
Twilio Sued by Authy (YC W12) Founder Over Merger Compensation - immad
https://www.bna.com/twilio-sued-authy-n73014451236/
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payne92
Complaint:
[https://www.bloomberglaw.com/iframe/document/X1Q6NR78D282/do...](https://www.bloomberglaw.com/iframe/document/X1Q6NR78D282/download)

TL;DR: earnout disagreement, with the key earnout definitions completely
redacted.

This is why earnouts are SO hard: too many external factors.

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zaatar
Actual complaint (PDF):
[https://www.bloomberglaw.com/iframe/document/X1Q6NR78D282/do...](https://www.bloomberglaw.com/iframe/document/X1Q6NR78D282/download)

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tdumitrescu
Am I reading that document correctly? He had a clause for accelerated vesting
upon termination and so vested 507885 shares immediately when they fired him
in December (par. 36), and this suit is about the remaining 127386 "earn-out"
shares that were dependent on hitting revenue targets? On the one hand that
sucks and it sounds like he had a terrible time at Twilio; on the other hand
he just got an extra 2.5 years' worth of stock without having to stick it out
and is basically set up for life if he wants to be. Puts this in a slightly
different light. (I have no connection to any of these people or companies,
just interested in the story.)

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beagle3
It's common to have this sentiment, but it doesn't actually put anything in a
different light, anymore than the fact that you're getting a salary of (say)
$150,000/year makes your landord stealing your $5,000 deposit "in a different
light". (If it looks completely unrelated to you, think about the deposit
story from the point of view of someone who lives on $20/day).

I have not read the complaint, and have no knowledge of this case. But when
you've been treated unfairly (in the legal sense), it is your right to seek
compensation for that through the courts, and the fact that other agreements
were honored (and put him in a good financial position) should not put
anything in "a different light".

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tdumitrescu
Absolutely - I'm not saying he shouldn't take action if he thinks he's
entitled to that compensation. But I think most people coming to this thread
with just the news article will be reading it more as "twilio acquired and
fired so they could claw back promised equity" rather than "head of acquired
company thinks twilio made it hard for him to hit revenue goals, affecting 1/6
of his equity compensation."

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isubkhankulov
i wonder how often this happens in the valley.

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logronoide
I wonder how often this happens outside of The Valley too.

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rsp1984
A friend of mine works for a large M&A advisory firm. Apparently it happens
all the time and the acquiring companies often make it deliberately hard for
an acquired company to meet their earn-out targets, e.g. by hitting them with
a lot of bureaucracy.

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dstroot
I've been bought twice. Each time the acquiring firm's bureaucracy was
massively impactful. It's not done intentionally- larger companies need the
structure. I have always thought of it as "gearing" \- as in a large gear can
make a small gear turn very fast simply by barely moving. Or put another way
what happens when everyone in the larger company just needs 10 minutes of your
time? You are booked for six months.

