14 ms·

Jeremy Guillory's Counter-Complaint against Cruise Automation

• beambot 11y ago
  > In early October 2013, Guillory met with 28-year-old Vogt, a self-proclaimed MIT drop-out who had spent a month to earn a degree in installing Microsoft Windows, and whose most impressive technical achievement by his own account was to build a device to crack certain kinds of high security safes. But Vogt had a shared interest in the emerging self-driving field from his days at MIT and its entry in the DARPA challenge. More importantly, Vogt had millions in capital from his successful sale of two previous start-ups in TV and video gaming, along with investor contacts. Can someone shed light on this paragraph? Twitch sold for $1B, so it's probably a bit disingenuous to take so many digs at Kyle's expertise & accomplishments... If anything, Kyle's software expertise is just as (if not more!) valuable than Jeremy's MechE skills for the early Cruise product. EDIT: Also, I'm pretty sure Kyle worked on MIT's DARPA entry [1]. At the very least, I know he was working with laser rangefinders -- I wrote an article back in 2008 using photos of his SICK LRF teardown [2]. If anything, after reading this "he stole my expertise/idea" claim, I'm more inclined to side w/ Kyle & sama. [1] http://web.mit.edu/6.111/www/s2005/PROJECT/Groups/15/main.html http://web.mit.edu/6.111/www/s2005/PROJECT/Groups/15/main.ht... [2] http://www.hizook.com/blog/2008/12/15/sick-laser-rangefinder-lidar-disassembled http://www.hizook.com/blog/2008/12/15/sick-laser-rangefinder...
  • lazyant 11y ago
    To me that first sentence says more about the person writing it than the person described.
    • joering2 11y ago
      Same here. What does "self proclaimed MIT dropout" means? Is he trying to imply that Vogt never attended MIT and is making himself look cool that he dropped out?
      • danso 11y ago
        I think he's implying that Vogt took pride in not finishing his education, which is an implication that Cruise would've never made it had Guillory not agreed to collaborate with him.
  • tclmeelmo 11y ago
    I would imagine that this is supposed to help support their argument for conversion, that Kyle was inclined to use Jeremy's IP contributions in part because Kyle was otherwise incapable of practically accomplishing the company's goals. It does seem harshly written, but the same could be said of the complaint and sama's post.
• sergers 11y ago
  after reading this, YC and Sam altman might be the dagger to kill the acquisition by GM... if true of course... but cant deny that he was a founder and has somewhat of a claim. do i think he deserves 50% in any possible scenario? no... but he was being strong-armed into taking the deal (which is just business as usual). if this goes to Jury trial he has a case for more than the measly 4.5million edit: "deserves" was a bad choice of words, i meant entitled.
  • thehivemind123 11y ago
    That is probably more than an engineer with a typical 100 basis points would get. You think he deserves more than someone who ACTUALLY built something at the company.
    • jkestner 11y ago
      "Deserves"? I'm sure the engineers here want to be recognized purely on their effort, but that's not how it works.
    • rtpg 11y ago
      I don't think anyone's arguing about who deserves what, but more about the legal strength. Loads of people own huge stakes in companies without doing things with them (see most public stocks), that doesn't mean they lose ownership of them. Sucks but that's how the private ownership cookie crumbles.
    • deleted 11y ago
      [deleted]
• a_small_island 11y ago
  Here is the YC application video from the counter complaint https://www.youtube.com/watch?v=_P6oXe1YI90 https://www.youtube.com/watch?v=_P6oXe1YI90
  • p4wnc6 11y ago
    What is interesting to me is that the video offers some hints that both parties are being uncharitable in their description of the other party. Jeremy acknowledges previous robotics and technical competency of Kyle, and Kyle describes both of them having a fairly developed plan involving commodity components, a plan to bring to market quickly, and "constraining the problem". Nothing in the video is a silver bullet, and I have no idea what the final legal implications are. But it seems complicated. It certainly doesn't sound like you can write off the short 1-month period in which Guillory worked on it, and it suggests he may have contributed to patentable items or significant architectural designs, which if then used to carry out Cruise's products, would really raise questions if Guillory's degree of ownership (yes, 1-month of architectural designs really are that big of a deal). But it also absolutely does not seem like Kyle is so devoid of technical expertise that he couldn't have advanced the company without critical work from Jeremy. Whatever the outcome, I think it will be contentious and drawn out.
• aresant 11y ago
  Sounds like they offered $4.5m ("triple the last offer" of $1.5m) to go away. I assume the attorney would only make that statement if they had supportable documentation. Given that Guillory appears to be a "needs a paycheck" guy that's an awful lot of money to walk away from without a damn good case.
  • imron 11y ago
    From the complaint: the application that Vogt himself submitted to Y Combinator described repeatedly that Guillory was a founder of Cruise Automation and states unequivocally in response to a question asking “who are the shareholders and what percent does each own?” that “Cruise Automation is a Delaware C Corporation created in September 2013. 50/50 split between Kyle and Jeremy." If true, that could be worth hundreds of millions, which is an even larger amount of money to walk away from.
  • Natsu 11y ago
    I wouldn't read too much into that or anything said in the complaint until the actual source documents are filed and we see the response to the complaint filed in court. That could very well be the nuisance value of the suit for them in their situation. Trying to judge a case from just the initial complaint is far too incomplete a picture to go on. I'd withhold judgement until there are more facts established that both sides have had a chance to argue over. Almost everything you read in the media is ill-informed analysis of non-lawyers. Haven't had much good coverage since Groklaw.
    • enraged_camel 11y ago
      I agree that the source documents are important. But the question shouldn't be whether Jeremy's side can produce them. If they couldn't, this lawsuit wouldn't be happening right now. Clearly, they think they have a significant chance of winning. Otherwise, Jeremy wouldn't have turned down $4.5 million.
      • tempestn 11y ago
        I agree with you, but remember that Jeremy turned down the 4.5 before having a chance to consult with his lawyer. So he must have believed he had a significant chance of winning at that point, and his lawyer must now believe there is some chance of winning or he wouldn't take the case, but we don't know that the lawyer would have advised turning down the 4.5.
• theoracle101 11y ago
  So let me get this straight. Jeremy was "waiting", while Cruise raised seed, Series A then B, and congratulated them assuming that he still had 50% and was happy to see his work grow? He never thought to protest, or sign any documents at each round giving his consent. If this isn't extortion I don't know what is. It will be pretty easy for Cruise to prove he wrote no code/prototyped nothing. All he has is association with Kyle and Cruise for 4 weeks before they parted ways. Sad to think all the engineers at Cruise, working their ass off, getting fucked over by this guy. He'll probably end up with more than all of them.
  • Denzel 11y ago
    The engineers will not be screwed over. They get the same amount -- whether Jeremy wins or not. Jeremy is seeking half of whatever Kyle is slated to receive, i.e., his diluted pre-seed 50% stake.
    • theoracle101 11y ago
      Thats not how these things work. Scenarios: 1. Deal falls through (unlikely) 2a. Deal goes through, and engineers amount are held in a reserve fund for 18 months to 2 years until the lawsuit is settled or the after the above timeframe. This is standard in situations like this. 2b. GM may reneogotiate to have this come out pro rata. Also unlikely (this may be incorrect if dillution only impact Kyle. Jeremy does claim he wants 50% of the whole pie) So in all scenarios, this does not bode well for them at all. Kyle must be furious, but for the engineers who had no part in this, who there is no question have both ownership and actually wrote code, I feel very sorry for. The lawyers will make out better then them too :/
      • Denzel 11y ago
        Of course, if the deal falls through they lose their payout. That's sad. We don't disagree there. Please explain how GM would renegotiate their equity stakes pro rata? I've never come across this.
      • toomuchtodo 11y ago
• Dwolb 11y ago
  For what it's worth, the YC app video mentioned in the complaint here: https://m.youtube.com/watch?v=_P6oXe1YI90 https://m.youtube.com/watch?v=_P6oXe1YI90
  • rpgmaker 11y ago
    Thanks.
• burger_moon 11y ago
  It still isn't clear to me how Vogt cut Guillory from the company. How that is even possible when they had already established the company at a 50/50 split? This also sounds like he was around for a lot longer than Sam implied in his blog. I have a lot of mixed feelings about this whole thing; parties on both sides have been rolling around in mud it seems.
  • theoracle101 11y ago
    It was likely not even incorporated, they hadn't done nearly enough work for either to care. Also seems like Jeremy needed a job anyway and bounced. Of course hindsight is 20/20, hence this whole ordeal.
    • iandanforth 11y ago
      From the YC application via the counter complaint "“Cruise Automation is a Delaware C Corporation created in September 2013. 50/50 split between Kyle and Jeremy.”"
      • thehivemind123 11y ago
        That document has not been released, so that is speculation. I'm sure someone can research their initial filing to find the exact date
      • mkoble11 11y ago
        that's what it says in the complaint...but does it actually say this in the YC application?
        • BinaryIdiot 11y ago
          I would say most likely. No doubt would it be requested during trial and they would both know what's on it so saying something untrue about it would be profoundly stupid. In my opinion anyway.
      • ksherlock 11y ago
• iandanforth 11y ago
  From the complaint: "Vogt, as the sole Director of Cruise Automation, Inc., authorized the issuance of 50% of the Company’s stock to Guillory;" That seems like a very clear statement. It's either true, in which case Guillory has a very strong case, or it's false and he doesn't.
  • rboyd 11y ago
    This whole case is really surprising. I would expect intellectual property assignment agreements and a vesting cliff, particularly after cofounding Twitch. On the other hand, I know how normal it can feel to trust each other, procrastinate on docs, and just get all over the tech.
  • kvogt 11y ago
    This is false.
    • iandanforth 11y ago
      Then the YC application quotes are inaccurate? Incomplete? Fabrications? "Cruise Automation is a Delaware C Corporation created in September 2013. 50/50 split between Kyle and Jeremy." Edit: Added quote.
      • Dwolb 11y ago
        It looks like you can search Delaware's database if anyone has a spare $20 to pull information. [1] [1] https://icis.corp.delaware.gov/Ecorp/EntitySearch/NameSearch.aspx https://icis.corp.delaware.gov/Ecorp/EntitySearch/NameSearch...
        • ilolu 11y ago
          You can search basic information without paying. Just searching for Cruise Automation reveals Incorporation date as 24/09/2013
        • snowwrestler 11y ago
• jamiequint 11y ago
  As someone who has both started and worked very early at multiple startups, it's so incredibly outlandish to hear someone claim that they brought in a business plan and some ideas, and that ideas alone should represent an equal percentage ownership to someone who actually worked on building a business for multiple years. In startups no battle plan ever survives first contact with the enemy. There is a reason why most successful companies release an initial version of a product early, then adapt to market conditions rather than sitting down, writing a long business plan, and executing it. If Jeremy's MechE experience and background in self-driving cars was so valuable how did Cruise manage to pivot from just offering an autonomous driving add-on that only worked on the highway to building a fully-autonomous city-based driving solution without him. How did they manage to raise millions of dollars, write all the code, and build all the hardware without him. It just doesn't add up.
  • foobarqux 11y ago
    Cruise hasn't (yet) built fully autonomous cars. Arguably even Google hasn't done it yet.
    • deleted 11y ago
      [deleted]
    • toomuchtodo 11y ago
      Does Cruise Automation hold any autonomous vehicle patents? I could not find any in Google Patents.
  • TAForObvReasons 11y ago
    > it's so incredibly outlandish to hear someone claim that they brought in a business plan and some ideas, and that ideas alone should represent an equal percentage ownership to someone who actually worked on building a business for multiple years. I really don't understand your view here. If the value of the business plan didn't merit equal percentage, that should've been made clear at the onset. At the time, according to Jeremy's complaint it was valued at 50% of the company: ... Vogt agreed that Guillory should be a co-founder and 50% equity owner of Cruise. If the business plan and some ideas didn't merit 50% ownership, Vogt shouldn't have agreed that Guillery should be a 50% equity owner of Cruise. Simple as that.
• onebot 11y ago
  Unbelievable. An experienced & successful entrepreneur would take on an unknown cofounder without any kind of vesting schedule + cliff. Doesn't make any sense to me. I am not buying Jeremy's side at all.
  • chris11 11y ago
    Yeah, but if that is true the agreement should be in writing. So I think Kyle should be able to easily prove Jeremy wrong if they did have a vesting schedule. Edit: according to Sam Altman's blog post they never got around to signing employment agreements.
  • timv 11y ago
    I can't see how there is any possible explanation of the agreed upon facts that doesn't paint Kyle as making a horrible mistake with respect to ownership rights. He submitted a YC application that listed them as co-founders, and has no paperwork showing the Jeremy gave up his share (whatever it might have been). So, the only explanation I can come up with is that " An experienced & successful entrepreneur" took on "an unknown cofounder" without proper paperwork. That's a pretty surprising set of circumstances, but it seems pretty clear that it happened.
• minimaxir 11y ago
  > The promise was memorialized in the October 21, 2013 Y Combinator application, submitted by Vogt with the knowledge and approval of Guillory, that identifies Guillory and Vogt as the founders of Cruise and lists Guillory as a 50% shareholder of Cruise Automation This is interesting, as the YC Application does require breakdown. ["If you have not formed the company yet, describe the planned equity ownership breakdown among the founders, employees and any other proposed stockholders. (This question is as much for you as us.)"]
  • a_small_island 11y ago
    Well, according to Sam Altman: "According to Kyle, Jeremy did not write any code or build any hardware during this exploratory period. He did help find an office for the company. At the point of Jeremy’s departure, neither he nor Kyle had signed employment agreements, stock agreements, or any documents of any sort with the company. Even if Jeremy had signed a stock agreement, he wouldn’t have reached the standard 1-year cliff for founders to vest any equity."[1] [1]http://blog.samaltman.com/cruise http://blog.samaltman.com/cruise
    • rtpg 11y ago
      Right, but even without contracts, if there's a document listing that the planned ownership split is 50%, and that they're both listed as cofounders... It sounds like there's documentation that this was the original agreed upon split. If there's no documentation of some sort of "vesting" or "minimum effort required", I don't see the legal argument for this person to not have this split. Contracts are documentation of agreements, but the agreements themselves are what hold legal strength. The contracts just help when there's a dispute over the facts.
      • foobarqux 11y ago
        To have a valid contract you need consideration: you can't get 50% for doing nothing, you have to put up something in exchange (money, skill, resources, etc). edit: (I'm not saying anything as to whether Jeremy did so).
• deleted 11y ago
  [deleted]
• 1123581321 11y ago
  The facts seem to be more on Jeremy's side than Kyle's except that the application video demonstrates that Jeremy believed Kyle also knew something about robotics. Regardless of the outcome of this incident, if you apply to Y Combinator with someone who knows the YC partners better than you, and your cofounder decides to push you out, your cofounder will be supported by YC against you. This is now something that every team of founders will have to think harder about now. It will harm founder cohesion which will reduce the success percentage in each batch. On the other hand, this is a positive signal to people who want to exploit a cofounder to get past the YC application process and then push them out of the company.
  • niveus 11y ago
    Or it means you should always get everything in writing no matter what side you're on. A simple statement regarding how the shares vest would have prevented this.
    • chris11 11y ago
      It sounds like Jeremy wasn't at the company long enough to get that sorted out. I am curious why he left so soon though.
      • educar 11y ago
        The complaint says he was ousted by Vogt unilaterally.
        • chris11 11y ago
          True, I'm wondering what Vogt's response would be. I'm also curious why Kyle would want Jeremy gone after a month.
  • jamiequint 11y ago
    "If you apply to YC with someone who knows the YC partners better than you and your co-founder decides to push you out, your co-founder will be supported by YC against you" What? One founder worked on the company for almost 3 years and the other party in question worked on the company for one month, yet this is a huge YC conspiracy? How do you get this crap out of the written complaints in any way?
• deleted 11y ago
  [deleted]
• mkoble11 11y ago
  haha, this seems like total bullshit. there's no WAY an experienced founder like kyle would have given 50% of the company away, especially without a vesting schedule.
  • sergers 11y ago
    the facts show there is no vesting schedule, i haven't seen anything that contradicts this yet. Sam alludes to it in his blogpost...
    • mkoble11 11y ago
      a vesting schedule is standard and would not have been overlooked by someone who founded 2 companies w/ successful exits. here's a direct quote from sam's post (http://blog.samaltman.com/cruise http://blog.samaltman.com/cruise) : "Even if Jeremy had signed a stock agreement, he wouldn’t have reached the standard 1-year cliff for founders to vest any equity."
      • sergers 11y ago
        you are making assumptions (while are all are here too)... clearly something was overlooked to be in situation now. but as he alludes to no agreement exists, there is no "standard" in contract terms to rely on.
        • mkoble11 11y ago
          i'm just reading the case as i see it. there might be more or less to this - but there were multiple opportunities for the guy to come forward especially after previous rounds.
          • sergers 11y ago
            no doubt Jeremy is opportunistic, but that doesnt really affect his claims legally if he was in fact identified as a cofounder when there is no contract in place to say otherwise.
• enraged_camel 11y ago
  It looks like this whole case rests on whether Jeremy can actually produce any document that shows a 50/50 split. This can be the corporate charter, or it can be some sort of paper with both their signatures. IANAL, but even the YC application alone may be sufficient if it indeed does say they're joint owners. As a side note, Sam Altman's recent blog post [1] vilifying Jeremy really rubbed me the wrong way. Sam is hardly a neutral player in this, and his post really felt like an attempt to ruin Jeremy's reputation in Silicon Valley. Sam really should have kept his mouth shut here, because depending on how this case plays out, it may be his own reputation that may be endangered. [1]http://blog.samaltman.com/cruise http://blog.samaltman.com/cruise
• AndrewKemendo 11y ago
  The most interesting thing to me is that Cruise went through YC, several funding rounds and most of a massive public acquisition - apparently before anyone did enough due diligence to find out about this being even a potential problem (if the claimant has any grounds - which it seems there are at least some amount) and heading it off at the pass. That alone speaks volumes.
  • hendzen 11y ago
    Agreed, this is a massive fuck-up by everyone involved (Altman, Cruise Board of Directors, Spark Capital, etc). Even if the claim has no merit it should have been dealt with long ago, before the company got to this stage. Now all the employees might get screwed as a result.
    • proksoup 11y ago
      They did fail to identify the problem .... But if there's any anger from screwed employees, it should be directed at the criminals who did the bullshit crime instead of the detectives who failed to identify the crime sooner, no?
      • AndrewKemendo 11y ago
        In this case there is a fiduciary duty from the investors (detectives in your metaphor) to make sure that the company is free from these kinds of things. So while they aren't to blame - they aren't really off the hook either - it's more of a sin of omission. And yes, in many cases when detectives or investigators in law enforcement are lazy with their work and miss something obvious, they often pay for it with their jobs.
        • proksoup 11y ago
          I guess I don't see how this was so obvious.
        • aetherson 11y ago
          Investors do not have a fiduciary duty to the employees. Members of the board of directors (which all investors presumably are not) have a fiduciary duty to the stockholders (which many employees presumably are not).
• tlogan 11y ago
  It seems like KEKER & VAN NEST LLP is Jeremy's law firm. They represented Google in copyright infringement vs Oracle. Do I read this correctly?
  • educar 11y ago
    Yes, also Apple vs HTC (they represented HTC)
  • snowwrestler 11y ago
    If they took this on contingency, that's an interesting social signal.
    • trhway 11y ago
      >If they took this on contingency can you imagine otherwise, i.e the size of their retainer and rates :)
• prawn 11y ago
  I imagine that things that seemed insignificant in the HN application may prove now to be quite problematic. I'd guess that founders might feel inclined to nominate a 50/50 split, assuming that anything else could be a red flag for YC's judgement?
• axg 11y ago
  IANAL, but wouldn't Jeremy's 50% be relative to the time he left the company? No reasonable person would assume a co-founder leaving a startup would retain 50% equity.
• hoodoof 11y ago
  It seems that the people who now own the company acknowledge that he was the cofounder but feel that "well he didn't do much, so he doesn't deserve his full shares". The law doesn't work like that. It's exceedingly strange to have had the initial cofounder depart and nothing was done to formalise the terms of that separation. Also Sam seems really annoyed that this ghost-co-founder has turned up with this claim at the most inopportune time, and suggests that this is bad behaviour. I don't think so, it's the right way to play it. Wait until you have maximium leverage and then play your legal cards. The missing cofounder would have been a fool to play it any other way, thereby losing his leverage. The evidence that he has played it right is that so many people are running in circles desperate to resolve it - he has them against a barrel. It appears the due diligence was pretty loose. Heads will roll.....
  • danielpal 11y ago
    Wow I hope no one ever founds a company with you.
    • hoodoof 11y ago
      Why? Im merely pointing out how the law works, and that if you want to win a legal dispute, do it when the opposing party has incentive (or better, a requirement) to quickly resolve the issue. Not sure why pointing this out makes me not a good person to found a company with. I have separated from a co-founder and I made damn sure we had an agreement in writing defining the terms of the separation. Didn't take much, no lawyers, just a one page agreement, three people each with a copy, all with signatures. All still good friends.
      • proksoup 11y ago
        It indicates your attitude towards how one should act. Obviously, one should act in their own self interest and use the law to it's fullest extent, not consider the social consequences of being a dick. Good luck sir.
        • 11y ago
• rdl 11y ago
  Is there a standard restricted stock repurchase agreement/ founder vesting here? If so, was it exercised? I now have a new fear which trumps "failure to file 83b in time". I am so incredibly paranoid about doing 83b, already.
• alain94040 11y ago
  As a self-proclaimed expert on co-founder issues[0], I'm glad that we're hearing both sides of the story. As expected, they don't match at all. Hopefully, SamA will read both, try to find an honorable middle ground, and write another blog post. Basically, One mistake seems to have been made: writing on the YC application that they are both founders, possibly stating a 50/50 split. That's one mistakes, two years of hard work, and one billion dollars. [0] As the author of the co-founder equity calculator, I still receive about one email a week from founders asking for advice about co-founder issues. After several years, I think I have seen about every possible problem with co-founders.
  • llamataboot 11y ago
    According to Jeremy, he gave him. an exploding offer, tried to get him to fire his counsel. Then he wrote a public blog post, upvoted here, and read by pretty much anyone in Silicon Valley about how slimy and unreasonable this Jeremy guy is (when he clearly has a vested interest in how this plays out). Nope, I don't think we'll see a 'middle ground' anytime soon, Sam is clearly playing on one team. That's fine. He picked his team. But I still think a public blog was a wrong decision from all perspectives: legal, strategic, and moral. And it will for sure be brought up in court as an underhanded tactic.
    • enraged_camel 11y ago
      Sam is obviously a very smart guy, but not a very wise one. He is, after all, only 30 years old. He let his emotional side (anger, frustration) get the better of him when he published that blog post. It's not how a competent leader would have acted.
      • davemel37 11y ago
        I know I would, and I think most others would gladly give sama a pass if he owned up to his bias and mistake and apologized to Jeremy publicly.
  • DenisM 11y ago
    Write a book? I'd preorder.
• 6stringmerc 11y ago
  The one thing this dispute and drama makes me wonder is if GeoHot might have a competitive advantage for a limited window. Time will tell.
• refurb 11y ago
  "After Guillory engaged counsel, cross-defendants then precipitously filed and made public their lawsuit, accompanied by a public blog post by Cruise investor and Director Sam Altman that wrongly accuses Guillory of extortion and an attempt to disrupt General Motors (“GM) acquisition of Cruise." This is why you don't speak publicly about a court case you're involved with. Now every single word Sam wrote will be put under the microscope and whether or not he "meant" something won't matter. All that will matter is what the jury believes he meant by it.
  • wmeredith 11y ago
    Yes. This looks really bad on Cruise's part. Oy.
  • bradleyjg 11y ago
    That's the downside. It's certainly a real one and exactly why a lawyer would have advised him not to say anything. But there were also upsides, or at least potential upsides. Both in this specific case and influencing those involved current and future yc companies. The reason general counsels make much less than CEOs is that it's a heck of a lot easier to always point out the risks than to weigh them against the rewards.
    • snowwrestler 11y ago
      It's one thing to hear your lawyer's counsel and then decide to do it anyway, because the potential reward is worth the risk. It's another thing to rush something through before your lawyer has a chance to provide counsel--which is essentially what Sam Altman claims he did, in his post. CEOs make more than GCs, but they employ GCs for a reason.
  • fudged71 11y ago
    Also they will use the original un-edited blog post.
• a13n 11y ago
  It's pretty common SV knowledge that ideas are a dime a dozen and team & execution are what really matters. However, this doesn't necessarily hold up in court. It'll be very interesting to see how this plays out. Especially considering sama's involvement. Any idea when we'll get an update?
• possibility 11y ago
  > After hearing the announcement, Guillory contacted Vogt to inquire about his share of the proceeds from the sale of Cruise to GM. Vogt responded that he was due nothing, but first offered $100,000, then $1 million, and then $1.5 million and acknowledgment that Guillory was a co-founder — but only if Guillory would immediately surrender his ownership rights. > The second Director to contact Guillory, Altman, also said he was authorized to negotiate on Cruise’s behalf and offered Guillory triple the amount of Vogt’s previous offer, but only if Guillory would agree to sign a formal settlement agreement that same day. 3 x $1.5 million = $4.5 million. Personally, I would have taken the money, but I think it must be incredibly hard to make such a decision under time pressure and without counsel. Still, you can retire on that money and basically be happy, and I would have chosen that over this shitstorm if I'd had the presence of mind.
  • davemel37 11y ago
    Which is why I am inclined to believe Jeremy really believes he is in the right in this case. If I thought I was entitled to hundreds of millions and someone offered me $100k, I would be so offended I would see out the suit to the end even if it got me nothing. The very idea that they went 10x on that offer, than 50% up and than 3x would just embolden me to realize they are really trying to screw me...
    • possibility 11y ago
      And similarly I don't think YC would offer $4.5M if they knew they were (completely) in the right.
      • slavik81 11y ago
        They might offer that much if proving they're completely in the right could take long enough to scuttle their billion dollar deal.
  • threesixandnine 11y ago
    Why? It's pretty obvious to me that they pushed him. First he was pushed out from the company and then they tried to push him out of the bigger deal with $100,000. All Internet outcry in the last few days about this is also pretty indicative. They used their influence to portray Guillory as a bad character all in "we are angels" and he's a freeloader way. Which of course considering Guillory previous work in the field is suspicious. He certainly contributed at the beginning and probably that contribution was very, very important for the company. Otherwise they wouldn't go all the way to $4.5 million. The interesting point you make about "presence of mind". Exactly. No one in this case has the presence of mind. It reeks of anger and revenge. I feel the same way so I am rooting for the small guy here.
• danielpal 11y ago
  I just read both complains. This one is frankly ridiculous. The fact is that Kyle incorporated the company before he met Jeremy. And from Jeremy's complain, he is trying to build the case by saying he was more competent than Kyle. Yet why didn't he continue with the idea by himself if he was so competent? The only proof he is using to say he was a co-founder is a YC application. This is I hope a non-binding document. I hope judge agrees that the only way to get equity in a company is if its granted in the form of shares. Jeremy was never granted any shares so he own's 0 shares. He also acknowledges he did no provide any IP to the company. So if he didn't provide any IP and didn't receive any shares he should be entitled to 0. I really hope Kyle wins and Jeremy is found guilty of tortorous interference and is obligated to pay for Kyle legal fees.
  • davemel37 11y ago
    > Yet why didn't he continue with the idea by himself if he was so competent? The complaint clearly explains this. He just got married and needed a job to pay the bills. I really hope you just missed this.It would be a shame if you are one of the few entitled folks who doesn't understand the real struggle most people feel to support themselves and their family. The type of person who thinks everyone has the same opportunities you do. I really hope you just missed that line in the complaint.
  • refurb 11y ago
    The only proof he is using to say he was a co-founder is a YC application. This is I hope a non-binding document. I hope judge agrees that the only way to get equity in a company is if its granted in the form of shares. Jeremy was never granted any shares so he own's 0 shares. That's not how it works. If you and I decide to start a company and you give me a verbal agreement that it's a 50/50 split, then it's pretty strong evidence of the ownership of the company unless some other document supersedes it. From what I can tell so, no such document exists.
    • bpicolo 11y ago
      What about the incorporation docs? :)
• tlrobinson 11y ago
  Well, I have a feeling we'll be seeing a change to the wording of the equity split question on the YC application...
  • typpo 11y ago
    Agreed. Anyone who's filled out a YC app answers the equity split question as though it's post-vesting. No one answers the question like, "Our equity split is 0%, 0%. After a 1 year cliff we begin vesting 50% each over 3 years" because that's pedantic and you're supposed to keep the app simple. People just write "50/50". Almost every YC app has this problem.
• alexcaps 11y ago
  This makes me sick. Jeremy makes me sick. Despicable.
  • jamiequint 11y ago
    100% agree, he's a scumbag.
• rayiner 11y ago
  The complaint has two major theories: 1) There was an actual agreement between Guillory and Vogt that they would be a 50% owners. The YC application is a memorialization of the fact that this agreement existed. 2) Even if there wasn't an actual agreement, Cruise is using IP that Guillory developed. The relevance of the YC application is this: Oral contracts are in general perfectly valid, unless they apply to a specific situation that requires a writing. A YC application listing the parties as 50-50 co-owners is at least strong evidence that an oral contract exists with those terms. It's reasonable to infer that if people have a writing proposing to do X, then they actually did X or have already agreed to do X. While a vesting schedule might be typical, it's not going to be implied into existence unless there is some evidence the parties intended for there to be a vesting schedule. For similar reasons, questions of how much Guillory actually contributed will be relevant to (2) but not (1). A 50-50 joint venture is like marriage. Come the divorce, the assets will be split 50-50, even if one party earned all the money. The law won't come in and try to value peoples' contributions after the fact. That would be impractical. The law trusts that people say what they mean and mean what they say. This case will turn on whether Vogt has any evidence to counteract the inference that may be made from the YC application. It will also turn on legal issues such as whether a writing, not just an oral contract, is required for the sort of arrangement Vogt and Guillory allegedly made, and if what's in the YC application is a sufficient writing to meet that requirement. IIRC stock issuance requires a signed writing in Delaware so that could be a stumbling block depending on how the agreement is framed.
  • hoodoof 11y ago
    With the final irony probably being that the acquiring company may lose its taste for the acquisition given the dispute, meaning they are just fighting over who gets half of the ashes of a bonfire of money.
    • davemel37 11y ago
      I suspect large corporations are no strangers to these lawsuits and if they really wanted the IP, they wouldn't be scared off by debacle...although they would likely double down on any due diligence they planned.
• nykho 11y ago
  In the cruise Cross complaint it says that they entered together to Cruise as a joint venture. In this joint venture they put code, algorithms, etc. Is it posible to say that newer algorithm, code, etc or even other responsibilities not mentioned from Vogt, are not part of the joint venture?. The idea of this it would be to contain the % of ownership of the joint venture. Or is this their plan all along?
• danbmil99 11y ago
  Not precisely equivalent, but I was involved in a startup where 3 of us split the shares without any vesting agreement in the paperwork. Fast forward 18 months, one of my co-founders was fed up and decided to quit. He claimed (correctly) he was entitled to his 33.3% regardless of future work or any other factors. Of course he would be diluted if there were investments or option grants, but his position was the split represented the full value of our contributions at the start date. After all, he argued, we were paying ourselves salaries for the work we did, so that was our compensation -- the equity was simply an investment that may or may not pay off some day. In the end, we paid him a lot of hard-earned cash to buy back most of his stock over a period of years -- enough for him to live very comfortably without working, while we sweated our asses off to make something of the venture. Probably stupid of us, even though in the end the company went public and the stock was quite valuable for a while. Moral of the story: get the paperwork right or pay the consequences. BTW, quitting co-founder wrote up the founding documents...
• steven2012 11y ago
  This is why sama should have stfu and not said anything. There are two sides to every story and the argument presented is compelling, so it's up to a judge and/or jury to sort this out. Of course sama has a dog in this race, which makes it even dumber that he commented at all. I hope he learns from this.
• deleted 11y ago
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• jboydyhacker 11y ago
  A couple reactions after reading the cross complaint: First. In a game of legal posturing sometimes a good writer can make a great deal of difference. Jermey’s lawyers are fairly good writes and they weave quite a huge story. I think as I said in original comments there is almost no way this case gets dismissed on summary judgement. That’s unfortunate because it means no easy way out. Second. Man Jeremy is pretty dismissive of Kyle’s background and it’s downright nasty. “two successful startups” and not related to autos. Well, does Jermey have any successful startups at all? It’s not a small thing and someone unpleasant to read if you are in the startup world or have spent much time actually trying to build a business to see lawyers talking smack about a guy whose done pretty well. Lastly, it’s a fine piece of writing but I still go back to what the hell did Jermey do for one month that would entitle him to anything. I think you have to go back to what is the convention in the industry which is a typical vesting schedule applies and that’s a risky in any startup. I also have to say poor Kyle must feel terrible. I’m honestly kinda sick to my stomach reading the complaints. Startups are tough thing and 2.5 years vs 1 month in a big difference in blood sweat and tears no matter how much Jermey put in. It strains any reasonable amount of credulity that if Jeremy felt this way – he’d never mention it until now. I believe under the law that does weaken his case quite a bit. I forget the legal concept but in some cases when you don't speak up- it minimizes your right to speak up later. It's deceptive to not speak up and let someone else continue building something under the mistaken belief they owned it- when you beleived you owned half. I think that's the part that has a lot of people taking Kyle's side- imagine if you built something for 2.5 years and you thought you owned all of it- and someone else believed the whole time they owned half? There is an inherent unfairness to that and the law does recognize that. My best advice for Kyle would be figure out a way to close the GM deal without settling as these guys are in for a fight. Get everyone else paid, close the deal and let the lawyers handle it as even reading their very well written prose- I don’t think there is a case here for Jeremy and given all the drama in the nice prose I think their lawyers know that too and it’s just a well worded shakedown. But yeah- really a sickening read. A lot of my opinion is based on the assumption Jeremey never said a thing about this until after the huge sale. If that's the case, quote sun tzu all ya want but it's still slimey and I think against some basic precepts of US corporate law.
  • 11y ago
• rdl 11y ago
  Has anyone pulled the $20 worth of filings from Delaware on file number 5403771? Seems stupid for everyone to do it.
• davemel37 11y ago
  Honestly, I think this whole story is a case of Kyle and Sama making a serious misstep in how they treated a fellow human being. It's clear Jeremy was involved and contributed in some capacity. If we ignored the legal for a minute, he is arguably entitled to at least a discussion about the cap table and some sort of payoff. However, Kyle telling him he gets nothing and than offering him $100k of his own money is both very insulting and very telling. It is a low ball offer starting a negotiation. It all went downhill from there. It was no longer about money, now it became about justice, and from a justice perspective Jeremy deserves some credit, acknowledgment and respect for his contribution. Just read Jeremy's complaint and you see he mentions the rewriting of history and the lack of mention of him in the press coverage, etc... Ronald Reagan had a plague on his desk that read, "Man can achieve anything so long as he doesnt mind who takes the credit." If Kyle would have shown some respect to Jeremy, this problem would have went away for a couple million. I don't blame sama, he started with a preconceived notion of charlatans coming out of the woodwork and was also biased to one side. His anger is the most telling sign of all. It is anger at not respecting Jeremy initially, leading to digging a massive hole. Walking away from this story, I want to side with Jeremy. If we lived in a meritocracy, I am inclined to believe he is not really entitled to much more than an honorable mention as the brains that started it all...but this was mishandled in such a way that any judge would WANT TO SIDE WITH THE LITTLE GUY, and the YC application and video is enough basis to let them find in Jeremy's favor...even though we all know he doesn't deserve it all. I think an apology, and public acknowledgement of Jeremy's contribution to the direction and strategy would go a long way in settling this dispute...that and a few million dollars.
  • argonaut 11y ago
    I'm sympathetic to Jeremy's case, which is actually extremely common in Silicon Valley (group of people get together informally to work on a startup, nothing serious or 100% legally tied up, group of people break apart, idea takes off, legal issues ensue). But anyone taking either Sam or Jeremy's word at face value has no idea what they're talking about. You have no basis to trust Sam or Jeremy in this hundred-million-dollar matter. Both sides have hundreds of millions of reasons to exaggerate or distort their case.
• akg_67 11y ago
  The media coverage of this dispute, Sam Altman blog post, details of claims and counterclaims are doing nothing more than tarnishing YC brand. YC need to settle this dispute as quickly as possible. Protecting YC reputation as the ones in founders corner in the world of "Angels are demons and VCs are vultures" is more important. The salacious details of strong-arming, fire your lawyer hire mine, and exploding offers are doing nothing more than giving appearance of YC that it is not much different from the people they were trying to help founders deal with.
• karmacondon 11y ago
  YC includes a vesting clause as a standard part of their incorporation documents, in part for just this situation. I've heard that a corporation was formed BEFORE the YC application. If shares were issued in that corporation without a vesting clause, then that's that. If shares were not issued and the YC application is the only evidence of a 50/50 split, then why wouldn't one assume that vesting was part of that agreement? The question on the application was "describe the planned equity ownership breakdown...". Someone could reasonably argue that they agreed to a 50/50 split given the assumption of a vesting schedule, and would not have agreed to it otherwise. Which is to say, if the YC application is the proof of ownership, then how can you ignore everything that is also implicit in that application?
• the_zodiac 11y ago
  Sam, you messed up here. Your post just ended up giving more leverage to Jeremy. There is a reason you should listen to lawyers and not just write something 'before the lawyers get to you'.
  • deleted 11y ago
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• boto3 11y ago
  This is gold: In early October 2013, Guillory met with 28-year-old Vogt, a self-proclaimed MIT drop- out who had spent a month to earn a degree in installing Microsoft Windows.
• bing_dai 11y ago
  To any entrepreneur who reads this thread and suddenly develops the cold sweat-inducing thought that "Oh No...I do not have proper paper work with that departed ex-cofounder/ex-employee either!", please build the courage to talk to that person and have proper written agreement in place. Consult a lawyer if necessary (IANAL). That way, you would not be in the same situation as Cruise and Guillory. I worked at a VC firm for about 3 years. By far the most difficult situation to mediate was co-founder disputes.
• Bahamut 11y ago
  After reading the various viewpoints posted, here are my thoughts. Jeremy sounds a bit greedy, and probably won't get 50% compensation, but probably will get a significant amount since it sounds like he wasn't dealt with fairly through the whole process if his claims hold up. However, based on Sam Altman's actions as depicted, this makes me not to ever want to work for a YC company, and I've been approached by plenty at various stages (early to late). With an investor that wants to resolve things in bad faith, I cannot trust that I wouldn't ever potentially get screwed the same way, all because an investor believes "That person does not deserve compensation, so we'll operate shadily to make it end that way." It makes all the talk about nice people and such from YC leaders sound as fake as the reputation of many tech industry people in the Bay Area is touted to be.
• Jeong19 11y ago
  This thread is full of nasty comments about sama and his blog post. To those of you attacking him, remember that you're talking about a man who has already proven himself to be one of the most disruptive entrepreneurs SV has ever seen, despite still being relatively young. When Sam was a fresh Stanford dropout, he built Loopt, the very first location aware app, which spawned dozens of imitators, including Foursquare and Gowalla. It also doubled as a dating app popular amongst gay men and easily beat Grindr to market by a decade. If sama says Jeremy's claim is baseless, then I'm inclined to believe him, on the strength of his reputation and accomplishments alone. Edit: Could the downvoters at least explain themselves? Is defending YC or sama enough to deserve downvotes now?
  • joslin01 11y ago
    You're getting down-voted because your argument boils down to Sam is a smart guy, trust him. Engineers like to think for themselves and play detective. For consolation, I had the same reaction especially when I first read the blog-post. Having read through this entire counter-complaint and the comments here, I'm not so sure anymore.
  • slowernet 11y ago
    Dodgeball, the predecessor of Foursquare, predated Loopt in the mobile social space by at least three years. There were likely others. Loopt received the at that time unheard of privilege of running an always-on location service on some phones, and failed as a business. Separately, being inclined to believe someone in a matter of fact/law based on their track record in another realm is an example of the appeal to authority fallacy. The subject also has personal and institutional conflicts of interest in this instance. Now if we're talking polo shirt styling...
  • rajacombinator 11y ago
    He built something that failed, then made a very cushy landing at YC. Hardly "one of the most disruptive" ...
  • fudged71 11y ago
    You're being downvoted because Sama is incredibly biased on this case. He has a financial responsibility to his LPs to help the acquisition of Cruise by GM, yet this legal case is getting in the way. Of course he's going to badmouth the guy, regardless of which side is truly correct.
• deleted 11y ago
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• nxzero 11y ago
  Very possible this has been covered, but how would a startup execute proactive due diligence to counter such claims from go to exit?
  • fudged71 11y ago
    Proactive due diligence on the side of the company? Leading up to investment rounds it is common to create a "Data Room" with all of your corporate documents. This is shared with the investors. If you spend a lot of internal effort to keep this Data Room complete and accurate, then you might find things that have been missed. But to be truly proactive is to get proper legal advice at every stage of your company so that these issues never happen in the first place. (Thinking of firing a cofounder? Talk to you lawyer, understand the process, follow it by the book).
• mooreds 11y ago
  And this is why founder vesting is so important. Ideas and knowledge are great, but execution is what really matters. If they'd had a cliff (3 mos, 6 mos, a year, etc) and a written agreement, none of this would be happening. I went through this with co-founders recently. It was unpleasant and expensive, but at least everyone knows where we stand w/r/t leaving, vesting, etc. This excerpt from Do More Faster is worth reading: "A common reason for startup fatalities, particularly in the early days, is some sort of conflict between co-founders. One of the main reasons for co-founder conflict is that many aspects of the relationships were either ill-defined or misunderstood. To minimize the chance of this, it’s critical that you and your co-founders come to agreement on some key issues. I’ve framed the most important of these as a set of questions that the co-founders should be asking each other as they enter into the business relationship. Many of these questions are hard but they get only harder with time. The sooner you address them, the better off your startup will be." http://readwrite.com/2010/10/28/excerpt-from-do-more-faster-avoid-co-founder-conflict-by-dharmesh-shah/ http://readwrite.com/2010/10/28/excerpt-from-do-more-faster-...
  • deleted 11y ago
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  • TaylorGood 11y ago
    Learned the hard way myself in pre-launch. Also, watched a friends company with $4m ARR close shop as a result of not having a vesting schedule and legal fees trying to gain back a deadbeat co-founder's equity. Not easy to bring up in the honeymoon phase of an idea that yes, we need a vesting schedule. My experience is most of the time (CPG startups in so. Cal) my co-founders don't even know what one is. There was resistance to the education process and agreement to terms but worth it.
• coldcode 11y ago
  Given that joining YC is supposed to make building a startup easier they cleared screwed up this time in not requiring clear contracts with everything specified. There is no place for oral contracts or quasi legal agreement given that the potential payoffs are so huge.
• samfisher83 11y ago
  Can Sama get sued for Libel? I think writing that post was not a good idea. This Jeremy dude seemed like he had spent some years working on this.
• jontas 11y ago
  A lot of people are criticizing Guillory for waiting until the deal was announced to come forward. Whether or not this is true (it is disputed in the two opposing briefs), one can hardly fault him for not wanting to spend time, money, and effort litigating for half of a company that may or may not be worthless. I would wait for some evidence of success/value before deciding to invest my time/money into claiming my half of the pie.
• pbreit 11y ago
  This thread seems to be falling faster than it's numbers would suggest. There are currently at least 3 older articles with fewer votes above it.
• masterponomo 11y ago
  I doubt this is what PG had in mind when he brought Sam on board. Just a prediction, we will soon be wishing Sam well in his future non-YC endeavors. He's perfectly justified in strongly protecting his own investment, but using HN to vilify the opposition--not cool.
• rajacombinator 11y ago
  This whole incident really lowers my opinion of YC.
• parray 11y ago
  Knowing Jeremy, this doesn't surprise me whatsoever. Greedy and good at selling his side of the story. One of the most selfish human beings I know. Kyle, I'm rooting for you to win this case here. You deserve it for the hard work you put in.