4 ms·

It's a lot more than the VCs do? By giving you the millions to hire a staff, get an office, etc for years? Working on something for a month absolutely doesn't

by ericd 11y ago

It's a lot more than the VCs do? By giving you the millions to hire a staff, get an office, etc for years? Working on something for a month absolutely doesn't entitle you to a share of the proceeds two or three years down the road, if there was no written or verbal agreement. You can make a claim, sure, but it should be thrown out quickly, and you absolutely should not wait until a blackmail-friendly situation to make it. Even if he had options, he would have had to exercise them years ago at most companies.

cookiecaper 11y ago
> It's a lot more than the VCs do? By giving you the millions to hire a staff, get an office, etc for years? Yes. Writing a check and occasionally shooting off an introductory email has its uses but it shouldn't be compared to actually building a billion-dollar product. Many founders need VC money and VCs certainly deserve some type of compensation. It's quite dubious, however, that VCs deserve double-digit equity (and often 50% of the company or more) just because they had money at a time when someone else didn't, and allowed themselves to be talked into giving that money to someone who was able to do something good with it (which, in VC, is essentially an accident; they are throwing money at college kids and seeing what, if anything, ends up sticking). >Working on something for a month absolutely doesn't entitle you to a share of the proceeds two or three years down the road, if there was no written or verbal agreement. If you leave the equity split undefined, it's undefined, not 0. We don't know what was done in that 1 month time frame. It's possible that Jeremy laid out an entire roadmap from concept to acquisition that Cruise followed meticulously. If this is the case, he is certainly entitled to a significant amount of equity. Perhaps in that one month, Jeremy did nothing but take up space in the office and perhaps he was dismissed for his uselessness. Under such circumstances, supposing there is reasonable documentation of this, he's probably entitled to little or no equity. The judiciary will have to consider the evidence and make a ruling as to what is equitable. >Even if he had options, he would have had to exercise them years ago at most companies. Founders get real stock, not options.
- ericd 11y ago
  You're right, they get stock. Restricted stock, usually, but still stock. That said, he would have vested none of it in a standard structure. When the company was actually incorporated, the split was no longer undefined. The VC deserves whatever percentage the founders are willing to sell to them for the millions they put up. I don't think it's usually an unfair trade, given that VC as an asset class has lost money historically.

by ericd 11y ago

cookiecaper 11y ago

> It's a lot more than the VCs do? By giving you the millions to hire a staff, get an office, etc for years? Yes. Writing a check and occasionally shooting off an introductory email has its uses but it shouldn't be compared to actually building a billion-dollar product. Many founders need VC money and VCs certainly deserve some type of compensation. It's quite dubious, however, that VCs deserve double-digit equity (and often 50% of the company or more) just because they had money at a time when someone else didn't, and allowed themselves to be talked into giving that money to someone who was able to do something good with it (which, in VC, is essentially an accident; they are throwing money at college kids and seeing what, if anything, ends up sticking). >Working on something for a month absolutely doesn't entitle you to a share of the proceeds two or three years down the road, if there was no written or verbal agreement. If you leave the equity split undefined, it's undefined, not 0. We don't know what was done in that 1 month time frame. It's possible that Jeremy laid out an entire roadmap from concept to acquisition that Cruise followed meticulously. If this is the case, he is certainly entitled to a significant amount of equity. Perhaps in that one month, Jeremy did nothing but take up space in the office and perhaps he was dismissed for his uselessness. Under such circumstances, supposing there is reasonable documentation of this, he's probably entitled to little or no equity. The judiciary will have to consider the evidence and make a ruling as to what is equitable. >Even if he had options, he would have had to exercise them years ago at most companies. Founders get real stock, not options.

ericd 11y ago
You're right, they get stock. Restricted stock, usually, but still stock. That said, he would have vested none of it in a standard structure. When the company was actually incorporated, the split was no longer undefined. The VC deserves whatever percentage the founders are willing to sell to them for the millions they put up. I don't think it's usually an unfair trade, given that VC as an asset class has lost money historically.