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Bad news: If the CEO wants you out, by default, you should leave. It won't work to stay wrt high-pressure collaboration & trust, and is a warning sign against c
by lmeyerov 6y ago
Bad news: If the CEO wants you out, by default, you should leave. It won't work to stay wrt high-pressure collaboration & trust, and is a warning sign against continued growth. Worse, they are likely about to fire you over the equity + performance, and unless you have single-trigger, you get 0 equity. Even if you keep equity after you leave, 40% equity is too much 'dead weight' for professional investors to not pressure them to wipe you out after you leave.
Question is how replaceable are you. (Sadly, most people are.) If the plan is a funding round, they'll need you or a new technical cofounder (they may be replacing you anyway?), they'll need equity to represent that. good news there is they want someone proven or harder to raise. The founder may also be wanting to keep > 50% after funding dilution.
I'd stretch it out 1mo till you got your cliff, so you get your 5% or whatever vested locked in. Then I'd try to figure out why the reln is broken, and if you truly want to stay / can fix it. Negotiation wise, I'd assume you are leaving, and maybe they are playing hardball. Asking for a buyout doesn't work as they are cash poor, and keeping too much equity doesnt bc they can just fire you. they may also decide to wipe you out after you leave by issuing more stock to remove dead weight on cap table.
Maybe: Offer to stay on until you help get a good replacement at 90% efficacy, and keep vesting at high rate, then leave. Say you are good for partial buyouts during the next rounds.
if you have single trigger, you have way more leverage. if a success 10yrs / 1000 employees / $1B from now and you leave now, you'd have contributed little of the ultimate work, and your equity & departure more of a hindrance during fundraising, so leave it w even 5-10% now is fairish.
edit: I would discuss w a startup lawyer. if you break the reln now w money still in trust of the untrustworthy ceo, like equity to sell at next rounds, you may want extra protections on it, like conversion dates to something more liquid.
- lmeyerov 6y agoPeople are downvoting this, and I'm guessing because they interpret it as saying it's fine that the technical co-founder is being forced down + out like this, or that they don't "deserve" their shot at vesting that 40%. Not my intent - it's immoral, and probably, illegal. Pulling this 1mo before the cliff is especially evil. The difficulty is the CEO has a lot of flexibility in equivalent legal actions like firing the co-founder, issuing 10X more shares, and diluting the 40% to 4%. Even if the technical co-founder does successfully walk away with 40% today and things go well, investors in funding rounds years from now will still pressure them to do so ("why is 40% of the company shares dead weight? That should go to new employees!"). The situation stinks, as does the negotiation position.