6 ms·

It sounds like you own 40% of something fairly valuable and now that it's 11 months into your contract other founder who needed your help is getting greedy and

by ohyes 6y ago

It sounds like you own 40% of something fairly valuable and now that it's 11 months into your contract other founder who needed your help is getting greedy and trying to push you out before you are owed anything. You said it yourself, you've grown hugely, you're dominating SEO since you joined, and built loads of products. This is your 'partner' getting greedy after you've done a lot of hard work. It wouldn't have happened without you. Don't undersell yourself. Your 40% is worth $400k based on that initial funding valuation, right? Assuming it's as successful as you seem to be implying, it is almost certainly worth more now. Everyone is telling you to roll over but seriously, fuck them. This other toxic guy is the one who should be getting pushed out, not you. The other investor ultimately has power in this situation, not you or him, so whoever convinces them that they are the person to go with gets the seat and gets to continue with the project. If he has a good relationship there you're probably fucked, but results matter... and if you can prove you've done great stuff since joining and and have great plans for the future, he can be replaced. To be clear: this guy has decided to blow up the project so he can get a bigger share, if it all fails now he can only blame himself.

fossuser 6y ago
Yeah - I don't see how people can tell them to just give up. Go scorched earth - what do you have to lose? Know the other guy is hostile and don't trust them to do the right thing. Consider your options outside of that and talk it over with the other investor. If you're the technical cofounder here you're probably in a stronger position to negotiate. If you can get the other investor to see what's happening here (your cofounder pushing you out one month before the cliff after you've helped to build things up) you may be able to get them on your side. As I see it without knowing details: - Either your contributions are real and your cofounder is a miserable person trying to screw you out of it and risking the company in order to do that. - Or you haven't done anything substantial and the cofounder wants you out. Even in this case it's still wrong of them to do this one month before vesting (and the way they're approaching it sounds dishonest, they should be direct). If it's truly the former I think getting the third investor to understand this is key, if the non-technical cofounder is risking the entire business at this stage they're going to be bad going forward - you probably need to get rid of them. If it's the latter (which seems unlikely since the other cofounder is non-technical) you'll still want to negotiate a reasonable exit, but it may be harder to do so (and you'll probably need a lawyer).
- digitaltrees 6y ago
  This advice will almost certainly result in no deal and leave all parties worse off. Instead, I would have an open, honest conversation, listen from a place of empathy and generosity and seek a compromise. The truth is, unless your cofounder has the right to terminate your employment, then continue working and try to create as much harmony as possible. Co-founder disputes are awful and usually result in the death of the company. But being aggressive will only speed up the Demise not prevent it, and if the company implodes that equity is worth nothing anyway.
  - fossuser 6y ago
    I'm all for pragmatism and cooperation, but it sounded like the OP already tried that and the current state is the result. Yes, start with what you're suggesting but don't just accept getting used. Who's at fault matters here, if the cofounder is truly acting in the way suggested and is not willing to compromise then it's critical to get the other investor to see what they're doing. If that leads to the cofounder blowing up and the death of the company happening sooner rather than later so be it. If it turns out OP is actually not contributing anything then yeah, better to seek some sort of clean exit compromise. The details matter and how much leverage OP has matters. It's impossible to give good advice without knowing that in either direction. At a minimum the OP should get the one year cliff on exit.
  - _0ffh 6y ago
    Well no, fuck them. If the choice is to get some crumbs of a cake I was vital in baking or to throw the whole cake, I'd throw it unless I was starving otherwise! It is not a good move to let someone get away with something like this. Also, it will mark you as a pushover in future endeavors with other people, should they get wind of what happened there. Do not let anyone get away with that kind of antisocial behavior, if you can help it, is my two cents.
    - adamsea 6y ago
      Parent posters point is that the battle for control will end up being so toxic it will fuck the cake. Which seems like a valid concern.
drtillberg 6y ago
Not clear who actually owns the equity outright. If its the OP, based on what's written and nothing more it sounds like a racket the non-technical founders are running. I personally would identify the laziest path for you to exercise your rights to extinguish the entire venture, ideally with counsel, and then tell the other people what you've decided to do, let them name their price. If things roll your way, maybe you resurrect the business later buying its assets out of bankruptcy. Either way, think lazy; this looks like a scam for your time; the more you put into it at any price, the worse off you are.
- bigbizisverywyz 6y ago
  It actually sounds like the co-founder knows what he/she's about, and could potentially restart a competitive offering quickly enough. In which case bringing about the demise of the initial now toxic partnership is also an option.
nickff 6y ago
Where are you getting the idea that the tech co-founder (TCF) owns "40% of something fairly valuable"? It seems the TCF currently owns 0%, and will go to ~10% (25% of 40%) if they don't get laid off/fired in the next month.
- deleted 6y ago
  [deleted]
- ohyes 6y ago
  It's not clear the other founder actually owns any more than TCF does. What makes you think TCF can be so easily pushed out or that the other founder has significantly more leverage? It isn't clear to me that they have different deals. Honestly, if non-technical thought he could fire this guy, he probably would have already. That's why TCF is being bullied into resigning. What is non-technical going to tell the investors when he fires the guy who keeps everything running, built everything, and did all the SEO? Think of it this way, take the deal and you get 3% of nothing because it'll get driven into the ground. Don't take the deal and either you keep working on it, and get 40+% of something decent, or you get N% of nothing because other guy drives it into the ground but you got a better buyout. There's very little downside for TCF in actually sticking to his guns, and it's not like he's going to look like the asshole here.
  - nickff 6y ago
    Non-tech founder (NTF) started it, so I'm guessing NTF is CEO. NTF is probably on similar vesting schedule, but won't fire himself. The fact they're having these conversations means that NTF has probably made up his mind, and decided this is not going to end on mutually amicable terms. It's possible that TCF can hang on until the cliff, but I doubt that'll happen, and it's not going to be pretty if they do. There are all kinds of ways NTF can reduce/destroy TCF's equity; I'd take 3% and move on with my life.
    - CyberDildonics 6y ago
      > There are all kinds of ways NTF can reduce/destroy NTF's equity What are those ways? The only sane thing is to go and talk to lawyers. In what world is it going to be the best option to let yourself be used and abused?
doonesbury 6y ago
Whatever the root reason this is now conflict over control. Therefore you need to know your legal contractual options and obligations and his plus whatever poison pills or repercussions for out of contract behavior. Who owns the IP is key. What is that? No need to necessarily write here but to bolster your resolve. Now if the contract allows bad actors without downside risk ... There are no good answers except experience. Watch out for attrition by tying you up on legal fees. But then call BS on him not having buyout proceeds. Finally, maybe you need to press him and not let him set the context. Saying no is but one play his side. You can put him in a box too All this assumes an adversarial process. Good luck to you.
mooreds 6y ago
> Your 40% is worth $400k based on that initial funding valuation, right? One quibble. That is typically not how it works, since his shares are likely common stock and investors get preferred stock. In my experience, the range of value for common stock in private firms varies widely, but it is never one to one with preferred stock (the golden rule being, of course, "who has the money makes the rules"). I have seen values ranging from 10% to 30% of the preferred stock price. Now, of course, I only have a few data points, so ymmv, but founders shouldn't delude themselves that their sweat equity is valued the same as preferred stock.
KorematsuFred 6y ago
I would like to disagree a bit. Resolving disagreements between co-founders I tricky. I would request OP to assume good intent and ask the following question. > What are you giving me in return of my 40% of the stock ? Why is that a fair price ? I do not know, but it is perfectly possible that the other person might have a good answer. If you have already made up your plan you guys can agree on some kind of plan where you divest your stock over a period in one way to another. I have a suspicion that the other co-founder probably does not want OP around for whatever reason. But OP can help him by simply taking a break while keeping the stock.

by ohyes 6y ago

fossuser 6y ago

Yeah - I don't see how people can tell them to just give up. Go scorched earth - what do you have to lose? Know the other guy is hostile and don't trust them to do the right thing. Consider your options outside of that and talk it over with the other investor. If you're the technical cofounder here you're probably in a stronger position to negotiate. If you can get the other investor to see what's happening here (your cofounder pushing you out one month before the cliff after you've helped to build things up) you may be able to get them on your side. As I see it without knowing details: - Either your contributions are real and your cofounder is a miserable person trying to screw you out of it and risking the company in order to do that. - Or you haven't done anything substantial and the cofounder wants you out. Even in this case it's still wrong of them to do this one month before vesting (and the way they're approaching it sounds dishonest, they should be direct). If it's truly the former I think getting the third investor to understand this is key, if the non-technical cofounder is risking the entire business at this stage they're going to be bad going forward - you probably need to get rid of them. If it's the latter (which seems unlikely since the other cofounder is non-technical) you'll still want to negotiate a reasonable exit, but it may be harder to do so (and you'll probably need a lawyer).

digitaltrees 6y ago
This advice will almost certainly result in no deal and leave all parties worse off. Instead, I would have an open, honest conversation, listen from a place of empathy and generosity and seek a compromise. The truth is, unless your cofounder has the right to terminate your employment, then continue working and try to create as much harmony as possible. Co-founder disputes are awful and usually result in the death of the company. But being aggressive will only speed up the Demise not prevent it, and if the company implodes that equity is worth nothing anyway.
- fossuser 6y ago
  I'm all for pragmatism and cooperation, but it sounded like the OP already tried that and the current state is the result. Yes, start with what you're suggesting but don't just accept getting used. Who's at fault matters here, if the cofounder is truly acting in the way suggested and is not willing to compromise then it's critical to get the other investor to see what they're doing. If that leads to the cofounder blowing up and the death of the company happening sooner rather than later so be it. If it turns out OP is actually not contributing anything then yeah, better to seek some sort of clean exit compromise. The details matter and how much leverage OP has matters. It's impossible to give good advice without knowing that in either direction. At a minimum the OP should get the one year cliff on exit.
- _0ffh 6y ago
  Well no, fuck them. If the choice is to get some crumbs of a cake I was vital in baking or to throw the whole cake, I'd throw it unless I was starving otherwise! It is not a good move to let someone get away with something like this. Also, it will mark you as a pushover in future endeavors with other people, should they get wind of what happened there. Do not let anyone get away with that kind of antisocial behavior, if you can help it, is my two cents.
  - adamsea 6y ago
    Parent posters point is that the battle for control will end up being so toxic it will fuck the cake. Which seems like a valid concern.

drtillberg 6y ago

Not clear who actually owns the equity outright. If its the OP, based on what's written and nothing more it sounds like a racket the non-technical founders are running. I personally would identify the laziest path for you to exercise your rights to extinguish the entire venture, ideally with counsel, and then tell the other people what you've decided to do, let them name their price. If things roll your way, maybe you resurrect the business later buying its assets out of bankruptcy. Either way, think lazy; this looks like a scam for your time; the more you put into it at any price, the worse off you are.

bigbizisverywyz 6y ago
It actually sounds like the co-founder knows what he/she's about, and could potentially restart a competitive offering quickly enough. In which case bringing about the demise of the initial now toxic partnership is also an option.

nickff 6y ago

Where are you getting the idea that the tech co-founder (TCF) owns "40% of something fairly valuable"? It seems the TCF currently owns 0%, and will go to ~10% (25% of 40%) if they don't get laid off/fired in the next month.

deleted 6y ago
[deleted]
ohyes 6y ago
It's not clear the other founder actually owns any more than TCF does. What makes you think TCF can be so easily pushed out or that the other founder has significantly more leverage? It isn't clear to me that they have different deals. Honestly, if non-technical thought he could fire this guy, he probably would have already. That's why TCF is being bullied into resigning. What is non-technical going to tell the investors when he fires the guy who keeps everything running, built everything, and did all the SEO? Think of it this way, take the deal and you get 3% of nothing because it'll get driven into the ground. Don't take the deal and either you keep working on it, and get 40+% of something decent, or you get N% of nothing because other guy drives it into the ground but you got a better buyout. There's very little downside for TCF in actually sticking to his guns, and it's not like he's going to look like the asshole here.
- nickff 6y ago
  Non-tech founder (NTF) started it, so I'm guessing NTF is CEO. NTF is probably on similar vesting schedule, but won't fire himself. The fact they're having these conversations means that NTF has probably made up his mind, and decided this is not going to end on mutually amicable terms. It's possible that TCF can hang on until the cliff, but I doubt that'll happen, and it's not going to be pretty if they do. There are all kinds of ways NTF can reduce/destroy TCF's equity; I'd take 3% and move on with my life.
  - CyberDildonics 6y ago
    > There are all kinds of ways NTF can reduce/destroy NTF's equity What are those ways? The only sane thing is to go and talk to lawyers. In what world is it going to be the best option to let yourself be used and abused?

doonesbury 6y ago

Whatever the root reason this is now conflict over control. Therefore you need to know your legal contractual options and obligations and his plus whatever poison pills or repercussions for out of contract behavior. Who owns the IP is key. What is that? No need to necessarily write here but to bolster your resolve. Now if the contract allows bad actors without downside risk ... There are no good answers except experience. Watch out for attrition by tying you up on legal fees. But then call BS on him not having buyout proceeds. Finally, maybe you need to press him and not let him set the context. Saying no is but one play his side. You can put him in a box too All this assumes an adversarial process. Good luck to you.

mooreds 6y ago

> Your 40% is worth $400k based on that initial funding valuation, right? One quibble. That is typically not how it works, since his shares are likely common stock and investors get preferred stock. In my experience, the range of value for common stock in private firms varies widely, but it is never one to one with preferred stock (the golden rule being, of course, "who has the money makes the rules"). I have seen values ranging from 10% to 30% of the preferred stock price. Now, of course, I only have a few data points, so ymmv, but founders shouldn't delude themselves that their sweat equity is valued the same as preferred stock.

KorematsuFred 6y ago

I would like to disagree a bit. Resolving disagreements between co-founders I tricky. I would request OP to assume good intent and ask the following question. > What are you giving me in return of my 40% of the stock ? Why is that a fair price ? I do not know, but it is perfectly possible that the other person might have a good answer. If you have already made up your plan you guys can agree on some kind of plan where you divest your stock over a period in one way to another. I have a suspicion that the other co-founder probably does not want OP around for whatever reason. But OP can help him by simply taking a break while keeping the stock.