4 ms·

What would you say if this person's technology contribution was fundamental to the success of the company and, once complete, the other partner then did away wi

by lrm242 15y ago

What would you say if this person's technology contribution was fundamental to the success of the company and, once complete, the other partner then did away with the technical mind behind the product so as to maximize benefit for himself? You have no idea what the true and complete facts are behind this guys story. Stop running around trying to apply half-baked, two-bit Valley Web-startup rules to his situation.

jsavimbi 15y ago
> What would you say if this person's technology contribution was fundamental to the success of the company...? Looking back, I wrote some code in 2004 and again in 2005. Assuming that said code was left intact(1), at no point in my existence would I pretend that a company was able to launch, become a going concern and grow to the point of multi-million dollar sale based on some code I wrote six or seven years ago. (1 a completely insane assumption, imo)
- nimblegorilla 15y ago
  What about the reverse situation? Someone invests money into a startup in exchange for 20% of the value. If they stop further investing does that mean the money was not fundamental to getting the company off the ground?
  - danshapiro 15y ago
    Equity is given before most of the expected value is provided, so it's important to have a mechanism to reclaim it if the expected value never materializes. That's why vesting is so important. If you decided to provide less than the expected amount of money, you would receive less than the agreed amount of equity, but it's really apples and oranges.
    - joshontheweb 15y ago
      The value expected from investors is longterm as well. Many startups take money from investors as a mechanism to get them on their board, provide mentorship and make connections. If the investor doesn't follow through on the mentorship, should he receive less equity?
      - jsavimbi 15y ago
        I've seen early-stage investors cashed-out and escorted from the building. It's a business and regardless of how much you put in up front, as a founder, employee or investor, you need to keep producing for the company or you'll be excused from showing up any more.
  - jsavimbi 15y ago
    > getting the company off the ground Angels routinely invest in the early-stage with the understanding that their stake will be diluted by future rounds to which they may not be invited to, or can decline to invest further in. If you're cahooted with an early-stage angelish investor who somehow thinks their initial financial contribution to the project ultimately lead to its success and should therefore retain their undiluted equity and equally participate in the liquidation of the company, then you have other problems you need to deal with. How do you identify these people? Usually financially unsophisticated and like to go around telling people that they are, in fact, either an owner or founder of "their startup". Some VC's have a habit of doing that as well. It's gauche.
    - nimblegorilla 15y ago
      Maybe we are disagreeing about different things. If someone invested money for 20% of a company they would still have some percentage of ownership after dilution. If someone invested time and skill then they should also retain some diluted equity in my opinion. The OP's 12.8m seems excessive though.
      - jsavimbi 15y ago
        > If someone invested time and skill then they should also retain some diluted equity in my opinion. Not without a vesting schedule and certainly not at an undiluted figure representing 20% of a company six years later. If anything, absent contracts and documentation, OP would be lucky if he could secure an early termination fee based on the one-year, pre-money valuation of the company during which he worked. My senses tell me that said amount, if awarded, would not cover the legal fees involved. This would be akin to Pete Best asking for a full share of the Beatles' catalog.
gizmo 15y ago
I base my judgement on the information I have at my disposal. If the facts change my judgement will change accordingly. I could refuse to pass judgement until I have "the complete and true facts" (as if that's even possible). I could wisely shake my head and say "well, it's complicated", "there are always shades of gray", "people ought to be adult about these matters". Refusal to take a side is just http://lesswrong.com/lw/yp/pretending_to_be_wise/ http://lesswrong.com/lw/yp/pretending_to_be_wise/. Based on the post by the OP I consider the claim that he is entitled to $12.8 million ludicrous, and I stand by that.
- snth 15y ago
  I don't think the point of that post was "You should always take a side, no matter how little information you have".
deleted 15y ago
[deleted]

by lrm242 15y ago

jsavimbi 15y ago

> What would you say if this person's technology contribution was fundamental to the success of the company...? Looking back, I wrote some code in 2004 and again in 2005. Assuming that said code was left intact(1), at no point in my existence would I pretend that a company was able to launch, become a going concern and grow to the point of multi-million dollar sale based on some code I wrote six or seven years ago. (1 a completely insane assumption, imo)

nimblegorilla 15y ago
What about the reverse situation? Someone invests money into a startup in exchange for 20% of the value. If they stop further investing does that mean the money was not fundamental to getting the company off the ground?
- danshapiro 15y ago
  Equity is given before most of the expected value is provided, so it's important to have a mechanism to reclaim it if the expected value never materializes. That's why vesting is so important. If you decided to provide less than the expected amount of money, you would receive less than the agreed amount of equity, but it's really apples and oranges.
  - joshontheweb 15y ago
    The value expected from investors is longterm as well. Many startups take money from investors as a mechanism to get them on their board, provide mentorship and make connections. If the investor doesn't follow through on the mentorship, should he receive less equity?
    - jsavimbi 15y ago
      I've seen early-stage investors cashed-out and escorted from the building. It's a business and regardless of how much you put in up front, as a founder, employee or investor, you need to keep producing for the company or you'll be excused from showing up any more.
- jsavimbi 15y ago
  > getting the company off the ground Angels routinely invest in the early-stage with the understanding that their stake will be diluted by future rounds to which they may not be invited to, or can decline to invest further in. If you're cahooted with an early-stage angelish investor who somehow thinks their initial financial contribution to the project ultimately lead to its success and should therefore retain their undiluted equity and equally participate in the liquidation of the company, then you have other problems you need to deal with. How do you identify these people? Usually financially unsophisticated and like to go around telling people that they are, in fact, either an owner or founder of "their startup". Some VC's have a habit of doing that as well. It's gauche.
  - nimblegorilla 15y ago
    Maybe we are disagreeing about different things. If someone invested money for 20% of a company they would still have some percentage of ownership after dilution. If someone invested time and skill then they should also retain some diluted equity in my opinion. The OP's 12.8m seems excessive though.
    - jsavimbi 15y ago
      > If someone invested time and skill then they should also retain some diluted equity in my opinion. Not without a vesting schedule and certainly not at an undiluted figure representing 20% of a company six years later. If anything, absent contracts and documentation, OP would be lucky if he could secure an early termination fee based on the one-year, pre-money valuation of the company during which he worked. My senses tell me that said amount, if awarded, would not cover the legal fees involved. This would be akin to Pete Best asking for a full share of the Beatles' catalog.

gizmo 15y ago

I base my judgement on the information I have at my disposal. If the facts change my judgement will change accordingly. I could refuse to pass judgement until I have "the complete and true facts" (as if that's even possible). I could wisely shake my head and say "well, it's complicated", "there are always shades of gray", "people ought to be adult about these matters". Refusal to take a side is just http://lesswrong.com/lw/yp/pretending_to_be_wise/ http://lesswrong.com/lw/yp/pretending_to_be_wise/. Based on the post by the OP I consider the claim that he is entitled to $12.8 million ludicrous, and I stand by that.

snth 15y ago
I don't think the point of that post was "You should always take a side, no matter how little information you have".

deleted 15y ago

[deleted]