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Toptal suit against co-founder dismissed
- pwncake 7y agoSeems like the other way around: https://www.theinformation.com/go/4146dbb37f https://www.theinformation.com/go/4146dbb37f
- neilv 7y agoThat theinformation.com article alleges that Toptal CEO Taso Du Val has all the stock, despite that employees and investors, including Andreessen Horowitz, expected to get stock. Since our industry has become the 1980s Wall Street of ethics, not much behavior surprises me anymore, but a successful startup allegedly backstabbing a prominent VC does.
- wheelerwj 7y ago> our industry has become the 1980s Wall Street of ethics +1
- debt 7y agoWhen there's this much money floating around, it's not surprising it brings out the worst in people.
- buckminster 7y agoAnd it brings out the worst people.
- jnbiche 7y agoBingo.
- bitL 7y agoYou'd be surprised how many "darlings" of our industry screwed their best people when the promises were due (even written ones) and plans changed.
- staticautomatic 7y agoWhat's interesting is that usually people get screwed because the founders/execs raise too much money. Here, they didn't raise enough.
- PeterisP 7y agoWhat do you mean by "expected" stock ? Is stock in some way similar to a baby that might get born on a given date or is stock assigned by lottery or whims of a deity? Did they have a contract that promises them stock? If yes, then they should demand that in court; if not, then they shouldn't have been "expecting" it - especially if we're talking about seasoned investors, which shouldn't be "expecting" anything other than what they themselves explicitly wrote in the investment paperwork. If they have a contract that promises them stock when pigs fly, then they shouldn't have been expecting that stock - they probably shouldn't have also accepted the disadvantageous contract, but that's a different issue.
- neilv 7y agoI was trying to be concise and not to make a case, so stated it intentionally weaker than my impression from the details in the article. Are you speaking of this particular case (e.g., that they shouldn't have expected the subsequent funding round), or making a more general point about contracts and "expected"?
- teej 7y agoToptal issued a press release affirming that they are suing [redacted]. https://www.prnewswire.com/news-releases/toptal-files-lawsuit-against-former-coo-breanden-beneschott-300901071.html https://www.prnewswire.com/news-releases/toptal-files-lawsui...
- olliej 7y agoAnother story of non-executives being screwed over stock - we’ve seen claw backs, revaluation, reweighting, etc Seriously people need to stop accepting anything other than actual, real shares, that aren’t any kind of lesser grade/b class shares. Guaranteeing investor payback over employee payback. Employee’s, especially early ones, are taking more risk than the VCs and should be compensated at a higher rate. If investor repayment is higher priority in funding rounds/buyout employee investment should be paid back before purely cash investors. The end.
- jusben1369 7y agoI'm pretty sure this is a bizarre twist where it's a founder getting screwed over with no stock, vs a "regular" non-executive.
- frakkingcylons 7y agoIt's an unfortunate mix of both, according to The Information. A co-founder, early investors, and employees aren't receiving stock because their contracts were dependent on future fund raises (which never emerged).
- zopf 7y agoThe reality is that you need to be able to trust the founders and board members you work with. A corporation's board typically has the authority to issue new shares (thus diluting existing shareholders), so even having unrestricted common stock or even preferred stock does not guarantee that you will always own a certain % of a company's outstanding shares. Between all the preferred share terms, warrants, options, contingent earn-outs, etc, there's a million ways to engineer the divvying-up of proceeds in a sale. Ultimately, it comes down to whether you trust your leaders to hold to the spirit of their agreement with you. All that said... it would be really interesting to see a corporation with bylaws and governance/voting structured in such a way that employee ownership and payout %s could be maintained within certain guaranteed bands. It would severely limit that corporation's flexibility, and might lead it to have a higher risk of failure in bad funding market environments... but it could become a big draw for high-value employees who strongly prefer equity certainty over cash comp and company autonomy.
- altmind 7y agoCan anyone provide a link to full complaint? Pacermonitor is not free and only shows the preview of the 1st page.
- staticautomatic 7y agoI'll be happy to download it but don't know where to host it. Suggestions?
- burger_moon 7y agoPastbin is pretty easy
- sucrose 7y agoMEGA, Mediafire, Zippyshare, Degoo, OneDrive, Google Drive, pCloud, etc. Pick one.
- ikeboy 7y agoInstall the recap extension which posts it publicly on courtlistener.
- a13n 7y agohttps://srv-file6.gofile.io/download/dnaTwk/Toptal%20v.%20Beneschott%20Complaint.pdf https://srv-file6.gofile.io/download/dnaTwk/Toptal%20v.%20Be...
- dang 6y agoThe title originally was "Toptal sues co-founder $NAME for fraud". Since the case was dismissed, I've updated the title. Edit: we've also replaced references to that person's name with "[redacted]" below. The reason is that HN threads tend to rank highly in search results. We don't want a situation where Googling some individual's name will forever lead people to an old thread like this, where they won't find important relevant information that, e.g., the case was later dismissed. Generally we find out about these things because individuals (or, less optimally, their lawyers) email us and ask for threads to be deleted. We tell them that we don't delete entire threads because that would be unfair to the commenters who participated, but that there are usually other things we can do to help resolve legitimate privacy concerns while preserving the rest of the thread. This case was an example of that.
- staticautomatic 7y agoLink to the full complaint: https://gofile.io/?c=dnaTwk https://gofile.io/?c=dnaTwk
- a13n 7y agoDirectly to the PDF: https://srv-file6.gofile.io/download/dnaTwk/Toptal%20v.%20Beneschott%20Complaint.pdf https://srv-file6.gofile.io/download/dnaTwk/Toptal%20v.%20Be...
- chadash 7y agoTLDR; Toptal started small and took a little funding early on, but now has over $100mm in annual revenue and got there mostly through organic growth rather than follow on investment rounds. The company seems to be wholly owned by one of the co-founders. The other co-founder, who was in college when the company started, doesn't have an equity stake at all. Presumably he had a salary from day 1. There seems to be some sort of agreement that if the company restructures, he might get equity at some point, but this isn't necessarily going to happen. Founder 2 (no equity) is accused of defrauding the company by misusing funds and hiring his girlfriend at an above market rate. The language of the complaint indicates that he's upset about not having an equity stake.
- thesausageking 7y agoIt's curious that Toptal is structured as a single member LLC. That would make it difficult/impossible for a VC to invest. And, while they claim they raised a round from a16z, it's not listed on a16z's full list of investments: https://a16z.com/investments/ https://a16z.com/investments/ That would support the notion that Du Val promised to convert and issue stock to other parties and never did.
- mrnobody_67 7y agoThey've also had at least 5 general counsels... and were taken to court by another marketplace for scraping their database of programmers (ultimately settling out of court).
- staticautomatic 7y agoI don't think any of that supports the assertion that he promised to convert the note but never did. Whatever promises were made are in the note itself. What's especially interesting and radical about this is that, if it's true, the note was no-recourse for the investors. As I imagine is typical, a note I did once would convert to preferred upon raising a certain amount of money, but if we didn't, the note holder could either extend the term or elect to take common instead. The idea that you could do a note where the investor gets nothing if you don't raise more money is fucking wild. That said, I guess it's not totally beyond the realm of possibility that even investors like A16Z would consider doing a no-recourse deal, provided the round was really hot and the investor was super confident that the company would raise more money. If it's true that the note is no-recourse, then I say more power to him. Ask for the terms you want! You'll never know how much leverage you really have unless you try. The worst thing that can happen is they say no.
- rococode 7y agoStrange that it's not on the website there. I don't know if the investment really happened either, but there are a couple links on a16z which seem to suggest they did invest in TopTal. Some articles reference a seed round. (these links are all empty apart from a logo and a date ranging from 2013 to 2016) https://a16z.com/toptal-2/ https://a16z.com/toptal-2/ https://a16z.com/toptal-logo-3/ https://a16z.com/toptal-logo-3/ https://a16z.com/toptal-logo/ https://a16z.com/toptal-logo/ https://a16z.com/toptal/ https://a16z.com/toptal/
- bruceb 7y agoSo someone explain this. The amount seem to be in the low 100k area? Why bother suing? Du Val has hoarded all this stock, apparently it has worked, you can argue the ethics of it, but he seems to have pulled it off. Why not just write off this relatively small amount for a company with $200m revenue? Why draw attention to yourself and your company? Is it an ego thing?
- vitalychernobyl 7y agoLooks like it was more than that (plus he's now trying to claim he owns a part of the company and/or entitled to $2MM.. again, according to the doc) "[redacted]'s at-will employment was terminated for the reasons herein explained, and [redacted] left Toptal’s employ unjustly enriched, and with amounts owed by him to Toptal in the form of unpaid loan amounts, unreimbursed credit card charges of a purely personal nature, and restitution for amounts caused to be embezzled and diverted to his girlfriend and for an unapproved, self-awarded bonus, totaling at least $629,850.46."
- bruceb 7y agoThanks. I just read first the few pages, thought it was lower. If the COO just kept quiet, I think it would have been worth it to forget even $630k, but I guess could say it also sends a message. I don't think most people on HN knew about the interesting events related to ownership of Toptal, so good for us the suit happened.
- deleted 7y ago[deleted]
- elsewhen 7y agofrom the lawsuit: "47. On July 3, 2019, [redacted] wired $466,373.67 to Toptal." so, this whole lawsuit seems to be about: $163,476.79
- vitalychernobyl 7y ago
- vitalychernobyl 7y agoJust read through the whole thing (don't know why) - here is the synopsis: It doesn't really talk about any ownership issues regarding the CEO - it's basically saying that [redacted] (an early employee) embezzled/mis-used money and when fired, started claiming he owned part of the company or was entitled to compensation. According to the thing - [redacted] was hired a COO as an early employee with no equity, they claim he was unhappy, and that he embezzled a bunch of money by paying his girlfriend, getting bonuses, and misusing the company credit card (some of this he repaid). But once they found out, they fired him, and he started claiming he owned equity and/or was owed severance. They want the money back, him made to shut up, and possibly drawn-and-quartered. So it doesn't look like this is much broader than that .. again - according to the doc.
- CalChris 7y agoWhy would they hire someone for COO and not give this person equity? Sympathy for the devil and all but these people were asking for something bad to happen.
- egdod 7y agoWhy he would accept the job on those terms is the more salient question.
- caymanjim 7y agoI would take a solid salary over equity almost any day, having been burned by failed startups in the past, and/or left before my options vested. It'd be nice to get a solid salary AND equity, but I'm never going to work anywhere again where I take a pay cut in exchange for equity.
- pault 7y agoI agree, but you'd probably have a different set of expectations if you were founding a company.
- 7y ago
- babelfish 7y ago> 65. Also after the termination of [redacted]'s at-will employment, again to extract even more money from Toptal and continue to unjustly enrich himself at Toptal’s expense, [redacted] has also made baseless and unfounded claims, that he is entitled to $2 million in severance, the monetary equivalent of a two-month leave of absence, and a $40,000 bonus. Dude was getting paid $!,000,000 a month? Damn.
- ivanech 7y agoI'm pretty sure this is 3 separate items - $2 million severance AND 2 months of pay AND $40,000. If $2 million is the equivalent of 2 months of pay, the sentence should have been structured differently.
- vitalychernobyl 7y agoNo :) (i read it that way too at first) It's $2MM + 2mo + 40k
- bmurray7jhu 7y agoCourtlistener has the full docket without a paywall: https://www.courtlistener.com/docket/16048273/toptal-llc-v-beneschott/ https://www.courtlistener.com/docket/16048273/toptal-llc-v-b...
- crb002 7y agoToptal is a massive ADA violator for those with ADHD screened out by competition programming style interviews, but are great programmers under routine conditions.
- pault 7y agoDoesn't that apply to every company that does technical interviews? What about people with anxiety disorders? Any interview at all is discrimination.
- pkaye 7y ago> What about people with anxiety disorders? What kind of accommodations would suit these individuals?
- swift532 7y agoRelatively small but not too small take home project plus live code review and discussion of approaches they took in the project.
- pkaye 7y agoWhen I used to be a manager who did hiring, I was always open to accommodating the candidates needs. Like instead of whiteboard, using paper or laptop. So far nobody asked for take-home projects. A few times people asked for a second chance and I'd agree to it.
- fouc 7y agoHow does competition programming style interviews discriminate against ADHD? I know there's different types of ADHD but the type I'm most familiar with is the one with a relationship between attention/focus & stimulation. High stimulation = high attention/focus. So interviews wouldn't be a disadvantage at all, unless they were incredibly boring.
- markbnj 7y agoAh yeah Toptal. I did an interview thing with them 3 or 4 years ago. I don't remember the details, except that it was online, moderated, timed, three python algorithm challenges. I nailed the first two and went overtime on the third, and was told I could "try again in six months." I remember it being an unpleasant experience.
- dejv 7y agoAnd at the end they would offer you 20 or maybe just maybe 30 USD/hour maximum. And with hour they do mean billable hour.
- rficcaglia 7y agoSeems like another Dice or Hall Kinion or Robert Half? Am I missing something special here?
- dangxiaopin 7y agoLooks like something you don't want to touch with a ten foot pole as an employee or an investor (or user for that matter). Avoid vexatious litigants.
- throwaway2834 7y agoThere is another lawsuit involving TopTal in Collier County (where [redacted] lives): https://www.filebin.ca/4rhKFRhk9bk9/11-2019-CA-002689-0001-XX.pdf https://www.filebin.ca/4rhKFRhk9bk9/11-2019-CA-002689-0001-X...
- throwtal 7y agoThere is an outstanding case by [redacted] in Collier County Florida, case number: 11-2019-CA-002689-0001-XX Here's the pdf: https://uploadfiles.io/791hz3tg https://uploadfiles.io/791hz3tg If the link doesn't work, you can access it: Go to https://cms.collierclerk.com/cmsweb https://cms.collierclerk.com/cmsweb Click Case Search In "Case Number" input "11-2019-CA-002689-0001-XX" (no quotes) Click Search Click Dockets Click the paperclip next to Docket Num 2
- toptalemployee 7y ago[redacted] sued Toptal for 100M, case number 11-2019-CA-002689-0001-XX in Collier County. My other post was shadowbanned, here's the pdf: https://uploadfiles.io/791hz3tg https://uploadfiles.io/791hz3tg