
I'm getting screwed with my stock options - concernedmitch
So, I joined a startup 1,5 years ago. 2 non technical founders, a half baked product with no revenue at all, built with a freelancer. Joined remotely from a EU country, as a contractor with shit money and 10% equity in options. Fast forward to today, we got seed funding, are 17 people, and the founders want to take 4 points out of my 10 points to extend the options pool. They are each giving 4  points as well. The issue is, that in my situation 4 points represents 40 percent of my options, whereas in their case more like 10% of theirs. Talking undiluted percentages here.<p>I don&#x27;t know what to fucking do. I&#x27;m &quot;c level&quot;, but I&#x27;m feeling helpless. Also, we&#x27;ve set up an office here, and hired some people, so quitting and leaving feels like a bad option.<p>Also related question. I&#x27;m thinking of exercising my existing vested shares as soon as possible, but I&#x27;m not aware of possible legalities. Startup is US based, I&#x27;m EU based.<p>Experience + feedback much appreciated.
======
patio11
How about "I appreciate your desire to have more stock available to give new
hires. You've proposed that I give up 4%, which is 40% of my allocation. I'm
amenable to giving up 1%, which is 10% of my allocation and equal to the
portion which you're willing to give up, and lets us bring in a whole new
engineer."

If they counter offered, I might give up another 0.5% in return for "OK, you
guys can have 1.5%, but in return the company rescinds your repurchase right
with regards to 3%." (i.e. We accelerate vesting.)

This is a negotiation. Nothing you say results in you owning less than 6% of
this newly valuable company, right? No need to agree to the proposal in front
of you just because it is in front of you.

~~~
encoderer
Great advice. Always have acceptable alternatives in mind. For instance,
propose that they accelerate vesting on your remaining options 50 cents on the
dollar. So if they want you to give up 2% they would instantly vest 1%. The
term here is "single trigger". Point being, be creative and try to work out a
deal. A 4% _starting_ offer isn't unreasonable.

~~~
Aqueous
He shouldn't be giving up any of his shares. At all. He should be demanding
more options. In all likelihood - he's the reason the business exists. They
would have nothing without him.

~~~
Silhouette
_They would have nothing without him._

The trouble is, that probably isn't true. They might have had nothing without
him _before_ , but now they have 16 people left without him, and presumably by
now some of those other people are technical as well.

So, his relative importance may already have been reduced from "indispensable"
to "valuable technical leader", and his personal negotiating position is
getting weaker all the time as the business grows. He may have to give up
something of value now to consolidate his position for the long term, but if
he's been suckered already then consolidation may be the best course of action
that is still available to him. Of course even a somewhat reduced but secured
stake in the business may still work out very lucrative if the company is
successful at its new scale and funding. The real question is how much
influence he has left to give up as little as possible while securing the
rest.

------
yumraj
Definitely talk to a lawyer, one who knows about startups. NOTE: the lawyers
for your startups represent the company, so don't talk to them - find your own
lawyer.

Other than that, AFAIK what you mention is not typical. Option pool should not
be created by "taking" options from employees, but rather by issuing new
shares which dilutes everyone equally. You should bring it up and ask that
they create the option pool by issuing new shares which will at least indicate
to them that you know what you're talking about and perhaps reduce their
inclination to screw you.

Also, what was your vesting schedule? If it was four years, you should have
already vested 3.75%, which you can exercise anytime. If they take 4% of the
remaining, you're left with just 2.25% to vest over next 2.5 years, which is
just wrong.

Also: before you begin negotiation, do understand your BATNA - Best alternate
to a negotiated agreement. In other words, what will you do/can do if there is
no mutual agreement. This will tell you if you're overall in a strong position
or weak. This will include any advice you get from the lawyers, your employee
agreement, etc.

~~~
Major_Grooves
This makes the most sense here. Nobody creates new option shares by "giving
up" shares - you issue new shares which create the option pool.

Do you actually have a contract for your ESOP? It's common to not have one in
the early stages since they are expensive to create.

Maybe your founders don't really know what they are doing wrt to options -
many don't.

------
webwright
The instant your partners know you're involving a lawyer is when the
relationship becomes adversarial (possibly permanently). This is not the
lawyer moment. The lawyer moment is "after a lot of discussion, these guys
refuse to do what me and the rest of the world thinks is fair". Has there been
a lot of discussion?

Get on a call with them ASAP. Tell them you think that pro-rata is both what's
FAIR and WHAT IS DONE 99.999% of the time in these circumstances-- and mention
that you've done a lot of research. Say, "Guys, obviously any two of us can
impose a decision on the third, but I trust you guys, so I'm assuming you're
doing this because you think it's normal/fair. How about this: I pay for a few
hours of a high-end startup lawyer's time and we can get a sense of what's
standard-operation-procedure here is? It seems like we might have different
opinions about what's fair. I'd propose we appeal to a knowledgeable 3rd
party. Is that cool?" If they agree, add: "If this experienced startup lawyer
says that pro-rata is what's done virtually all the time in these
circumstances, can we agree to go that route?" And see what they say. Just
keep saying you trust them and ask questions along these lines. Eventually
they'll either agree or it'll come out that they feel that you haven't earned
your 10%.

Understand: If things get ugly, they can fire you (wait-- are you vesting? If
they fire you after 1.5 years, you lose most of your options). Once they fire
you, they can dilute you and other people who are not with the company
somewhat easily. Your job here is to be friends and to maintain/earn trust
(and to not get taken advantage of!). NEVER THREATEN until there's nothing
left to salvage. If you're a fabulous negotiator, you can HINT that you're
willing (and financially able) to lawyer up.

~~~
kordless
The guy has no business trying to learn how to be a diplomat when he's already
tasked with a day to day job for the founders. If it's gotten this far in the
conversation (posting on HN) then the situation is clearly bad, at least on
one end. Given it's a situation with unfair dilution, the assumption is that
all stakeholders are well aware of the dilution results and are OK with what
is being proposed. They are founders, after all, and SHOULD know what they
mean by asking for this. Also, don't think for a minute they don't already
have attorneys queued up on their end.

I would say this is EXACTLY the time to have an attorney get involved to take
a look at the documentation and render an opinion. If the situation is ugly,
they may fire him if he protests, but that also gives rise to a reason to
question the cause for termination. Given the contractual agreement between
the parties, a termination event may provide an avenue to compensation for
unfair termination, especially when seeking legal council could be shown as
the reason for termination.

When in doubt, lawyer up and be cautious of making blaming statements that
aggravate the other party. You may want to end up working with them in the
future. Or not, depending.

~~~
tptacek
Saying that may make you feel better, but Tony seems to have the better
argument. You absolutely can be fired for lawyering up what the founders
intended to be a pro-forma restructuring of the shares. You will probably have
no recourse when that happens. Assuming you're vesting, like most employees
(and founders!) are, getting fired will cost _most_ of your shares.

Talking to a lawyer: good.

Bringing a lawyer into the discussion with the founders: bad.

~~~
Silhouette
While these practical considerations are interesting, I think there is another
observation worth making as well.

If you really can be fired without cause or notice and at the loss of most/all
of your interest in the business, you have no cards and anything you do is a
bluff.

If you really are dealing with cofounders who are are willing to push you out
of 40% of your interests without offering much of anything in return as soon
as the going gets good, then you have no reason to trust they won't push you
out of the remaining 60% the day before any lock-up expires.

In that case, your best options may be either to lever the practical value
that keeping you on board has right now to get a better, more secure deal
immediately -- one where you won't be vulnerable to being kicked out
arbitrarily and without proper compensation in the future -- or to assume
you're going to get screwed when your lock-up ends and leave now.

It's a good idea to negotiate at this point rather than caving to the
(probably very bad) deal being offered as an opening gambit by the cofounders,
but the bottom line is that if they can fire you whenever they feel like it
and you have no airtight contractual right to compensation if they do, nothing
else you negotiate now actually has any value at all.

(Edit: Obviously if you opt for the "apply leverage" option then you do it
nicely. I'm not talking about lawyers-at-dawn and threatening to walk if they
don't meet your every outrageous demand or anything silly and confrontational
like that. But I think it would be perfectly reasonable to expect solid
guarantees that your remaining interests will retain meaningful value in
exchange for whatever you are willing to give up here, such as accelerated
vesting _and_ a condition that if they let you go early then there's something
in it for you.)

~~~
tptacek
That doesn't make sense. You have at least one obvious card, which is that the
board wants you to continue working for the company. If they didn't, instead
of trying to claw back some of your equity, they'd claw back most of it by
firing you.

~~~
Silhouette
_That doesn 't make sense. You have at least one obvious card, which is that
the board wants you to continue working for the company._

That's true of any good employee, whether or not they were on board early and
received a stake in the business.

However, the value of that card will progressively decrease to near zero over
time whatever you do. Like any good poker player, you want them to pay to stay
in the game _before_ they know what your hand will be worth if they call you.

Put another way: Two years down the line, with 100 people on board and another
funding round in the bank, any one senior technical person will almost
certainly be expendable to the business _and_ everyone will know exactly how
much his options/diluted options/low preference shares are worth if he doesn't
have proper safeguards to guarantee his position.

------
vessenes
You definitely want a lawyer, but on the face of it, this is an aggressive
move by your partners. The start of a fair negotiation would be equal pro-rata
dilution. So if it was 45/45/10, and you want to make 12% in the options pool,
you should get diluted 12%, just like them.

That would mean they'd go down to 39.6% and you would go down to 8.8%.

Since you're remote and the company is growing, I would personally expect real
problems on the horizon.

Finally, exercising your options is most likely a good plan; options often
expire after someone leaves.

~~~
jbverschoor
He can exercise his options. Which means he needs to pay money right now to
own actual stock of company. Which is unsellable without a buyer.

~~~
danielweber
Strike price might be really really cheap, though, if he got options before
they had funding.

It's a little harder for them to screw you out of ownership than out of
unexercised options. But just a little.

~~~
mikkom
I don't know how US stocks work but in EU at least if the shares already have
a bigger valuation you will need to pay taxes at the point when you exercise
your options.

------
georgespencer
Assume positive intent. They might not be out to fuck you -- they might just
not have thought about it from your perspective.

Let them know that you think it's unfair because you're diluting much more
than them proportionately.

Help them understand that you're in this for the long run (even if you're not
sure, founders want to hear that: stability in senior team is something they
value) and you want to be incentivised. Many founders tend towards
underestimation of problems and overestimation of their own abilities, and
they may interpret seed money as an opportunity to replace you. You were a guy
who joined when they didn't have access to the hiring market. Now they have
money they will have a bit more access.

~~~
kordless
As much as I support the power of positive thinking, someone should never make
assumptions about anyone's feelings - good or bad. You should assume all
possible outcomes and state what you want for yourself. If you have legal
precedent for defending what you want for yourself, you should use it.

~~~
jtbigwoo
The OP's language makes it seem like the relationship is already strained and
he is isolated from the founders ("half-baked", "shit money", "feeling
helpless") while still wanting to continue with the company. This negotiation
is wrapped up in two things: 1) the financial issues and 2) the OP's value to
the company. I think point 2 is the trickier part. Others have already
suggested a few ways that the financial issues could be resolved, but he also
has to get his relationship with the founders into a better state. If the
relationship stays strained, it's only a matter of time before the next issue
sets this whole process off again. Especially when we're feeling isolated,
rearranging our own mental state often starts the process of claiming the
power to fix the relationship.

Let's say they negotiate and his equity stake is cut back to 8.5% while the
others give up 5.25% each. His narrative of the negotiation could be, "They
tried to screw me again and I barely held on" or it could be "They gave up
more money, I gave up a bigger proportion." Even though the finances don't
change, the first response maintains the status quo while second response
starts the process of reclaiming the relationship.

(Sorry for the male pronouns if you're not a male, OP. Writing he/she is
annoying and I'm lazy.)

------
MCRed
What you're looking for is an anti-dilution clause. There may be one in the
stock option agreement that prevents this. If not, whether they can do it is
going to depend on the stock option agreement and the laws of the state where
they are incorporated.

I believe the best advice for you is to find a lawyer in the state where the
company is incorporated and hire them.

It sounds to me like you've already gotten a raw deal on your ownership, and
they think they can just walk all over you. Dilution at the time of funding
should affect everyone the same, and if they want 12 percent for an option
pool, then everyone should get diluted fairly (every share should lose %12 of
its ownership). I believe anything else might be considered fraud, depending
on the terms of the agreement.

You can exercise your vested shares whenever you like (under most agreements)
and the only legalities I can think of are the tax implications.

~~~
btown
On the other hand, it is standard advice in the venture-backed startup world
to NEVER give an anti-dilution clause - I've heard the words "never give an
anti-dilution clause to anyone unless they're God, and even then he'd better
be giving you a term sheet worth its weight in gold." Unless you were aware of
such a clause, it's unlikely that it's in there. At the end of the day,
without a clause like that, the parties with the controlling stake in a
company can issue shares to whomever they want - I'm assuming that they're
issuing shares to themselves and not to you in order to implement this
options-pool extension, and not literally taking away your (vested) common
stock - now THAT would be illegal. My understanding is that there are some SEC
regulations that prevent them from just distributing shares to a few people,
but these are hard to enforce, and you'd need to basically sue your cofounders
without a guarantee of success (e.g. what Savarin tried to do at Facebook).

~~~
danielweber
Without an anti-dilution clause, early investors can be stomped all over by
later investors.

NB: I'm not disagreeing with your arguments for why anti-dilution clauses are
bad. But minority shareholders are otherwise relying on the trust from the
board, which has every incentive to screw them over, so it's a no-win
situation.

~~~
nordsieck
This is not strictly true. Early investors usually have pro-rata rights.

------
tptacek
Be careful executing your options if you don't trust the company. Execution
might not substantially improve your rights as a shareholder. It will, on the
other hand, involve you surrendering your own cash. There are startup horror
stories of early employees executing and getting zeroed out at acquisition.

(I say this as someone who listened to those horror stories, refused to
execute options, and lost a low six figure return as a result. I don't regret
the decision though; on the other hand, if I had ponied up thousands of
dollars and gotten zeroed out, I probably wouldn't be able to live with it.)

~~~
swang
Can you explain more about how they can screw you over when they get acquired?

~~~
danielweber
I know of multiple startups where the acquisition price was exactly the price
necessary -- down to four significant digits -- to pay off the VC companies
that made up 3 of the 5 sitting board seats.

I myself exercised a (small!) amount in a company that got acquired and my
shares all went to $0 because other shareholders got preferential treatment.
(This company earlier made a point of the fact that there were no investors
with preferential treatment, but either lied about that or somewhere along the
line they got desperate and gave preferential treatment. In either case, the
stakes were too small to bother suing.) At least I could claim a capital loss.

------
blaze33
So they want you to contribute as much as an initial founder? Well, then they
should give you as much equity as an initial founder, say like 30% and then
you'll happily give 4% to extend the option pool. That's the upper bound you
should start negotiating.

Otherwise it should be prorated, and you shouldn't give more than 1%,
otherwise you'll be contributing more than the founders and that doesn't make
any sense.

I've experienced shitty moves like that from people who usually wants you to
contribute and behave like a founder with a majority share without giving you
such a share. I can understand the idea, some people fall for this, but it has
no rational justification and the real issue is that the work/trust
relationship may end up being damaged beyond repair.

------
vandyswa
I'm seeing a lot of comments focusing you on your percentage of the share
pool. One area where you can really take a hit is share priority. At each
funding round the company can issue a new, higher priority of shares, and even
let previous participants who buy into the new round get their existing shares
upgraded to the new priority. You can be sitting on your X% shares (whatever X
ends up being) and find out when your company is sold that you're getting $0
because there was no money left after servicing the priority shares. This
effect can be greatly magnified if some of the money was paid in with an
_interest_ clause, with that value also taking priority over your own share of
the company. You're remote, and you're a code monkey. You don't have to assume
your company is out to screw you, but don't assume they'll work hard to try
and take care of you. You most certainly need a lawyer in the corporation's
state, and one who specializes in this area of the law. Good luck! It can be
rough out there.

------
mrkurt
You should talk to a lawyer, primarily to find out where you stand. It is very
hard for a tiny startup to properly issue options internationally, and you may
find that you don't own options in an enforceable way, or have huge tax
problems, or any number of other things.

Once you've settled that, have them explain what they're trying to do and have
a lawyer interpret it for you. Normally employee option pools (and any kind of
dilution) are expanded by issuing more shares. That would dilute everyone
equally. To dilute people at different rates, the company would actually need
to issue a bunch more shares (diluting everyone even more) and then grant
options to the other guys. As far as I know, judges look on that very
unfavorably. The startup's lawyers should be advising against that.

Despite what other commenters are saying, this probably isn't a negotiation.
It's likely just incompetence on their part. Your first priority should be
understanding precisely what position you and the company are in, and then
evaluating from there.

------
nirmel
I run Lawdingo.com, a place to get connected to lawyers for advice or
services. We charge $30 for advice calls, but if you email me
(nikhil@lawdingo.com) we'll cover that cost, and we can get you on the phone
with a startup lawyer today.

------
dollar
Your partners either a) know what they are asking you to do is unfair and are
asking you anyway, in which case they are assholes, or b) don't know what they
are asking you to do is unfair, in which case they are idiots. This is a no-
win situation, time to cut your losses and move on as quickly as possible.

------
hyperliner
Have you, you know, TALKED TO THE REST of the founders? I don't think they are
out to get you and in the process distract the startup or get terrible press.

Seems people here are talking about lawyering up too fast, without knowing
whether a proportional dilution has even been discussed.

~~~
kelukelugames
Please talk to the founders. It is very possible that they believe this is
fair. Calm yourself, let go of resentment, and make an appeal to them. Don't
approach thinking they are trying to screw you over.

------
jonathanjaeger
Definitely talk to a lawyer in the U.S. who works with startups. If they
incorporated in the same way most startups with investors do, it's a Delaware
C-Corp, and lawyers who work with startups will know the nuances of the
vesting and options legalities.

I worked with Scott Walker to incorporate my startup. He's very helpful and
takes calls without charging (if you listen to This Week in Startups or Mark
Suster's Both Sides podcast you'll hear them talk about him in the ads):

[http://walkercorporatelaw.com/](http://walkercorporatelaw.com/)

------
kordless
Quitting and leaving is an OPTION. Realize that doing the right thing in a
difficult situation will cause you immediate discomfort and probably scare you
more than you like. Realize options that you fear the most are probably the
best for you.

You must have some sort of contract between yourself and the company or the
founders. If there isn't a contract, or it's a bad one, then it becomes
interesting from the standpoint of IP ownership. How your shares are tied to
the IP ownership is what you want to concentrate on as it is your lever to get
what you want. If you find the founders are being unreasonable, use any and
all means to defend your dilution up to the point it equals an equitable
dilution of all shares by all stake holders.

Don't make blaming statements to the founders, clearly state what you want for
yourself in terms of ownership, then go get an attorney and have them look at
the documentation. After they give you an opinion on it, prepare yourself for
the worst outcome and then restate what you want for yourself again to the
founders. If they don't agree, be prepared to make the hard decision.

Best of luck to you!

------
arethuza
Having handled things like that badly in the past - the first thing I would
recommend is to calm down and think about it rationally as a business
transaction open to negotiation.

Also, aren't share option pools handled by (potentially) issuing new shares
(in UK terms the difference between issued and authorized share capital)
rather than shuffling around existing shareholdings/options?

~~~
wpeterson
Agreed on issuing new shares for options pools. This dilutes all pre-existing
equity holders equally.

~~~
arethuza
Transferring existing shares can also create tax liabilities - not much fun if
you shares look worth a lot in paper but in reality you have little liquid
cash to actually pay tax bills!

[NB UK experience]

------
mrinterweb
If an employee owned 4% of the options, would they have to give up 100%? This
simply sounds like they are not doing their math right. Obviously, the plan
that they proposed benefits them, but propose to them what would be fair based
on diluting options by percentage equally. If they want to extend the option
pool, the same percentage should be taken out of all option holders.

------
ottoflux
Shit happens. Refactoring options and shifting things around may suck, but it
may have been a requirement of them getting the seed funding. 100% of your
options at Zero worth are worse than N% (not a terrible N%) at an actual
positive valuation.

I'm not familiar with EU tax rates on short term capital gains in a US market,
and would highly recommend spending some of the money you might have spent on
a lawyer talking to a reputable financial accountant from your country with
experience in this area. In the US you have to set aside a chunk of the
proceeds if you do a same day sale when you exercise your options, and are
frequently penalized by your state if you don't give them their share at the
end of that financial quarter.

There's a lot going on there and I don't think HN is going to give you
complete enough advice to rest your mind.

~~~
korzun
> Shit happens.

This is not the case where you can use 'shit happens' and write this off like
it's not a big deal.

When you work mostly for options (which is already pretty much a scam) and
receive little to no pay, this is not 'shit happens' this is 'I need to feed
my self and my family' type of situation.

------
jbverschoor
If they want to issue out new shares for employees, then they can simply issue
new shares. This will dilute the existing shares but not by 40%. More like 11%

They cannot simply take away from you that's your.. Unless they have stated
otherwise somewhere.

So just talk with them and maybe you misunderstood something.

------
rwaliany
1) get RSUs as soon as you can (if it's not too expensive or seed is a
convertible note), so that if you leave you're still an owner in the company.
2) they should just add shares to the company to increase the option pool. I'd
consider anything else shady.

------
mncolinlee
Sounds like an awful position. I was in a similar place recently. I was second
or third engineer (depends if you count a contractor) in a very successful
startup when I found that my equity wasn't as promised. I pretty easily found
a job where I'd likely make more as cash even if the startup gets acquired for
$500 million. You shouldn't tie yourself to a situation where empty promises
are all you're working for. I know exactly how it sucks to move on from
something you built.

Obviously, you could just propose an equal dilution of everybody in the pool.
Or come to them with an outside offer and see what happens.

------
incanus77
Are your options on paper? Lawyer is a good idea, and even if you have any
informal documentation like emails you should be in decent shape, but having
this hard on paper is the only way to be sure. In the absence of an anti-
dilution clause, the wording of however you acquired your 10% will help to
define the intent and whether you can actually resist the dilution.

If you feel there is a lot of potential in the stock, don't skimp on legal
fees. I was involved in a bit of a complicated shares (not option) situation
and $1500+USD was certainly worth it in the end.

~~~
incanus77
In light of some of the lawyer-equals-adversarial comments above, I should
clarify: definitely don't tackle your partners with a lawyer. What I'm
suggesting is hire a lawyer you like / you get through a trusted
recommendation to read things from your point of view, then give you advice at
the present time.

A good lawyer will present things as they stand, but also let you know where
the line exists between asking for what is fair and pressing your case more
strongly / becoming more adversarial. They will leave the choices to you, but
they will inform you well of the spectrum of choices that you have.

------
hess
It's already stated that their math is flawed, but you can show them by
pushing it to the extreme. What if they took 10% of everyones equity. That
would leave them with 30% each and you with nothing.

------
georgeecollins
Get a lawyer to look at your past agreements. As others have mentioned, there
should be nothing adversarial about hiring a lawyer to look at your
agreeements and advise you of your rights and obligations. You need a lawyer
to tell you when you can exercise stock. Don't get legal advice from a forum.

When you know your legal situation, keep an open mind about what is best for
you rather than what is "fair". If investors want to dilute you more than
other founders, going along with the investors may ultimately be the most
lucrative option for you.

------
logfromblammo
You should not be asked to give up anything without getting something in
return. The options you were offered are compensation for your below-market
pay rate. As with any negotiable intrument, the vested and unvested options
have a current value. If the founders want to offer them to someone else in
lieu of pay, they need to buy them back from you first.

All the people saying "pro rata" don't seem to be distinguishing between
options and actual equity. If you have options, you are offered the
opportunity to buy equity in the company at discounted rates. Investor
coupons. Your equity in the company is the number of shares you have removed
from the option pool by exercising vested options.

The founders, who have actual equity in the company, are adding 8% of their
company to the option pool, which is already at least 10% of the company, less
whatever OP exercised out.

I assume the freelancer was paid in cash. That makes the current structure 40%
Founder A, 40% Founder B, and 20% option pool, currently 10% allocated to
Employee 1, and 10% distributed among employees 2-15. The proposal puts each
founder at 36% each, grows the option pool to 28%, with 6% for employee 1 and
10% for 2-15, and 12% for new blood.

Until someone starts exercising those options out of the pool and into actual
ownership shares, the founders are still 50-50 in control of the company.
Those options remain just investor discount coupons. They have some value,
which can be calculated.

Unvested options are worth less than vested options, because you have to apply
a discount rate representing the time you have to wait to use them. The 4%
given up are essentially the 4% from the end of the vesting schedule. What the
founders could do is take the current value of that 4%, and pay that to OP as
cash, or apply that amount towards exercise of vested options. It would
replace a larger amount of future options with a smaller amount of current
equity, but the current value of the assets remains the same.

You don't need to consult with a lawyer. The founders can do the right thing
and pay you what they promised to pay you when you agreed to work for them, or
they can reneg. If they don't at least pay you for the work you have already
done for them, that's when you hire the lawyer and jump straight into the
lawsuit.

------
nerdy
What is your relationship like? Any reason you can't tell them the same way
you told us?

If they're receptive, you've helped to forge a better relationship. If not, at
least you know bailing is the right choice.

Consider having a mental (or physical) flow chart of all of the possibilities
before you talk with them so your action can be predetermined based upon their
feedback/reaction.

------
pskittle
Talk to a lawyer, to know your best options

~~~
themonk
Would you like to continue here after taking legal route, I may not.

------
sylvinus
As others have said, the rational thing to do would be pro-rata dilution.

Your real problem though is why didn't they ask for that in the first place.
It looks like they want to squeeze you out and you should have a transparent
discussion about that first.

------
ceedan
They sound like real scumbags if they think your 4 is equal to their 4.

------
joezydeco
Aside from the option math: how did the company obtain seed funding when, as
you put it, the product is half-baked and has zero revenue?

Or has that changed in the last 1.5 years?

------
gnurag
I agree with others here, talk to a lawyer. You've worked hard with shit money
and 10% equity in the hopes of cashing in your hard work later.

------
alimoeeny
It maybe an LLC, that is why they are talking about giving up their share to
new employees and investors.

------
notastartup
> 2 non technical founders, a half baked product with no revenue at all, built
> with a freelancer.

> Fast forward to today, we got seed funding

ugh.

------
4qbomb
Find someone in that state with the license place LWYRUP and hire them.

[http://www.imcdb.org/i303189.jpg](http://www.imcdb.org/i303189.jpg)

