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Could you guys expound on why this is the "right thing?" I see this very differently. Personally, I would never have agreed to this based on my understanding o

by aneth3 14y ago

Could you guys expound on why this is the "right thing?" I see this very differently. Personally, I would never have agreed to this based on my understanding of the situation. It's clear from the article that Ecquire evolved from Dropcard, even if it is an entirely different product now: "Ecquire was getting further and further conceptually (and technologically) from Dropcard" Almost every tech company evolves dramatically, and rarely resembles its former self after four years. If one contributes substantially in the founding stages of a company, I believe one should end up with something, even if it is a reduced stake. The company would not have made it where it is without Ariel and Anton's participation in early failed ideas or admission and participation in the incubator. It's safe to assume their contribution exceeds zero percent, which is what the Tal pushed for and Ariel and Anton agreed to. No investor would have agreed to this, why is it right for Ariel and Anton?

ori_b 14y ago
> No investor would have agreed to this, why is it right for Ariel and Anton? Because they agreed to it. It's not like they were swindled -- They had an offer to discuss the price and be bought out for a fair price. But they decided that it wasn't worth the effort, and perhaps they felt like giving the startup that they helped found a gift. If you ask for something nicely, and people are willing to give it to you without being browbeaten, I don't see anything wrong. In short, it's the right thing because they decided it was the right thing.
tatsuke95 14y ago
>Ecquire evolved from Dropcard, even if it is an entirely different product now" What does that even mean, really? If they have nothing in common (and they might in this case, I don't really know), then the evolution is irrelevant. You can't stake a claim on all my future ideas because we once shared an idea together. >"If one contributes substantially in the founding stages of a company, I believe one should end up with something, even if it is a reduced stake." This has to be determined case by case, which is why I think the early equity split is meaningless. What did they contribute? Money? Code that is still being used? Other ideas that got implemented? It's pretty easy to put a price on these things. If you can't point to tangible contributions to the new business you don't deserve anything. I think the courts would agree.
- macspoofing 14y ago
  >What did they contribute? Sweat equity, most likely, for which they were rewarded with an ownership stake. >I think the courts would agree. Courts would side with Arel and Anton, should they decided to retain their shares.
  - tatsuke95 14y ago
    >"Sweat equity, most likely, for which they were rewarded with an ownership stake" Sweat equity doesn't occur in a vacuum; something is created from that effort. If they wrote code and that code earns money, they are entitled to a portion of those earnings. That's inarguable. It is my understanding that the original "idea" (I have trouble calling it a company) didn't take hold. If nothing is created and the company never amounts to anything...what are you getting an "ownership stake" in? Had Zuckerberg and a friend opened a candy store on the Harvard campus in 2002, and it had failed, that friend is not entitled to anything Zuck does with Facebook because he put in labour on the candy store. Now, if Zuck was operating Facebook under the same legal entity as the candy store in which his partner had equity, said partner might have a claim, though it would be hard to establish if the partner produced no work for the new idea. That said, if this is analogous to the situation in the article, what on earth are these guys doing getting bogged down with convoluted equity agreements when they should be working on the product? I'll repeat: if the other co-founders provided something tangible --be it an idea, code, money, whatever-- to the new project, they deserve "their share". If they can't point to something tangible, they deserve nothing.
    - deleted 14y ago
      [deleted]
    - aneth3 14y ago
      > if Zuck was operating Facebook under the same legal entity as the candy store in which his partner had equity, said partner might have a claim, though it would be hard to establish if the partner produced no work for the new idea Now, IANAL, but to my knowledge this is just patently false and represents a complete mischaracterization of the purpose and legal implications of a corporation. In this case, Facebook would be owned by the flower shop entity, not Zuck. Regardless of what work his partner put in, Facebook is still owned by the flower shop entity, and each has ownership stakes as contractually or legally established. Neither Zuckerberg nor his partner would have any personal claim to Facebook, only to their equity in the owning entity. Zuck would not suddenly get more equity in the entity because of the work he did. This is one of the most basic functions of equity and the reason for investing time or dollars in exchange for equity - so that your wealth increases disproportionately from the work of others. If ownership was determined by judges proportioning by sweat equity, those who left Facebook after 2 years and now have $10M+ would be in trouble. There are numerous legal complications if Zuckerberg claimed that Facebook was NOT under the flower shop entity, however given your statement that he explicitly placed it under the flower shop, the case is quite simple. Zuck would not have been able to extract Facebook without buying out his partner. I am way over my head in trying to get into this part, but depending on state law, I understand there are de facto partnership agreements in the absence of a written one (generally an equal split) and sometimes ways of getting rid of "dead weight" partnerships. These are not things you want to happen. This sort of situation occurs all the time in small businesses and often leads to their demise. You are doing a great disservice to anyone who takes your advice.

by aneth3 14y ago

ori_b 14y ago

> No investor would have agreed to this, why is it right for Ariel and Anton? Because they agreed to it. It's not like they were swindled -- They had an offer to discuss the price and be bought out for a fair price. But they decided that it wasn't worth the effort, and perhaps they felt like giving the startup that they helped found a gift. If you ask for something nicely, and people are willing to give it to you without being browbeaten, I don't see anything wrong. In short, it's the right thing because they decided it was the right thing.

tatsuke95 14y ago

>Ecquire evolved from Dropcard, even if it is an entirely different product now" What does that even mean, really? If they have nothing in common (and they might in this case, I don't really know), then the evolution is irrelevant. You can't stake a claim on all my future ideas because we once shared an idea together. >"If one contributes substantially in the founding stages of a company, I believe one should end up with something, even if it is a reduced stake." This has to be determined case by case, which is why I think the early equity split is meaningless. What did they contribute? Money? Code that is still being used? Other ideas that got implemented? It's pretty easy to put a price on these things. If you can't point to tangible contributions to the new business you don't deserve anything. I think the courts would agree.

macspoofing 14y ago
>What did they contribute? Sweat equity, most likely, for which they were rewarded with an ownership stake. >I think the courts would agree. Courts would side with Arel and Anton, should they decided to retain their shares.
- tatsuke95 14y ago
  >"Sweat equity, most likely, for which they were rewarded with an ownership stake" Sweat equity doesn't occur in a vacuum; something is created from that effort. If they wrote code and that code earns money, they are entitled to a portion of those earnings. That's inarguable. It is my understanding that the original "idea" (I have trouble calling it a company) didn't take hold. If nothing is created and the company never amounts to anything...what are you getting an "ownership stake" in? Had Zuckerberg and a friend opened a candy store on the Harvard campus in 2002, and it had failed, that friend is not entitled to anything Zuck does with Facebook because he put in labour on the candy store. Now, if Zuck was operating Facebook under the same legal entity as the candy store in which his partner had equity, said partner might have a claim, though it would be hard to establish if the partner produced no work for the new idea. That said, if this is analogous to the situation in the article, what on earth are these guys doing getting bogged down with convoluted equity agreements when they should be working on the product? I'll repeat: if the other co-founders provided something tangible --be it an idea, code, money, whatever-- to the new project, they deserve "their share". If they can't point to something tangible, they deserve nothing.
  - deleted 14y ago
    [deleted]
  - aneth3 14y ago
    > if Zuck was operating Facebook under the same legal entity as the candy store in which his partner had equity, said partner might have a claim, though it would be hard to establish if the partner produced no work for the new idea Now, IANAL, but to my knowledge this is just patently false and represents a complete mischaracterization of the purpose and legal implications of a corporation. In this case, Facebook would be owned by the flower shop entity, not Zuck. Regardless of what work his partner put in, Facebook is still owned by the flower shop entity, and each has ownership stakes as contractually or legally established. Neither Zuckerberg nor his partner would have any personal claim to Facebook, only to their equity in the owning entity. Zuck would not suddenly get more equity in the entity because of the work he did. This is one of the most basic functions of equity and the reason for investing time or dollars in exchange for equity - so that your wealth increases disproportionately from the work of others. If ownership was determined by judges proportioning by sweat equity, those who left Facebook after 2 years and now have $10M+ would be in trouble. There are numerous legal complications if Zuckerberg claimed that Facebook was NOT under the flower shop entity, however given your statement that he explicitly placed it under the flower shop, the case is quite simple. Zuck would not have been able to extract Facebook without buying out his partner. I am way over my head in trying to get into this part, but depending on state law, I understand there are de facto partnership agreements in the absence of a written one (generally an equal split) and sometimes ways of getting rid of "dead weight" partnerships. These are not things you want to happen. This sort of situation occurs all the time in small businesses and often leads to their demise. You are doing a great disservice to anyone who takes your advice.