
Ask HN: When are you allowed to quit a startup? - throwaway52
Hi Everyone--
Long wall of text ahead, sorry, but hopefully details will help.<p>I've been working at a startup since the beginning of the year. It has been good thus far -- great environment, great people, great time. I'm the only programmer and our products absolutely require this company to have a programmer on staff. I'm very much enjoying the work -- this wasn't in my area of expertise before (the business end) but I'm really getting a knack for understanding how our product fits in the field. And further, I've been able to really develop my skills to be a versatile programmer/dev. ops. guy.<p>The problem is that I'm looking at the calendar, and listening to all the conversations about sales and what not, and thinking: "Man, this company is probably going to go belly up around Christmas." And while in this part of the world, it wouldn't be too hard for a programmer to get work -- even freelance work until the post-Christmas doldrums -- I'd really not want to be out of work around Christmas. I have mega bills (student loans) and am very fastidious about money.<p>At this point, I'm trying to keep the whole thing very un-personal even though I'm really good friends with all of the founders (CEO/CFO/COO). But, I think it should be noted that as we launched one of our first products a few weeks back, all three founders took vacation the week/weekend before the launch -- it was assumed that I'd get the project done on time, so I ended up canceling mine. So, at the end of the day, I'm wondering if the Godfather quote comes into play -- "This is business not personal."<p>Further -- the company is trying to figure out how to stay afloat, and one of the ideas is to start doing consulting. Which sounds fine, but I came from a consulting/agency background specifically to leave that type of work; so while I would gladly help these guys out if we were doing it while working on the core products, this new model where we give up the core products for five or six months is just not very appetizing.<p>I know there are other startups interested in me -- they've reached out to me -- but I'm just not sure what to do when the boat is sinking. I understand if I was a skin-in-the-game cofounder, then like a captain, its down with the ship. But what if I'm just one of the first employees, who still has no equity (that discussion was had and they decided I'd get a "big" share, once we became revenue neutral) and who has enough bills and student loans to not be comfortable with the idea of one day paychecks just stop coming?<p>Thanks for any insight or personal experiences...
======
michael_dorfman
Let's review: you're not a co-founder, and have no equity. Vague promises have
been made about you "getting a share", but no commitments. The co-founders all
went on vacation immediately prior to a launch, but you cancelled yours to get
the product ready. The business is foundering, and you're not convinced that
the co-founders are responding to the challenges in the right way, and you
suspect the company will run out of runway before Christmas.

Is that a fair summary?

If so: why are you even thinking about staying, if you've got other options?

If you've got a plan that you think will put the company on a firmer financial
footing, I'd pitch it to the co-founders, and ask to be brought in on the
equity side.

Otherwise, I'd walk as soon as the right offer came along.

~~~
throwaway52
Well when you put it like that...

All kidding aside, I think that I've been stuck in a forest for the trees
mode. From the outside, I think you're able to see whats going on a lot better
than I. Thanks for that.

~~~
gaius
Why do they only want to give you a share when they're revenue-neutral?

A limited company, their liability is extremely limited, I'm assuming it's not
a partnership. There's no reason for them not to give you equity _right now_.

~~~
throwaway52
From what they said was that to give out shares at this point would require
additional lawyer fees. They are already formed as an S corp (I believe), so
I'm not sure how much lawyer fees would be required, but nevertheless, I was
young and naive when I first started (this is my first startup) and probably
should have pushed a bit harder.

~~~
gaius
A startup whose founders can go on holiday for a week can afford lawyer's
fees.

~~~
nitrogen
Vacations needn't be expensive. Sure, there's a loss of one week's income
generation, but it's possible to have a fantastic week away on what it would
cost to talk to a lawyer for half an hour. Some examples: camping and fishing,
eating what you catch to save on food; rock climbing; backpacking; etc.

~~~
lsc
yeah, but the opportunity cost is pretty high.

------
sirsean
I've been an early employee / only programmer in a startup in the past, in
which the founder said the exact same thing -- once we get to "revenue
neutral," you'll get "a big share of equity."

It won't happen. They only said that to keep a carrot in front of you for a
little while longer. If the company ever gets to revenue neutral, their idea
of a "big share" will suddenly change. After all, why give a programmer a
significant chunk of equity once the company is making money? That equity is
suddenly worth something!

If you don't already have equity, you're not likely to get any. And it sure
sounds like you deserve a significant amount of equity given how early you are
and the risks you're taking; if you wait to negotiate how much equity you get
until after the risk has gone down, you'll get a lot less equity. And that's
if you get any at all.

~~~
RuadhanMc
Yep. No big slice of the pie for you. Actually, what they'll do is give you a
crumb that fell off the pie and make you wait 4 years before you can eat it.

Tomorrow never happens.

~~~
Timothee
Good point on vesting. Chances are that your vesting would start when they
start giving you equity (if they eventually do). Even if they were to give you
the same amount it's not fair to you to have to wait a couple extra years to
finish vesting.

The risks you're taking right now will also look a lot less once the company
gets to revenue neutral. "we made it, so it wasn't that risky after all…"
it'll be easy for them to negotiate down at that point.

------
smallegan
Why does a company with only one programmer have a CFO and a COO? Also, why
wouldn't you be the CTO and have a share if they are all about titles... I'd
say it seems like maybe you are being taken advantage of and it might be time
to jump ship. Good luck!

~~~
throwaway52
You'd be amazed ... when I first started I reported to the (then) COO who
reported to the CEO. But we all sit in the same room, so I'd ask the COO my
question, and then he would turn and ask the CEO, who would turn and answer
the COO who would then turn and answer me.

But your point about being taken advantage of has been in the forefront of my
mind. Thanks for giving that some credence.

~~~
swombat
The very fact that they have both COO and CEO in startup mode is a huge red
flag, btw. That "reply wave" that you describe is also an enormous wtf.

Run.

~~~
throwaway52
The first flag was when they told me that not to worry, when we brought on a
second programmer, he would report to me. Heh.

~~~
phjohnst
So two programmers and the company would already have 4 levels of hierarchy?
No thanks.

Says something about their idea of a 'business'

------
points
>> "I'm the only programmer"

>> "all of the founders (CEO/CFO/COO)"

>> "no equity"

WHAT? Quit. Now.

~~~
CyberFonic
One programmer and three CXX's already? and they haven't made a dime yet???
All their MBA training has taught them is how to profit off the sweat of
others.

~~~
jakx
Good skill to have.

------
gojomo
N non-coding MBAs (N>1) plus 1 software person is usually an antipattern, even
if the technical person is an equal founder.

The possible exceptions would be if the MBAs bring giant domain experience,
prospects-ready-to-buy, or enough funding to pursue a larger/longer-term
vision (with a salary and extra tech staff).

------
andrewce
I worked in a similar situation, though with a group of people who wanted to
form an arts venue in the largest city in my state (I'm in the midwest).

When I agreed to come on (after leaving teaching), there was promise of
salary. The salary never materialized, and so I was putting in 80-100 hours of
free labor per week, and paying for my own expenses while doing so.

Meanwhile, the project ballooned from $250k to $2.7mil, and our investor (who
is one of only 2 or 3 people I've ever actively disliked) bailed when he
realized that the fellow I worked for was trying to extract quite a bit of
money out of him.

I left after 7 months, and will never be reimbursed for the 2,000+ hours I put
into reading, researching, writing, and networking. They still have exactly no
money.

This isn't exactly analogous, but similar enough. Sometimes the boat's going
to sink (to use your captain metaphor). Given that you don't own part of the
company, and that your employers seem to think of you as replaceable, your
obligation is minimal.

The fact that they're looking at changing what they do complete is not an
encouraging sign, as it's very difficult to shift back from those changes.

Were I in your shoes, I'd quit and would be reaching back out to the startups
who reached out to me, as well as to others that seem like good places to
work. I would make it clear to my employers why I was quitting (in business,
rather than personal, terms), and would hope that such honesty helps them to
survive, or at least to make better decisions in the future.

This approach has worked well for me in the past, as it lets me maintain
personal relationships (and even professional relationships) while extricating
myself from situations neatly and efficiently.

------
idan
There's a lot of sound advice in the thread (TL;DR: many red flags, get out
now!)

I'd like to add my experience of having _stayed_ at such a company, and
getting the short end of the stick.

If you end up making the wrong choice -- yes -- you'll lose money, bills will
be scary, etc etc. I hate to sound cliché, but you sound like a bright
individual, and that stuff will eventually recede in your rearview mirror. If
you stay and get screwed, you will still eventually leave, and then you will
think about two things:

a) How stupid you feel for letting a company walk all over you. Like, "Aren't
I smart enough to avoid those traps?" (Answer: only after you've fallen into
them once or twice.)

b) Eventually, you'll appreciate the wisdom earned from failure. I worked for
4.5 years as employee zero, with little in the way of appreciation from my
employer (not just material). I saw many things I now recognize as hallmarks
of mismanagement. As much as I felt like a heel for not having the gumption to
quit, I earned a great deal of experience that I rely on daily.

So -- if you end up staying, and you end up like me -- it's not all roses, but
it's not all thorns either. Knowing what you don't want in an employer is
often as valuable as knowing what you do want.

A final aside: there was no malice at my old company. They were decent people,
but something else was always higher priority, and the results spoke for
themselves.

~~~
Natsu
> I saw many things I now recognize as hallmarks of mismanagement.

Could you expand upon those? Maybe they're obvious, but I'm curious and I'm
sure there are people here who would prefer to avoid learning to recognize
such things from experience.

------
ajdecon
Why does it matter that this is a startup? I mean that seriously: you don't
have any equity, you're not a founder. If this were a job at any random,
established company and you saw the end coming, you wouldn't hesitate to get
out. And it doesn't sound like the best job in the world.

It's just a job, and jobs end. Treat it like one.

------
danshapiro
Your CEO, CFO, and COO are either completely ignorant of finances, or are
cold-hearted jerks. It is simple and easy to grant you options (or even
founder shares, although that would be unusual) in an S-corp right now (if
you'd said LLC, then there would be a case to be made that they didn't want to
issue equity until they converted to a C-corp, which is expensive - but it
still means they're selfish and/or dumb for doing it that way).

Once you've got revenue, your company value is materially higher, and they can
no longer easily transfer you shares (since you have to pay taxes based on the
value of the shares). And any options they grant you must have a strike price
of the current fair market value, which will be provably higher if the company
has gone from no revenue to some revenue, which just takes money out of your
pocket for no good reason.

I generally go by Hanlon's razor: "Never attribute to malice that which is
adequately explained by stupidity." With the huge caveat that I've only heard
your side of the story, it sounds like your cofounders are well meaning, drunk
with power, and ignorant of how to do their jobs. Find a new job first, then
tell them you're leaving. If they ask nicely and your new employer doesn't
mind, you might give them 4 weeks.

But most employees err in the direction of too much loyalty to their last job,
so resist the urges to extend further, do consulting, or otherwise fail to
break the bond. You are probably doing the founders of this company a huge
favor. They cannot run a successful company the way they're running this one.
Giving them the wakeup call they need - politely, reasonably, and
professionally, by departing gracefully - will leave them with enough runway
to rethink their strategy and could save their endeavor. And it's definitely
the right thing for you.

------
brudgers
You are the hired help.

You came in looking for a job.

You will go out looking for one.

The legal fees for selling you stock in an S-corp are negligible, buy-sell
agreements and employment contracts should already be in place...or there are
none. In which case you don't want equity anyway.

There is nothing in your description which speaks in favor of staying.

The owners are just burning through OPM before they go bankrupt.

------
dansingerman
Do they read HN? Is there an office of four people (A programmer, a CFO, a COO
and a CEO) all looking at each other thinking - is this us?

If I was anyone but the programmer I'd probably be crapping myself. Which
tells you something about the position you are in. (i.e. one of power)

~~~
aaronbrethorst
That's not necessarily true. I've run into this sort of situation in the past
(never worked for them, just seen it), and the attitudes of the non-technical
people towards the technical ones tends to be one of "they're just
programmers: they're taking my brilliant vision and merely transcribing it
onto the computer, like a typist!".

These kinds of people, who believe that building a successful software company
is 99% inspiration and 1% perspiration tend to be egotistical and clueless. I
bet they've never heard of HN, and even if they read this thread would be
convinced they could find yet another poor 21/22 year old sucker to employ for
under market rates. The unfortunate thing is that they're probably right about
the latter.

------
cedsav
From your description, I'm guessing that the company will go under the day you
quit. The founders can go on for a while on empty, but they need you if for
any of their hail mary plans to have a chance to succeed.

However, their only obligation to you is payroll. As long as they can pay you,
they surely expect you to keep working for the team, and they probably
wouldn't be happy if you jumped ship early.

Obviously, it's up to them to be candid about the situation and give you
advance notice if money runs out. So, if I were you I would put it on the
table. Make sure they understand you will quit if they can't pay you, and that
you expect them to give you 30 day notice.

------
locopati
If you feel like things are not going well and you have other offers, jump.
It's always easier to find work while you're employed than it is once you're
unemployed, especially with the state of the economy. You feel that you owe
them something, but they do not appear to share that view (that they owe you
something). Go to greener pastures while the going is good.

------
throwaway52
Next question about startups and quitting -- how long is long enough notice?
I've not gotten into specifics with any other companies yet, but is 2 weeks
too little time for a startup?

~~~
mgkimsal
You can give notice, but in many positions, you'll be out the door within the
hour. Nothin personal, but that's how it is. I've given 2 weeks notice and
been escorted out the door within 30 minutes, and I've given 2 weeks noticed
and asked to stay longer. Whatever you give, be prepared that that's your last
day, and plan accordingly. They may see it as an act of betrayal or a loyalty
issue, and will have you leave that moment. Or they may not.

Stop thinking in terms of this being a 'startup'. That term means almost
nothing any more, given that companies with millions in funding that have been
around for >2 years are still called 'startups' in some quarters. You work for
a business, and may leave. Be prepared to leave. Give them a notice that
you'll work out 2 weeks to wrap up and document stuff, train a replacement,
etc. Don't give any more consideration to the long term health of this org -
they've not given you any consideration. To that end, don't go out of your way
to be a jerk, whether that's withholding info, trashing files, installing
spyware, etc (I've seen it all happen). Just be professional and get out.

~~~
sprout
I find that "out the door within the hour" extraordinarily unprofessional. I
wouldn't want to work in a situation where people think throwing someone out
on their ass without collecting documentation, checking up on projects, and
generally tying up loose ends is a good strategy.

It just sounds like an extraordinarily petty and ineffective way to deal with
losing a team member.

~~~
mgkimsal
It's only happened to me once, but it did happen, and the person who did it
was regarded by others as petty and power-hungry. FWIW, I was brought back to
do a bit of work later, and the number 3 guy in the place heard my story and
was basically shocked that HR had handled things this way.

How this happened was I'd handed in my notice already - 2 weeks. But... I
wanted to know if I was going to get my remaining vacation time as pay or not.
I'd started before there was an 'hr handbook', but there was one in place. I
wrote to HR and asked, and was told "it's in the handbook". I wrote back and
asked what page it was on, because I couldn't see it in mine.

I got an email back saying something to the effect of "here's your vacation
that's owed you..." and that was it. 10 minutes later the guy in the same cube
as me said email to me bounced. I watched him send and it bounced back saying
'mailbox invalid'. An HR rep from our building came to my desk another 10
minutes later with a box saying "I have to escort you out of the building
now". She was nice about it, and didn't seem to _want_ to do it, but did it.
So... the project I was working on was left in a broken state, client emails
to me bounced, and they had no clue what was going on. I left, set up my own
shop, and _what do you know_ \- that client decided to jump ship and stay with
me instead of being charged twice the hourly rate for the kind of service they
were getting. Basically, they considered their business too important to be
cut off by phone and email from the people doing the work solely on the whim
of one HR person.

Yeah, that was my rant. Again, only happened to me once, but it happened, and
I've seen it happen to others.

------
kenjackson
I'd like to add that the founders simply aren't pulling their weight. And one
thing I've learned is founders don't get more generous over time.

A good founder, who cares about their employees would get the necessary legal
instruments to get you shares. Period. A good founder would (a) probably also
cancel vacation before launch, but (b) if they all took vacation, they'd make
sure you took vacation after the launch completed.

------
exit
it's not a fucking startup if you don't have equity.

------
tjp
What really caught my eyes is the Christmas prediction. I used to work for a
startup that ended up belly, hmm, sideways, and the process a -lot- longer
than I expected. Money ran out in November. In December, they laid off 10%,
and then there was always someone to cough up some money to make the whole
thing going, until June, when the company was bought up (and I said goodbye) -
it took another 6 months for the new owners to decide to get rid off the team.
It may have been lucky for us, but generally: belly-up takes time.

But, it doesn't really change the fact that your bosses appear to be not the
nicest people in the world.

~~~
throwaway52
We've all discussed other options and belly up would be the worst case
scenario ... they're hoping that they can, at worst, get bought up by some
conglomerate to ease the pain. The safe "thing" about it, though, is that for
the most part, they can't do what they want to do at all without me. So, while
I may not enjoy the circumstances, I do have job security until the job
disappears.

~~~
notahacker
If they get bought up by some other conglomerate before they've been able to
bring themselves to pony up the lawyers fees to give you equity, they make
money and you don't. If the other conglomerate has their own programmers and
their own preferred way of building things, you quite possibly still find
yourself looking for another job.

------
gte910h
You're just an employee, if you feel your company is going under, find other
employment. Once you find another offer, they'll either offer you a share of
the company to stay, or you can leave.

~~~
throwaway52
This is probably true -- though I've been in situations like that before (swap
shares for money) and never take them as I just don't think that type of very
passive "threat" (for lack of a better term) is ever fruitful. But, on the
other hand, I don't have a ton of business experience, so maybe it would work
out. Do you have any experience in those situations? Staying after discussing
leaving?

~~~
danshapiro
Many articles have been written about this: don't ever accept a counteroffer
(google "counteroffer" to find them). It is generally just a way to delay your
departure until they can quietly find your replacement, at which point they
will fire you. And you don't want to work at a company that only treats you
fairly when you threaten them.

------
petervandijck
Quit.

~~~
jonhankok
Agreed.

------
spe
You know how that goes, if you're at a poker table for more than 5 mintues and
still trying to figure out who the duck is, it's definitely you. So walk away.

------
daniel-cussen
Who's hiring: <http://news.ycombinator.com/item?id=1659409>

------
james1071
You don't owe them anything.

------
dragoon
Let's get real about something: they're business guys, and you're the
technical muscle, right? You seem young, and you're probably as good at sizing
them up (note your "great people" comment) as the average MBA is at writing
code; by this, I mean, not at all. Don't even try. Make your decisions based
on hard facts, such as how much equity you have already and when you will
start collecting a salary, and not based on "warm fuzzy" feelings of loyalty
or how much you will get "when times change". Unless you're seasoned and have
been in the business world for a decade or so, you are _way_ out of your depth
when trying to size such people and their promises up. (Of course you like
them! Their job is to make people like them. They probably like you, but do
they respect you?) Business people over-promise because the worst of them are
sociopaths and the best of them have great intentions and are wonderful people
but still are ridiculously overconfident, just because they have to be in
order to succeed in that world.

They may be great guys, but you really need to get a firm commitment regarding
equity. You're taking a risk and have a right to know what the rewards will
be. A promise, especially a subjective one, means nothing. What does a "big"
share even mean? If the company is valued at $2 million and you get 0.25%,
that's a $5000 bonus, which can be described as "big" but is quite lousy in
comparison to what you actually deserve. Remember that the business guys, due
to the overconfidence that is characteristic of that sort, would still
consider such a grant very generous. After all, it's going to be a $10 billion
company one day, and that 0.25% is going to make you a millionaire many times
over, no?

You're taking as much risk as they are, and you actually have the technical
skills. You deserve a better deal. If your leaving would hurt them as much as
you think it would, then they will give you equity, and they'll actually
respect you more now that you're not letting them take advantage of you. Or,
they might let you go, in which case you're better off to have this happen
sooner rather than later, after having wasted even _more_ time.

~~~
throwaway52
Wowzer. I really appreciate the honesty -- and you're right about the fact
that they are quite established MBAs and I am just a young idealistic
programmer.

The fact that the CEO will often pull code off the internet and say we should
use it shows me that respect is not really there and from that, I've always
questioned how much they respect me/my role/my abilities.

I think you're spot on about giving them the option of keeping me or not -- I
don't generally like to threaten anyone about leaving, but I think if handled
well, I can explain my expectations and what I'd like, and then go from there.
With a backup plan of course.

Thanks for the insight.

~~~
mattm
>> The fact that the CEO will often pull code off the internet and say we
should use it shows me that respect is not really there.

Holy crap!

------
shareme
vacations before launch and college loans..IMMEDIATELY! WTF is wrong with
you??!

No offense but you need to quit immediately..

