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What I'm going to tell you next is controversial. Take it or leave it. I'm sure other people will tell you it's wrong/immoral/stupid/a bad idea/whatever... Good

What I'm going to tell you next is controversial. Take it or leave it. I'm sure other people will tell you it's wrong/immoral/stupid/a bad idea/whatever... Good for them. I want you to start saving everything. Save emails. Save contacts and contRacts. Save code libraries. Save workplace procedures and systems. Save lists of your clients, suppliers and resellers. Save strategy documents. Save analytics and marketing plans. Save Facebook remarketing lists. Then put all of this stuff in a drawer, and forget about it for the next few years. One day down the track, you're going to wish you had access to some of this stuff. "What was that supplier/investor/advisor's phone number?", "How did we build our user base initially?", "How successful was X technique?", "What was the codebase we used?", "Who was that great client who gave us helpful feedback?" etc. Keep it offsite, and do it in a way that won't set off alarm bells (slowly, reasonably, etc). Be very very careful. This is probably their #1 fear, and they might be keeping tabs on access logs for certain sensitive documents. No doubt a lot of this data will be stored on your computer (laptop?) already. Back it up, and keep a backup offsite so that it's protected if you get a rude shock and are forced out at a moments notice. The other way to access it is in the normal course of work over the next few months. If you have a legitimate reason to check X while you're doing Y, then check X on your local machine and save a backup. Over 3-6 months, you'll probably end up touching every piece of the business. This is not about power. It's not about revenge. And it's not copyright or IP rights. (Don't be stupid and try to use it to "get them back", or to beat them at their own game, or ruin them, or whatever. You'll lose.) This is a reference for you. A time capsule you can look back on for lessons, advice and strategy when you're building the foundation of your new life - without having to go back to square one.

throawaycofnder 13y ago
Now that we have that out of the way - let's talk lawyers. Realistically, if you don't have a controlling stake, they're next-to-nothing you can do to stop "them" screwing you. All a lawyer is going to be able to do is tell you "if you do X, or let them do Y, you'll be far worse off". As Bluestrike2 says, you might wind up winning the case, but bankrupting yourself in the process. Litigators are the only profession that provides no economic benefit to society. Other professions create things, or improve things, or build on things. Litigators divide a pie into 3 parts, and keep a slice. So the chances of walking out ahead are pretty remote. Plus it sounds like you don't have a huge amount of cash to spend on lawyers anyway. So keep your head screwed on. Sure, get advice so that you know where you stand. But this "lawyer up", "fight for your rights" bullshit is a road to ruin spouted by idiots. Find a lawyer who has expertise working for people in your CTO/CEO's position. I think they're going to have seen more cases, and learned more about what works and what doesn't, than someone who has expertise protecting "the little guy" (minority shareholders, etc). I don't know what it's like where you are, but where I'm from lawyers are required to provide a schedule of fees and a costs estimate upon request. It's nice to get an idea about the fees in advance. Before you meet with them, send them the contract and have a brief chat about what you want from them before you sit down. The day before you meet with them, call them just to check they've read the contract. Don't let them get away with flying by the seat of their pants in your consultation. (You'd be surprised at how many lawyers do this.) The 3 questions you want answered are: 1. What your legal obligations are, under your contract and any relevant legislation or case law, and how do you ensure you don't fuck up and accidentally screw yourself out of your equity/shareholding/vesting/whatever. 2. What legal protections you have under your contract and any relevant legislation or case law. (i.e. How might the company push you out in unpleasant ways, and what you can do to prevent this from happening.) 3. How would they recommend you get out as quickly and as profitably as possible. Realistically, your lawyer is going to tell you "Here's a list of stupid and pretty obvious things you shouldn't do. There's not too much you can do to protect yourself, and there are plenty of things they can do to screw you totally." For example, the CEO might be in a position where they could sell all the assets of the company to a new company, and leave you with an interest in an empty shell. Or there might be an "out" in the contract that lets them essentially kick you out for next-to-nothing. Or the CEO could "loan" the company money at high interest rates, bankrupting it, and then repossess the assets. And there might be sweet FA you can do to protect yourself from these scenarios.
throawaycofnder 13y ago
So if you're saying that they need you for another 3-6 months, then it might be worth pushing forward exit talks now - before you become useless and unnecessary in the business, and while they need you. Your lawyer will be able to advise you on strategy here, and if they're cool-headed, it might be best to get them to negotiate on your behalf. (I know personally, one harsh comment or unfair criticism and I'd lose my focus in negotiations, or break down and be unable to cope. So having an experienced advocate might be worthwhile.) How I would be playing this would be: a) I'd explore a scenario where I stayed on in a non-tech role, without losing the equity vested. b) I'd explore whether I could (kindly) stay on for the 3-6 months they needed in return to receiving a payout for the equity vested at an agreed amount that saw me take back the personal wealth plus an agreed amount of money for the vested equity. (This is going to hurt, and you'll feel like they paid too little while they feel they paid too much, but I don't think you should tie your equity to something illiquid that you have no control over.) c) I'd explore plan b, paid out over instalments instead of in one lump sump, if they don't have the capacity to pay right now. d) I'd explore plan b as a mix of equity plus cash - maximising cash. e) I'd explore plan b, but instead of a payout I'd look to increase the vested equity in the company to an agreed amount. (If they can't get the money to pay out out now, this might be the only option - but I think it's messy and risky.) f) If you can't get any of those, just do whatever you can to walk away with as much of the capital you've invested as you can - ideally in cash. How did things work out for me? I ended up with a Plan C. It worked out to be the equivalent of about 1.5 years dividends from my shareholding as we were structured differently, was already profitable and industry-leading in what it was doing. I thought I got screwed. My co-founders thought they paid too much. Whatever. All divorces are acrimonious. Fast forward a few years, and I have a new company that makes me more money, sees me working 10-20 hours a week, and doing something I enjoy doing far more. What's happened to my co-founders? Well, the business reached saturation point soon after I left, and is now struggling to survive. After we finally forgave each other, I caught up with my now greying, stressed, sick, tired, overworked and underpaid cofounder/former best friend and I feel sorry for him. He actually looks at my life now and envies it. :( What happened to me at the time left me teetering on the edge of suicide. It was humiliating. It was a huge fall from grace. And I felt utterly destroyed: financially, emotionally, spiritually, and physically. It took me 18 months to recover, 2.5 years to regain a level of confidence in who I am and what I do, and 3 years to build my new business, and 4 years to stop regretting what happened and feel happier about where I'm going than where I've been. You sound like a smart guy - and I'm confident that your new life will be far better than the hell or uncertainty you're in right now (or the hell you may be in for another 3-6+ months). My wish for you is that you get to leave your current situation with the best possible foundation (whatever it looks like) and you begin your new life as soon as possible. If your future isn't in this venture, then the sooner you get started on "the next thing", the sooner you'll get there.

throawaycofnder 13y ago

Now that we have that out of the way - let's talk lawyers. Realistically, if you don't have a controlling stake, they're next-to-nothing you can do to stop "them" screwing you. All a lawyer is going to be able to do is tell you "if you do X, or let them do Y, you'll be far worse off". As Bluestrike2 says, you might wind up winning the case, but bankrupting yourself in the process. Litigators are the only profession that provides no economic benefit to society. Other professions create things, or improve things, or build on things. Litigators divide a pie into 3 parts, and keep a slice. So the chances of walking out ahead are pretty remote. Plus it sounds like you don't have a huge amount of cash to spend on lawyers anyway. So keep your head screwed on. Sure, get advice so that you know where you stand. But this "lawyer up", "fight for your rights" bullshit is a road to ruin spouted by idiots. Find a lawyer who has expertise working for people in your CTO/CEO's position. I think they're going to have seen more cases, and learned more about what works and what doesn't, than someone who has expertise protecting "the little guy" (minority shareholders, etc). I don't know what it's like where you are, but where I'm from lawyers are required to provide a schedule of fees and a costs estimate upon request. It's nice to get an idea about the fees in advance. Before you meet with them, send them the contract and have a brief chat about what you want from them before you sit down. The day before you meet with them, call them just to check they've read the contract. Don't let them get away with flying by the seat of their pants in your consultation. (You'd be surprised at how many lawyers do this.) The 3 questions you want answered are: 1. What your legal obligations are, under your contract and any relevant legislation or case law, and how do you ensure you don't fuck up and accidentally screw yourself out of your equity/shareholding/vesting/whatever. 2. What legal protections you have under your contract and any relevant legislation or case law. (i.e. How might the company push you out in unpleasant ways, and what you can do to prevent this from happening.) 3. How would they recommend you get out as quickly and as profitably as possible. Realistically, your lawyer is going to tell you "Here's a list of stupid and pretty obvious things you shouldn't do. There's not too much you can do to protect yourself, and there are plenty of things they can do to screw you totally." For example, the CEO might be in a position where they could sell all the assets of the company to a new company, and leave you with an interest in an empty shell. Or there might be an "out" in the contract that lets them essentially kick you out for next-to-nothing. Or the CEO could "loan" the company money at high interest rates, bankrupting it, and then repossess the assets. And there might be sweet FA you can do to protect yourself from these scenarios.

throawaycofnder 13y ago

So if you're saying that they need you for another 3-6 months, then it might be worth pushing forward exit talks now - before you become useless and unnecessary in the business, and while they need you. Your lawyer will be able to advise you on strategy here, and if they're cool-headed, it might be best to get them to negotiate on your behalf. (I know personally, one harsh comment or unfair criticism and I'd lose my focus in negotiations, or break down and be unable to cope. So having an experienced advocate might be worthwhile.) How I would be playing this would be: a) I'd explore a scenario where I stayed on in a non-tech role, without losing the equity vested. b) I'd explore whether I could (kindly) stay on for the 3-6 months they needed in return to receiving a payout for the equity vested at an agreed amount that saw me take back the personal wealth plus an agreed amount of money for the vested equity. (This is going to hurt, and you'll feel like they paid too little while they feel they paid too much, but I don't think you should tie your equity to something illiquid that you have no control over.) c) I'd explore plan b, paid out over instalments instead of in one lump sump, if they don't have the capacity to pay right now. d) I'd explore plan b as a mix of equity plus cash - maximising cash. e) I'd explore plan b, but instead of a payout I'd look to increase the vested equity in the company to an agreed amount. (If they can't get the money to pay out out now, this might be the only option - but I think it's messy and risky.) f) If you can't get any of those, just do whatever you can to walk away with as much of the capital you've invested as you can - ideally in cash. How did things work out for me? I ended up with a Plan C. It worked out to be the equivalent of about 1.5 years dividends from my shareholding as we were structured differently, was already profitable and industry-leading in what it was doing. I thought I got screwed. My co-founders thought they paid too much. Whatever. All divorces are acrimonious. Fast forward a few years, and I have a new company that makes me more money, sees me working 10-20 hours a week, and doing something I enjoy doing far more. What's happened to my co-founders? Well, the business reached saturation point soon after I left, and is now struggling to survive. After we finally forgave each other, I caught up with my now greying, stressed, sick, tired, overworked and underpaid cofounder/former best friend and I feel sorry for him. He actually looks at my life now and envies it. :( What happened to me at the time left me teetering on the edge of suicide. It was humiliating. It was a huge fall from grace. And I felt utterly destroyed: financially, emotionally, spiritually, and physically. It took me 18 months to recover, 2.5 years to regain a level of confidence in who I am and what I do, and 3 years to build my new business, and 4 years to stop regretting what happened and feel happier about where I'm going than where I've been. You sound like a smart guy - and I'm confident that your new life will be far better than the hell or uncertainty you're in right now (or the hell you may be in for another 3-6+ months). My wish for you is that you get to leave your current situation with the best possible foundation (whatever it looks like) and you begin your new life as soon as possible. If your future isn't in this venture, then the sooner you get started on "the next thing", the sooner you'll get there.