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Ask HN: How can I protect myself as a cofounder?

I am the sole tech cofounder in a team of 3. Our business is going well and there are no tangible signs of trouble yet, however since the other two cofounders are close personal friends I feel a fairly high level of personal risk. Specifically, if our business reaches profitability and/or receives funding my value as a "programmer" becomes very low - I could easily be substituted with a better developer for a few hundred K per year (being generous). We have a fairly bottom-heavy vesting schedule, and our current agreement on paper states that two out of three cofounders are required for an expulsion. In addition, as the "non-business" cofounder I do not have as close of a relationship with our contracted lawyers as the other guys. So I am essentially trusting my entire stake in the company I have built over a year to the goodwill of my cofounders. What steps can I take to reduce my personal risk? The natural answer is "don't get involved with cofounders you don't trust 100%" - in a perfect world this is true, but in reality I think it's reasonable to take the steps I can to protect myself, and I would like advice on what these are.

gus_massa 10y ago
* Talk to a lawyer * Have everything written * Do you have a >30% of equity? * Talk to a lawyer
- brudgers 10y ago
  Not just "a lawyer" but your lawyer. The company's lawyer is not your lawyer, it is the company's.
tabeth 10y ago
I haven't started a company before, but I've seen several stories on HN similar to the OP. Wouldn't someone have some sort of 1/N share of the company as long as you work X years contingency? I also suppose you'd have a clause saying that if you left before the vesting cliff due to "expulsion" you'd be awarded your prorated amount of equity. Sounds crazy anyone would agree to anything else.
tylercubell 10y ago
I don't think there's much you can do except make it riskier in your partners' eyes to get rid of you. Become indispensable. This is totally anecdotal but I remember from an early season of Survivor that there was a contestant who cooked for everyone so nobody wanted to vote them off the island. I think some of that tribal thinking applies to business.
- throwaway392343 10y ago
  Yeah this is my general thinking too. Any suggestions on specific ways to do this as a developer?
  - tylercubell 10y ago
    The only thing I can think of is using a technology that would be difficult or costly to hire for. Of course this would be morally dubious if it doesn't align with the goals of the business but if it does produce some material benefit it could be a win-win. At any rate, I think you would be treading a fine line and anything beyond this could potentially amount to sabotaging the business and you definitely don't want that.

gus_massa 10y ago

* Talk to a lawyer * Have everything written * Do you have a >30% of equity? * Talk to a lawyer

brudgers 10y ago
Not just "a lawyer" but your lawyer. The company's lawyer is not your lawyer, it is the company's.

tabeth 10y ago

I haven't started a company before, but I've seen several stories on HN similar to the OP. Wouldn't someone have some sort of 1/N share of the company as long as you work X years contingency? I also suppose you'd have a clause saying that if you left before the vesting cliff due to "expulsion" you'd be awarded your prorated amount of equity. Sounds crazy anyone would agree to anything else.

tylercubell 10y ago

I don't think there's much you can do except make it riskier in your partners' eyes to get rid of you. Become indispensable. This is totally anecdotal but I remember from an early season of Survivor that there was a contestant who cooked for everyone so nobody wanted to vote them off the island. I think some of that tribal thinking applies to business.

throwaway392343 10y ago
Yeah this is my general thinking too. Any suggestions on specific ways to do this as a developer?
- tylercubell 10y ago
  The only thing I can think of is using a technology that would be difficult or costly to hire for. Of course this would be morally dubious if it doesn't align with the goals of the business but if it does produce some material benefit it could be a win-win. At any rate, I think you would be treading a fine line and anything beyond this could potentially amount to sabotaging the business and you definitely don't want that.