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For the most part, my cofounders and I followed the advice in this video—with the one exception of founder salaries. To be honest I really regret the vesting cl

For the most part, my cofounders and I followed the advice in this video—with the one exception of founder salaries. To be honest I really regret the vesting cliff. I worked without pay for 6 months. I had no indication anything was wrong. We raised a seed round were about to finally start paying ourselves the cofounders booted me. Suddenly they weren't happy with my performance, though days before they'd praised it. Worst of all one of them still hadn't quit his full-time job! The vesting cliff protects those who stay from a founder leaving early, but it also creates the possibility of a founder getting strategically booted once the business is less risky and/or starts getting traction. To be perfectly honest after going through this, I'm not very inclined to do a founder vesting cliff again.

TheBiv 12y ago
Very interesting. Considering your scenario, would you advise others to not have a cliff or have a X month cliff?
- suchthrowaway 12y ago
  At the end of the day, you really have to trust your cofounders. Betrayals happen but you can't found a company with people you don't trust. A cliff still makes sense in cases when a cofounder abandons a start-up and stops working. Maybe the safest way for everyone involved is to only apply cliffs for the first 3 months or in the case of voluntary departure. That still leaves room for abuse but at least the temptation is more limited. I'm sure the folks at YC have experience with just about every permutation of this scenario. I wish the video had also covered protecting the founders on the other side of a split up.
  - brackenbury 12y ago
    Trust is not a binary value. When large sums of money are involved you don't want to rely solely on trust.
SeoxyS 12y ago
I agree... there's too much room to get screwed over royally with cofounder vesting cliffs. The equity stakes are so much higher founder, and the compensation is usually either mostly or entirely stock. That means that if there's a breakup, the founder who gets booted is completely screwed and lost a year of their life for nothing. I wouldn't have a 1-year cliff for any below-market employees. I'd reserve 1-year cliffs for employees with market salaries that happen post-funding.
ehurrell 12y ago
It seems to be in these legal areas that people expose what's really important to them. Sadly sometimes that means finding out people you thought were friends are capable of toxic things, even when you have written agreements. It can be a tough thing to learn, but I'd bet you are better off for learning it.
danieltillett 12y ago
If you had worked without pay you should have been able to use that as leverage to get vested - this was one of the points made in the lecture of why you should always pay the founders.
- dllthomas 12y ago
  Yeah. There's an exception when you own enough of the business, but if there's a cliff and they kick you out before it you didn't actually own enough of the business. It seems likely they owe at least one of ownership or backpay.

TheBiv 12y ago

Very interesting. Considering your scenario, would you advise others to not have a cliff or have a X month cliff?

suchthrowaway 12y ago
At the end of the day, you really have to trust your cofounders. Betrayals happen but you can't found a company with people you don't trust. A cliff still makes sense in cases when a cofounder abandons a start-up and stops working. Maybe the safest way for everyone involved is to only apply cliffs for the first 3 months or in the case of voluntary departure. That still leaves room for abuse but at least the temptation is more limited. I'm sure the folks at YC have experience with just about every permutation of this scenario. I wish the video had also covered protecting the founders on the other side of a split up.
- brackenbury 12y ago
  Trust is not a binary value. When large sums of money are involved you don't want to rely solely on trust.

SeoxyS 12y ago

I agree... there's too much room to get screwed over royally with cofounder vesting cliffs. The equity stakes are so much higher founder, and the compensation is usually either mostly or entirely stock. That means that if there's a breakup, the founder who gets booted is completely screwed and lost a year of their life for nothing. I wouldn't have a 1-year cliff for any below-market employees. I'd reserve 1-year cliffs for employees with market salaries that happen post-funding.

ehurrell 12y ago

It seems to be in these legal areas that people expose what's really important to them. Sadly sometimes that means finding out people you thought were friends are capable of toxic things, even when you have written agreements. It can be a tough thing to learn, but I'd bet you are better off for learning it.

danieltillett 12y ago

If you had worked without pay you should have been able to use that as leverage to get vested - this was one of the points made in the lecture of why you should always pay the founders.

dllthomas 12y ago
Yeah. There's an exception when you own enough of the business, but if there's a cliff and they kick you out before it you didn't actually own enough of the business. It seems likely they owe at least one of ownership or backpay.