7 ms·

From a purely legal perspective, this is incorrect. He's on a vesting schedule, and currently has 0% (his cofounder also has 0% currently, assuming they starte

From a purely legal perspective, this is incorrect. He's on a vesting schedule, and currently has 0% (his cofounder also has 0% currently, assuming they started at the sam time). They both entered this agreement to only get ~40% if they work there for 4 years (and at that point, they'll likely have to revest). Vesting schedules were created for this exact situation.

stale2002 6y ago
I mean, maybe. But that is not a reason to follow your advice and just "give up". If the choice is between "giving up" or getting as much equity as possible, for example by stalling for a month until he vests, but also causing those other problems that you mentioned, then the choice should be clear. Stall, and get the larger amount of equity. He's got nothing to lose, right? If you have nothing to lose, then there is no reason to not take as much as you can. I don't think it is some costly effort to simply stall for a month, and refuse any deal. He doesn't need a lawyer or anything. He can simply refuse a deal, and continue "negotiating" until he vests and gets his guaranteed 10%.
- gkoberger 6y ago
  They can't stall; that's now how this works. There's no such thing as squatters rights when you're terminated. Like tptacek said a few times in this thread, they should read the contracts and see if they can be fired, but it's very likely they can be.
- tptacek 6y ago
  This is a partner we all agree is ruthless enough to terminate a productive partner prior to a cliff, but somehow either lacks enough clue or holds on to just enough ruth not to be able to simply fire the partner before the cliff elapses. They probably don't have to accept a deal in order to be terminated.
  - stale2002 6y ago
    Ok, but he already has nothing to lose, right? I had the choice between accepting a pittance, or forcing the other person to take actions that would make them possibly legally liable, then I'd choose to force the other guy to take on the legal liability. Because if they were to fire him, then they'd basically have to fire them like a week or 2 before his vesting cliff, with an establish history of an attempted negotiation. Firing someone a week before they vest, in order to claw back the shares, because the other person refused your offer, is likely illegal, and not "good faith". If he is already in a situation where he has nothing to lose, you may as well force the other person to engage in the possibly illegal action against you. Or, at the very least, get them to make the illegal threat in a way that you can document it. Even the bluff, or threat of legal action, against a questionable practice, is a huge problem for a company, that most founders do not want to have to deal with. And he doesn't have anything to lose anyway... That doesn't mean you have to sue them right now. Even the threat of mentioning that this might be illegal, and that you are at least considering legal action, could force the other person to give in, and not do the possibly illegal thing. Or even beyond that, if there is a documented evidence of these illegal actions, what you can do is simply not sue now, and only sue later on, if the company is actually worth something in the future, and it makes sense to do so. All upside, and no downside. Don't pay the court costs, unless there is something to gain.
    - tptacek 6y ago
      He has a lot to lose: * The 3% he's been offered, which while paltry compared to the 40% he had if things had gone better is still not a small amount of equity to hold in a successful company. * Many thousands of dollars in legal fees. * Many months of effort and stress. People on message boards have weird ideas of what does and doesn't constitute lawful termination. Hiring in the US (I'm assuming this is the US, because there was a $100k investor) is at-will, most especially so in companies documented carefully enough to have 4/1 vesting. There is likely no such thing as a "bad faith" termination; there is only termination authorized by contracts establishing who manages the company, and termination that isn't. Again, by all means, pay a small amount of money to get a competent lawyer to verify that's the case. Everybody on this thread will likely say "go ahead and fight" if it turns out this person can't be fired, so you can just stick a pin in that thought and we can continue to discuss the more realistic scenario. Threatening to sue: also often a bad idea! If it's not credible, and everyone knows you don't have the resources to litigate, and that even if you did it would be economically irrational to do so, then the threat does the opposite of gain you leverage; meanwhile, threats can trigger other legal problems for you. Advice I'm pretty confident in giving: don't trust a message board post that tells you to threaten legal action.
deleted 6y ago
[deleted]

stale2002 6y ago

I mean, maybe. But that is not a reason to follow your advice and just "give up". If the choice is between "giving up" or getting as much equity as possible, for example by stalling for a month until he vests, but also causing those other problems that you mentioned, then the choice should be clear. Stall, and get the larger amount of equity. He's got nothing to lose, right? If you have nothing to lose, then there is no reason to not take as much as you can. I don't think it is some costly effort to simply stall for a month, and refuse any deal. He doesn't need a lawyer or anything. He can simply refuse a deal, and continue "negotiating" until he vests and gets his guaranteed 10%.

gkoberger 6y ago
They can't stall; that's now how this works. There's no such thing as squatters rights when you're terminated. Like tptacek said a few times in this thread, they should read the contracts and see if they can be fired, but it's very likely they can be.
tptacek 6y ago
This is a partner we all agree is ruthless enough to terminate a productive partner prior to a cliff, but somehow either lacks enough clue or holds on to just enough ruth not to be able to simply fire the partner before the cliff elapses. They probably don't have to accept a deal in order to be terminated.
- stale2002 6y ago
  Ok, but he already has nothing to lose, right? I had the choice between accepting a pittance, or forcing the other person to take actions that would make them possibly legally liable, then I'd choose to force the other guy to take on the legal liability. Because if they were to fire him, then they'd basically have to fire them like a week or 2 before his vesting cliff, with an establish history of an attempted negotiation. Firing someone a week before they vest, in order to claw back the shares, because the other person refused your offer, is likely illegal, and not "good faith". If he is already in a situation where he has nothing to lose, you may as well force the other person to engage in the possibly illegal action against you. Or, at the very least, get them to make the illegal threat in a way that you can document it. Even the bluff, or threat of legal action, against a questionable practice, is a huge problem for a company, that most founders do not want to have to deal with. And he doesn't have anything to lose anyway... That doesn't mean you have to sue them right now. Even the threat of mentioning that this might be illegal, and that you are at least considering legal action, could force the other person to give in, and not do the possibly illegal thing. Or even beyond that, if there is a documented evidence of these illegal actions, what you can do is simply not sue now, and only sue later on, if the company is actually worth something in the future, and it makes sense to do so. All upside, and no downside. Don't pay the court costs, unless there is something to gain.
  - tptacek 6y ago
    He has a lot to lose: * The 3% he's been offered, which while paltry compared to the 40% he had if things had gone better is still not a small amount of equity to hold in a successful company. * Many thousands of dollars in legal fees. * Many months of effort and stress. People on message boards have weird ideas of what does and doesn't constitute lawful termination. Hiring in the US (I'm assuming this is the US, because there was a $100k investor) is at-will, most especially so in companies documented carefully enough to have 4/1 vesting. There is likely no such thing as a "bad faith" termination; there is only termination authorized by contracts establishing who manages the company, and termination that isn't. Again, by all means, pay a small amount of money to get a competent lawyer to verify that's the case. Everybody on this thread will likely say "go ahead and fight" if it turns out this person can't be fired, so you can just stick a pin in that thought and we can continue to discuss the more realistic scenario. Threatening to sue: also often a bad idea! If it's not credible, and everyone knows you don't have the resources to litigate, and that even if you did it would be economically irrational to do so, then the threat does the opposite of gain you leverage; meanwhile, threats can trigger other legal problems for you. Advice I'm pretty confident in giving: don't trust a message board post that tells you to threaten legal action.

deleted 6y ago

[deleted]