However, legally, the principle you mention seems sound. And morals vary from person to person, which is one of the basic reasons societies need legal systems. It seems kinda shocking that they never signed anything explicit about Jeremy's equity. But if they didn't, then yeah, maybe he has a case.
- trhway 10y ago
  >having contributed essentially some whiteboarding and finding an office reminded about that story of a guy painting a wall at a startup here around 10 years ago. Though the equity in that case was done in writing. In the case of Cruise, without even going into detailed merits of the case - there are lawyers and judges for that after all - i think Cruise has simple question - go for less than 100% of $1B or go for the whole 100% of nothing. Do they honestly think that their half-baked system - at best practically equivalent to the system of an average Grand Challenge team 10 years ago - is really worth $1B? They got lucky that GM is that stupid, desperate and rich. Greed can scare easily that luck away.
  - kristjansson 10y ago
    https://en.wikipedia.org/wiki/David_Choe https://en.wikipedia.org/wiki/David_Choe > Choe, ..., chose to receive company stock in lieu of cash payment for the original Facebook murals. A different thing entirely, if that's what you were thinking of.
confiscate 10y ago
There is a tree outside my house. I never signed anything with the owner of the tree, but I took care of the tree watering it everyday for 10 years. The owner of the tree now sells the tree. Am I now entitled to a portion of those proceeds?
- threesixandnine 10y ago
  Yes.
  - confiscate 10y ago
    I washed your car once. The car was clean. You own the car and all the papers are under your name. I did not immediately ask for payment, and did not sign anything. 5 years later, when you sell your car, I show up and say I am entitled to ownership of your car because I washed it 5 years ago. There is a photo of me washing your car, so I am clearly involved. Do I own a part of your car?
    - plskthx 10y ago
      You and I planted a tree together. It looked like it was going to be a nice tree, so we filed a joint application for funding from the city. The application was successful but I left before the funding came through. Years later, it turns out that this was a bona fide money tree. I think you and the city should put my name on some branches, since I was there in the beginning. If it takes 48 months for the tree to reach maturity, and I was there for the first month, then 1 branch for every 48 of your branches seems fair.
      - confiscate 10y ago
        You and I planted a tree together, and applied for funding from the city. You didn't show up for the interview. In the end the application was successful because of the effort of others on the team. At this point, no one owns the tree. I decide to officially file for ownership of the tree from the city government, paid all the filing fees, and was granted 100% of the tree with all the papers from the government. 5 years later, on the day I am about to sell my tree, you sue me for ownership of the tree. Does that seem fair? Or let's put this another way. I go on crunchbase, find 30 startups in Palo Alto, take their team info and write an application to an incubator and put myself as co-founder. I tell these startups about this and some of them decide to just ignore me because it's not worth the effort to tell me to go away. Years later, one of the startups is about to get sold. I have made zero contributions to the startups, but there is an application saying I had the title of co-founder. I decide I am entitled ownership of the company, because I helped them apply to an incubator. I sue them to block their acquisition. Would you allow me to do this?

geofft 10y ago

Silly question: if he did in fact work on it for a month, isn't he legally entitled to minimum wage, even in the absence of any employment agreement? (Obviously that's very different from, and much smaller than, a nontrivial equity stake.)

kiiski 10y ago

You're thinking it the wrong way around. The default is that a person always owns the result of his work. Employees sign an agreement to give that result to their employer in exhange for a wage. If there is no agreement, the person who did the work will keep owning the results.