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It’s not about being babysat, it’s about downside protection for VCs. If you’re competent and believe in your business (which any founder CEO should be and do),

It’s not about being babysat, it’s about downside protection for VCs. If you’re competent and believe in your business (which any founder CEO should be and do), your personal assessment of the risk of you leaving should be effectively zero — meaning this term (“founders must adhere to this vesting schedule”) reduces to, “sure, if that makes you happy, let’s negotiate on more important things.” Not agreeing to this term (or negotiating heavily) when accepting investment capital can be a huge red flag for this reason. It immediately weeds out people who aren’t committed to the business.

sheeshkebab 8y ago
so you are saying you are not negotiating about your ownership of the company? WTF...are you really that desperate for their money that you are basically an employee of a VC subsidiary now? grow up people, and found companies that actually can stand on their own.
- dang 8y ago
  Please express your points thoughtfully rather than in the flamewar style. If you rant like this or otherwise do the latter, it ends up having the same effect as trolling. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
Phlarp 8y ago
>It immediately weeds out people who aren’t committed to the business. Wouldn't this be equally valid as "self selects for people willing to take a worse deal" or even less charitably "self selects for suckers"
- kenneth 8y ago
  I'm a VC, so let me shed some light on this. The biggest reasons we require founders to be on a vesting schedule is not really to protect our investments (as mentioned by another commenter). If the founders were to decide to screw us over somehow, our investment is already toast, and we potentially have other recourse. It's to protect founders from each other. Most successful startups have multiple founders, but the most common reasons for failure is also disputes between multiple founders. Bad founder breakups are frequent. They can be survived, but only with a vesting schedule for the founders, so that the remainder founders aren't screwed by having to, in essence, work for the founders who left. If you have two founders, and one leaves after 2 years due to a disagreement — without a vesting schedule, the remaining founder would have no motivation to continue to create value, given all the value he creates goes in an equal amount to the founder who left. Even with a vesting schedule, in this case, we'll typically negotiate to repurchase the majority of the stock of the departing founder.
  - Phlarp 8y ago
    So what explains the rote implementation of this logic on single founders too? I expect to be heavily downvoted for even suggesting these things on this board (as my original comment was) but this logic reeks of VC bullshit and I suspect you won't refute that despite your assertion that this is totally only about co-founder protection you wouldn't hesitate to impose such a vesting schedule on a solo founder, likely using some of the other arguments in this thread that you've even discounted in the original post.
    - keithwhor 8y ago
      I began as a solo founder and I (gladly) accepted a vesting schedule as part of our first money in. There are very few legitimate reasons that founders shouldn’t be willing to accept vesting schedules for their own ownership — I mean, there’s one: that you believe the value and potential of your company to be so great in a short time horizon that you can get rich quickly and leave within a couple years, and also believe with 100% confidence that the risk to do so is negligible and external factors (market downturn, you name it) will not be able to impede your progress. Call me when you build that company; it’s roughly equivalent to the perpetual motion machine of company-building. Vesting schedules for founders are standard terms and there are a multitude of reasons they’re standard — as a founder I can give you reasons, and VCs can give you plenty more. As somebody who began a solo founder, there was no intracooperative founder risk to me accepting a vesting schedule and I did so anyway without hesitation, for the reasons I outlined earlier.
      - sheeshkebab 8y ago
        Let’s say you launched a company, bootstrapped it to the tune of say $500k, have customers and business, then a VC comes along with “standard terms” trying to put you on a vesting schedule, for your own damn company... what is your response going to be? Quite likely it’s not going to be - “I run it by my legal department and they said Ok”.
        keithwhor 8y ago
dragonwriter 8y ago
> It’s not about being babysat, it’s about downside protection for VCs It's about being babysat as downside protection for VCs.

sheeshkebab 8y ago

so you are saying you are not negotiating about your ownership of the company? WTF...are you really that desperate for their money that you are basically an employee of a VC subsidiary now? grow up people, and found companies that actually can stand on their own.

dang 8y ago
Please express your points thoughtfully rather than in the flamewar style. If you rant like this or otherwise do the latter, it ends up having the same effect as trolling. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

Phlarp 8y ago

>It immediately weeds out people who aren’t committed to the business. Wouldn't this be equally valid as "self selects for people willing to take a worse deal" or even less charitably "self selects for suckers"

kenneth 8y ago
I'm a VC, so let me shed some light on this. The biggest reasons we require founders to be on a vesting schedule is not really to protect our investments (as mentioned by another commenter). If the founders were to decide to screw us over somehow, our investment is already toast, and we potentially have other recourse. It's to protect founders from each other. Most successful startups have multiple founders, but the most common reasons for failure is also disputes between multiple founders. Bad founder breakups are frequent. They can be survived, but only with a vesting schedule for the founders, so that the remainder founders aren't screwed by having to, in essence, work for the founders who left. If you have two founders, and one leaves after 2 years due to a disagreement — without a vesting schedule, the remaining founder would have no motivation to continue to create value, given all the value he creates goes in an equal amount to the founder who left. Even with a vesting schedule, in this case, we'll typically negotiate to repurchase the majority of the stock of the departing founder.
- Phlarp 8y ago
  So what explains the rote implementation of this logic on single founders too? I expect to be heavily downvoted for even suggesting these things on this board (as my original comment was) but this logic reeks of VC bullshit and I suspect you won't refute that despite your assertion that this is totally only about co-founder protection you wouldn't hesitate to impose such a vesting schedule on a solo founder, likely using some of the other arguments in this thread that you've even discounted in the original post.
  - keithwhor 8y ago
    I began as a solo founder and I (gladly) accepted a vesting schedule as part of our first money in. There are very few legitimate reasons that founders shouldn’t be willing to accept vesting schedules for their own ownership — I mean, there’s one: that you believe the value and potential of your company to be so great in a short time horizon that you can get rich quickly and leave within a couple years, and also believe with 100% confidence that the risk to do so is negligible and external factors (market downturn, you name it) will not be able to impede your progress. Call me when you build that company; it’s roughly equivalent to the perpetual motion machine of company-building. Vesting schedules for founders are standard terms and there are a multitude of reasons they’re standard — as a founder I can give you reasons, and VCs can give you plenty more. As somebody who began a solo founder, there was no intracooperative founder risk to me accepting a vesting schedule and I did so anyway without hesitation, for the reasons I outlined earlier.
    - sheeshkebab 8y ago
      Let’s say you launched a company, bootstrapped it to the tune of say $500k, have customers and business, then a VC comes along with “standard terms” trying to put you on a vesting schedule, for your own damn company... what is your response going to be? Quite likely it’s not going to be - “I run it by my legal department and they said Ok”.
      - keithwhor 8y ago

dragonwriter 8y ago

> It’s not about being babysat, it’s about downside protection for VCs It's about being babysat as downside protection for VCs.