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Sam Altman posted on his views on his blog: http://blog.samaltman.com/cruise http://blog.samaltman.com/cruise And the related HN comments: https://news.ycomb

Sam Altman posted on his views on his blog: http://blog.samaltman.com/cruise http://blog.samaltman.com/cruise And the related HN comments: https://news.ycombinator.com/item?id=11490188 https://news.ycombinator.com/item?id=11490188

SilasX 10y ago
So, I have a stupid, flamebait question: What precisely is wrong with Jeremy Guillory's case? I read those links but I also read this related BI piece [1] and it looks like Guillory has a solid claim: there is a document of them representing the company as half belonging to him, and no one's presenting any later agreement that says when his half was bought out or invalidated. All that Vogt is going on, it seems, is "but you were just congratulating us when we raised more money!". What does that matter? Altman's response, in turn, is that Guillory isn't being cool about this and taking (what he deems) a reasonable offer from Vogt. Well, why would he? If he was led to believe early on that he had a full 50% stake, why is it some moral transgression not to accept less [2]? If you don't want a now-silent partner keeping equity, then buy them out. Don't wait until the company is worth something and then try to retroactively void the equity because you don't feel like they're part of the gang anymore. [1] http://www.businessinsider.com/cruise-cofounder-fires-back-2016-4 http://www.businessinsider.com/cruise-cofounder-fires-back-2... [2] than the corresponding amount modulo later dilution
- jasonlaramburu 10y ago
  It sounds like the primary evidence supporting Guillory's claim is what they wrote on one question in their YC application (50:50 equity split). I don't know if that would represent a legally-binding contract if the case had gone to court, since it doesn't reference any shares, corporate entity etc.
  - BinaryIdiot 10y ago
    The YC application isn't and doesn't need to be a contract. It was just another piece of evidence demonstrating the division of the company at the beginning. They also registered in Delaware as 50 / 50 split if I recall correctly and Guillory never signed any of the paperwork regarding limiting their shares.
    - nostrademons 10y ago
      IIRC they had registered in Delaware as a Kyle = 100% split, and then never signed any paperwork after that. That's a very different situation.
  - rayiner 10y ago
    Yeah, the YC application is merely evidence of a contract rather than a contract itself, but it's pretty smoking gun evidence. Why would you write there is a 50-50 split on your YC application if it wasn't true?
    - tptacek 10y ago
      What real company would continue to operate for years after someone with a 50% claim on the company had left after just a month or two of service?
      - SilasX 10y ago
        Is it really unheard-of for an angel to hold such an equity stake and only advise for a month or so?
        tptacek 10y ago
        Yes, I believe so.
      - rayiner 10y ago
        What's puzzling to me is how they thought about it enough to put down the split in the YC app, but it didn't come up when they split up.
        tptacek 10y ago
        What am I missing? This seems not at all complex. The two believed, when they applied, that they'd share fates. They were quite wrong. Like most people, they didn't do all the paperwork to safeguard against later bad-faith claims after they parted ways.
        rayiner 10y ago
        I'm sure that's what happened, and I'm projecting my own paranoia. But it seems like it was kind of an acrimonious break-up, which would prompt some ass-covering.
- whamlastxmas 10y ago
  The issue is that his ownership only existed as a technicality and he only received a favorable outcome due to to the inflexible nature of the legal system. He was not a 50% owner or anything near that. However, due to a lack of evidence otherwise, he was able to convince the court he was.
  - SilasX 10y ago
    That depends: when someone approaches YC and lists equity stakes, is there an implicit understanding of a vesting schedule and cliff? If so, the YC submission wouldn't be enough to substantiate an ownership claim, esp if the assumed schedule is the standard 4-year/12-month cliff. In the absence of documentation of how the equity dissipates, it would be assumed not to. In that case, I'm not sure it's dismissable as a technicality: if an early, vital partner has to leave, you have to weigh the costs of buying out their equity stake against current cash demands. When the future of the company is tenuous, the value is small and Guillory surely would have accepted a song for a buyout, just as Walter White took a $5000 buyout for his huge stake in Grey Matter (or the Apple guy); but they may also need that money very much. If you take the approach of "well [in hindsight] OBVIOUSLY they didn't mean to leave him with that equity", you're effectively giving founders a free option on the shares of silent partners, unfair in its own way.
    - whamlastxmas 10y ago
      >Guillory never had equity, wrote code, nor invested in the company, although he was listed on the application to Y Combinator They applied together to YC. They got accepted, but Guillory didn't go. Vogt said he didn't want to work together anymore. A business entity was later formed, in which Guillory had zero ownership of because he left the project before it even began and had nothing to do with it. The only basis for Guillory here is that they did at one point agree to work together. This is like me saying to you, "Hey, do you want to go halfsies on a lottery ticket?" and then you responded, "Yes". Later, I tell you I no longer want to go halfsies, then go out to buy a ticket by myself and win. You then later sue me saying you get half of the winnings because we had previously agreed to go halfsies, despite the agreement later being revoked and you having never contributed and never planning to contribute anything to the cost of the ticket. It isn't an issue of assuming a vesting schedule, it's an issue of someone deceitfully claiming ownership of something they never owned.
- vonklaus 10y ago
  I think Alman's emotional arguments were a bit misplaced and while I disagreed with, at the time, how they were made, he seems to be fairly correct. Here is my interpretation of why: > What precisely is wrong with Jeremy Guillory's case? It isn't that there was anything wrong with it, but if you see Alman's post, they were in the preliminary stages of the company and I think jointly applied to YC. if IIRC they didn't even both do through YC together. Let's say you and I talk about doing a lemonade stand. We apply to Techstars as Junicorn bespoke lemonade purveyors. Unfortunately, I want to use tensor flow & the latest stanford NLP techniques for our lemonade startup and build it on blockchain technology using go. You wanted to do some anachronistic throwback where the Lemonade POS system is built on nodeJS with gulp & browserfy having it be mobile-first, cloud based omnichannel. So we have the break up. Then I, and my new founders build an entire company based on Lemonade stands & blockchain technology. Going throug techstars with an entirely different group of people and taking the idea all the way from an idea into a product. Again for a timeline recap: 1. We both had the same idea independently. 2. Then we tried to combine our ideas. 3. Then we went our seperate ways to work on our own seperate implementation. 4. Then my team and I built Junicorn: Summer Lemonade and sold to MinuteMaid for our Concentration technology. (this is like thousands of steps you weren't part of) 5. Then you ask for some large number payoff because we both discussed starting a company but ultimately didn't. However, depending on the legal structure and some of the other factors (e.g. massive leverage before a sale) he was probably able to make some money. He may have even contributed to the company in a way that entitled him to something. It was just pretty shitty to bring that up during a massive sale like this.
  - nihonde 10y ago
    In the scenario that you describe, you muddied the waters of Junicorn without properly cleaning up your mess during the breakup. That opens you up to claims like these, which is probably why this happened at Cruise. As soon as you have an adverse relationship to a business partner, it's time to cut bait, get releases signed, or do something completely unrelated.
    - vonklaus 10y ago
      correct. The reason I believe that this was shitty was timing. The lawsuit coincided with the GM deal by all public accounts. Regardless of the legal structure, this was a shitty thing to do. Clearly, he cofounded Cruise and probably did contribute at least to the zeitgeist of the project. Obviously, a cliff is standard for founders and kyle (based on the application) had posted a personal 100k convertible note. so if he fired Jeremy, that's fine. Jeremy probably would be entitled to something, and it should have been spelled out. However claiming 50% 2 years later to coincide with a 1B exit, seems fucked up. The approach to this, is what I have issues with.

SilasX 10y ago

So, I have a stupid, flamebait question: What precisely is wrong with Jeremy Guillory's case? I read those links but I also read this related BI piece [1] and it looks like Guillory has a solid claim: there is a document of them representing the company as half belonging to him, and no one's presenting any later agreement that says when his half was bought out or invalidated. All that Vogt is going on, it seems, is "but you were just congratulating us when we raised more money!". What does that matter? Altman's response, in turn, is that Guillory isn't being cool about this and taking (what he deems) a reasonable offer from Vogt. Well, why would he? If he was led to believe early on that he had a full 50% stake, why is it some moral transgression not to accept less [2]? If you don't want a now-silent partner keeping equity, then buy them out. Don't wait until the company is worth something and then try to retroactively void the equity because you don't feel like they're part of the gang anymore. [1] http://www.businessinsider.com/cruise-cofounder-fires-back-2016-4 http://www.businessinsider.com/cruise-cofounder-fires-back-2... [2] than the corresponding amount modulo later dilution

jasonlaramburu 10y ago
It sounds like the primary evidence supporting Guillory's claim is what they wrote on one question in their YC application (50:50 equity split). I don't know if that would represent a legally-binding contract if the case had gone to court, since it doesn't reference any shares, corporate entity etc.
- BinaryIdiot 10y ago
  The YC application isn't and doesn't need to be a contract. It was just another piece of evidence demonstrating the division of the company at the beginning. They also registered in Delaware as 50 / 50 split if I recall correctly and Guillory never signed any of the paperwork regarding limiting their shares.
  - nostrademons 10y ago
    IIRC they had registered in Delaware as a Kyle = 100% split, and then never signed any paperwork after that. That's a very different situation.
- rayiner 10y ago
  Yeah, the YC application is merely evidence of a contract rather than a contract itself, but it's pretty smoking gun evidence. Why would you write there is a 50-50 split on your YC application if it wasn't true?
  - tptacek 10y ago
    What real company would continue to operate for years after someone with a 50% claim on the company had left after just a month or two of service?
    - SilasX 10y ago
      Is it really unheard-of for an angel to hold such an equity stake and only advise for a month or so?
      - tptacek 10y ago
        Yes, I believe so.
    - rayiner 10y ago
      What's puzzling to me is how they thought about it enough to put down the split in the YC app, but it didn't come up when they split up.
      - tptacek 10y ago
        What am I missing? This seems not at all complex. The two believed, when they applied, that they'd share fates. They were quite wrong. Like most people, they didn't do all the paperwork to safeguard against later bad-faith claims after they parted ways.
        rayiner 10y ago
        I'm sure that's what happened, and I'm projecting my own paranoia. But it seems like it was kind of an acrimonious break-up, which would prompt some ass-covering.
whamlastxmas 10y ago
The issue is that his ownership only existed as a technicality and he only received a favorable outcome due to to the inflexible nature of the legal system. He was not a 50% owner or anything near that. However, due to a lack of evidence otherwise, he was able to convince the court he was.
- SilasX 10y ago
  That depends: when someone approaches YC and lists equity stakes, is there an implicit understanding of a vesting schedule and cliff? If so, the YC submission wouldn't be enough to substantiate an ownership claim, esp if the assumed schedule is the standard 4-year/12-month cliff. In the absence of documentation of how the equity dissipates, it would be assumed not to. In that case, I'm not sure it's dismissable as a technicality: if an early, vital partner has to leave, you have to weigh the costs of buying out their equity stake against current cash demands. When the future of the company is tenuous, the value is small and Guillory surely would have accepted a song for a buyout, just as Walter White took a $5000 buyout for his huge stake in Grey Matter (or the Apple guy); but they may also need that money very much. If you take the approach of "well [in hindsight] OBVIOUSLY they didn't mean to leave him with that equity", you're effectively giving founders a free option on the shares of silent partners, unfair in its own way.
  - whamlastxmas 10y ago
    >Guillory never had equity, wrote code, nor invested in the company, although he was listed on the application to Y Combinator They applied together to YC. They got accepted, but Guillory didn't go. Vogt said he didn't want to work together anymore. A business entity was later formed, in which Guillory had zero ownership of because he left the project before it even began and had nothing to do with it. The only basis for Guillory here is that they did at one point agree to work together. This is like me saying to you, "Hey, do you want to go halfsies on a lottery ticket?" and then you responded, "Yes". Later, I tell you I no longer want to go halfsies, then go out to buy a ticket by myself and win. You then later sue me saying you get half of the winnings because we had previously agreed to go halfsies, despite the agreement later being revoked and you having never contributed and never planning to contribute anything to the cost of the ticket. It isn't an issue of assuming a vesting schedule, it's an issue of someone deceitfully claiming ownership of something they never owned.
vonklaus 10y ago
I think Alman's emotional arguments were a bit misplaced and while I disagreed with, at the time, how they were made, he seems to be fairly correct. Here is my interpretation of why: > What precisely is wrong with Jeremy Guillory's case? It isn't that there was anything wrong with it, but if you see Alman's post, they were in the preliminary stages of the company and I think jointly applied to YC. if IIRC they didn't even both do through YC together. Let's say you and I talk about doing a lemonade stand. We apply to Techstars as Junicorn bespoke lemonade purveyors. Unfortunately, I want to use tensor flow & the latest stanford NLP techniques for our lemonade startup and build it on blockchain technology using go. You wanted to do some anachronistic throwback where the Lemonade POS system is built on nodeJS with gulp & browserfy having it be mobile-first, cloud based omnichannel. So we have the break up. Then I, and my new founders build an entire company based on Lemonade stands & blockchain technology. Going throug techstars with an entirely different group of people and taking the idea all the way from an idea into a product. Again for a timeline recap: 1. We both had the same idea independently. 2. Then we tried to combine our ideas. 3. Then we went our seperate ways to work on our own seperate implementation. 4. Then my team and I built Junicorn: Summer Lemonade and sold to MinuteMaid for our Concentration technology. (this is like thousands of steps you weren't part of) 5. Then you ask for some large number payoff because we both discussed starting a company but ultimately didn't. However, depending on the legal structure and some of the other factors (e.g. massive leverage before a sale) he was probably able to make some money. He may have even contributed to the company in a way that entitled him to something. It was just pretty shitty to bring that up during a massive sale like this.
- nihonde 10y ago
  In the scenario that you describe, you muddied the waters of Junicorn without properly cleaning up your mess during the breakup. That opens you up to claims like these, which is probably why this happened at Cruise. As soon as you have an adverse relationship to a business partner, it's time to cut bait, get releases signed, or do something completely unrelated.
  - vonklaus 10y ago
    correct. The reason I believe that this was shitty was timing. The lawsuit coincided with the GM deal by all public accounts. Regardless of the legal structure, this was a shitty thing to do. Clearly, he cofounded Cruise and probably did contribute at least to the zeitgeist of the project. Obviously, a cliff is standard for founders and kyle (based on the application) had posted a personal 100k convertible note. so if he fired Jeremy, that's fine. Jeremy probably would be entitled to something, and it should have been spelled out. However claiming 50% 2 years later to coincide with a 1B exit, seems fucked up. The approach to this, is what I have issues with.