
Cruise settles legal case involving cofounder - taylorhou
http://www.businessinsider.com/car-startup-cruise-settles-legal-case-involving-cofounder-2016-5?op=1
======
fraserharris
To all new founders, get a legal agreement in place from day 1 with your
collaborators. Here are some amazing free resources (vetted for Canada, a
million times better than nothing in the US, pass it by a lawyer if you have
the money):

[http://wiki.velocity.uwaterloo.ca/Legal](http://wiki.velocity.uwaterloo.ca/Legal)

@sama - could YC spearhead creating US versions of the founder IP agreements?

~~~
brudgers
It's worth noting that Vogt is not a new founder. He was a cofounder of
JustinTV, SocialCam, and Twitch before Cruise. It might have been an error due
to lack of relevant experience, but the previously problematic situation isn't
attributable to a rookie mistake.

Though I am not a lawyer, my understanding is that the claims and counter
claims did not really revolve around IP. Take it out of the equation and the
documents [as described on the internet] might still form the basis of a
claim.

~~~
Dobbs
Those there companies are all the same company. Also while Kyle was a
cofounder of Justin.tv he wasn't actually part of it until a little bit in
when they needed someone to figure out the camera.

~~~
brudgers
My intuition from a distance is a two dollar dollop of conceptual imprecision
regarding meaty persons versus fictitious persons lies closer -- not further
-- from the center of the recently settled issue.

Autodesk and Amazon did not buy the same company.

~~~
arcticfox
"two dollar dollop of conceptual imprecision regarding meaty persons versus
fictitious persons" ... what?

Maybe I'm just slow today, but even as a native English speaker I cannot
understand that sentence.

------
6stringmerc
Well, that private settlement certainly clears it up for them. As for the rest
of us, who sat on the sidelines and watched the slap-fighting, it doesn't
offer a whole lot. Here's the crux I guess of the article:

> _Cruise and its founder Kyle Vogt now acknowledge that Guillory was a
> cofounder of the company._

This is very much a sticking point that was extensively discussed in the prior
hullabaloo regarding the YC-affiliated post on the matter. How this was agreed
upon - the reasoning - being private isn't the most clarifying outcome for the
public. I've no doubt this is on purpose for all the parties involved, and
hope they are satisfied in private.

As a longtime observer of human behavior, my belief is this announcement will
do nothing to quell outside speculation. If the parties involved don't want a
bunch of randos-on-the-internet making up their own scenarios, there is an
easy fix. Just share with the class what happened so we all may learn.

~~~
GavinMcG
What is there to fix? They've settled it. Why should they care to satisfy your
curiosity?

~~~
6stringmerc
To answer your questions in order:

1\. Public perception of a contentious disagreement where both sides levied
serious accusations and reputations may be relevant in future business
dealings.

2\. Because if they don't want people making up their own theories they'll at
least say something in unison other than "we aren't saying anything" as it
pertains to Answer #1.

I'm not saying they _owe_ any explanation - I'm just saying if they don't
_give_ one then they don't have room to _bemoan_ idle speculation.

~~~
jrockway
> 1\. Public perception of a contentious disagreement where both sides levied
> serious accusations and reputations may be relevant in future business
> dealings.

That sounds exactly like why they said "we've reached a mutually-agreeable
compromise." Now neither party will be negatively affected in future business
dealings.

> If they don't want people making up their own theories they'll at least say
> something

Who cares? They have a billion dollars from General Motors. GM itself is a big
enough company that opinions on HN don't matter and won't affect the sales of
their final product.

They defused a difficult set of complaints in a mutually-agreeable fashion
without involving the courts. That's good business. As outsiders, we are not
in any involved with them, and probably shouldn't spend any time caring,
except to take away one lesson: talk your differences over and reach an
amicable agreement. Don't invent drama when none is required!

~~~
6stringmerc
Well regarding your perspective I think you've got a contradiction in the
reasoning used: Unlike you state, they did involve the courts, at least
initially. Settling out of court enabled a level of privacy which, as I was
getting at, leaves the mechanics of agreement undisclosed (agreeing to not say
anything). As outsiders sure that doesn't mean squat, but, in a larger view,
some high profile disputes employ "trial in the court of public opinion"
tactics. That seemed relevant in this particular instance, and when it goes
unaddressed, it simply - again, as an outsider - leaves an odd impression to
me.

~~~
galistoca
What people are saying is nobody really cares about "leaving an odd impression
on an outsider". You're acting too serious about something that's really not
your business.

~~~
6stringmerc
I'm a writer so when a story has an inconclusive ending it gives me pause.
Maybe you don't feel the same way and that's fine. I was simply commenting in
the way I would about any other storyline I watch being played out. Caring is
not particularly an accurate term, I'd say more like interest. I'm interested,
and thus I've paid attention. I postulate, comment, and move on with life and
store the data for later use.

~~~
ctvo
All of your replies read like a bad attempt at prying into how much they paid
to get this to go away. I have to agree with the others: it's none of your
business, and no spinning of some reputation damage unless they do (?) will
change that.

------
neurotech1
Sam Altman posted on his views on his blog:

[http://blog.samaltman.com/cruise](http://blog.samaltman.com/cruise)

And the related HN comments:

[https://news.ycombinator.com/item?id=11490188](https://news.ycombinator.com/item?id=11490188)

~~~
SilasX
So, I have a stupid, flamebait question: What precisely is wrong with Jeremy
Guillory's case? I read those links but I also read this related BI piece [1]
and it looks like Guillory has a solid claim: there is a document of them
representing the company as half belonging to him, and no one's presenting any
later agreement that says when his half was bought out or invalidated.

All that Vogt is going on, it seems, is "but you were just congratulating us
when we raised more money!". What does that matter?

Altman's response, in turn, is that Guillory isn't being cool about this and
taking (what he deems) a reasonable offer from Vogt. Well, why would he? If he
was led to believe early on that he had a full 50% stake, why is it some moral
transgression not to accept less [2]?

If you don't want a now-silent partner keeping equity, then buy them out.
Don't wait until the company is worth something and then try to retroactively
void the equity because you don't feel like they're part of the gang anymore.

[1] [http://www.businessinsider.com/cruise-cofounder-fires-
back-2...](http://www.businessinsider.com/cruise-cofounder-fires-back-2016-4)

[2] than the corresponding amount modulo later dilution

~~~
vonklaus
I think Alman's emotional arguments were a bit misplaced and while I disagreed
with, at the time, how they were made, he seems to be fairly correct. Here is
my interpretation of why:

> What precisely is wrong with Jeremy Guillory's case?

It isn't that there was anything wrong with it, but if you see Alman's post,
they were in the preliminary stages of the company and I think jointly applied
to YC. if IIRC they didn't even both do through YC together.

Let's say you and I talk about doing a lemonade stand. We apply to Techstars
as _Junicorn_ bespoke lemonade purveyors. Unfortunately, I want to use tensor
flow & the latest stanford NLP techniques for our lemonade startup and build
it on blockchain technology using go. You wanted to do some anachronistic
throwback where the Lemonade POS system is built on nodeJS with gulp &
browserfy having it be mobile-first, cloud based omnichannel.

So we have the break up.

Then I, and my new founders build an entire company based on Lemonade stands &
blockchain technology. Going throug techstars with an entirely different group
of people and taking the idea all the way from an idea into a product. Again
for a timeline recap:

1\. We both had the same idea independently.

2\. Then we tried to combine our ideas.

3\. Then we went our seperate ways to work on our own seperate implementation.

4\. Then my team and I built _Junicorn: Summer Lemonade_ and sold to
MinuteMaid for our Concentration technology. (this is like thousands of steps
you weren't part of)

5\. Then you ask for some large number payoff because we both discussed
starting a company but ultimately didn't.

However, depending on the legal structure and some of the other factors (e.g.
massive leverage before a sale) he was probably able to make some money. He
may have even contributed to the company in a way that entitled him to
something. It was just pretty shitty to bring that up during a massive sale
like this.

~~~
saltwrong
If you read the legal documents, instead of Sam's attempt to try the case in
the media, you'll see it's quite clear. There are signed documents stating
Guillory owned half the equity. These documents were in YC's possession.
Nothing ever voided them.

Instead of separating Guillory early and cleanly, they dropped the ball, and
attempted to shame him, attempted to threaten him (Sam called Guillory dozens
of times in a single weekend and told him to take a small buyout or he'd never
work again), and then only as a final result did the thing they should've done
out of the gate: negotiate a settlement.

~~~
vonklaus
If true, is this professional? No. However, OJ Simpson wasn't found guilty,
using a technicality to escape justice. So while the legal system is helpful
and i wouldn't consider it a total piece of shit, I think if I built a 1
billion dollar company and someone asked for $500M, because I forgot to file
some paperwork due to the quickie shotgun starter-marriage we rushed into I
would probably flip the fuck out.

Also, it's like in the social network where "Mark" says:

You know, you really don't need a forensics team to get to the bottom of this.
If you guys were the inventors of Facebook, you'd have invented Facebook.

edit: I responded to SA from my account* and articulated why I thought he made
a mistake. You created a novelty/new account called 's[am]alt[man]wrong'. Your
point isn't that bad, Jeremy may deserve something (i'm not an insider on the
story) but this is cowardly behavior, and downright harmful to your case due
to how chldish this is. I respect Sam for taking a personal stance on this
which ultimately could/might have slightly damaged him personally. So, in
essence this was the point I was making here.

It isn't about the issue, but how it was handled. Coming out of the woodwork
in the final hours of a massive deal to demand payment is shady and doesn't
seem to be handled in a way that was particularly reasonable. Just as
anonymously asserting insider info on here which is unverifiable because you
are choosing to hide your identity...is also less than forthcoming. You and
Jeremy may be correct, but I would allege that regardless how Sam and Kyle
handled themselves, the burden of being reasonable rests on detractors, I mean
Kyle doesn't need to prove he added a ton of value to Cruise because he
fucking started Cruise and built the team that ended up building the product
that was Cruise and turned into the company that was Cruise which then put
together the sale of the company(Cruise) to GM.

* which is like >800 days old and pretty fucking tied to my real identity. I mean, there is a goddamn keybase public key attached to it...

------
seibelj
So all of that drama, name calling, sam altman posts, etc. ended with them
agreeing that he was indeed a co-founder? Honestly the only people who really
know what happens between two people, are those two people.

~~~
jamiequint
Settling != agreeing the other party was right. Lots of times it makes
financial sense to settle even if the other person was completely wrong.

e.g. When you have a legal issue holding up the close of your $1bn deal and
you have to choose between paying up so you can get your deal closed, or
dragging it out over 1-3 years in a protracted legal battle that risks never
getting the deal done.

~~~
seibelj
So you are saying, without in-depth knowledge about the situation, that even
though they settled and publicly agreed that he was indeed a cofounder, that
he is lying and Cruise is wrong? I choose to believe the court record.

------
throwaway6497
If Guillory has undiluted 50% ownership of Cruise - he surely must have made a
bank. Anywhere from tens of millions to hundreds of millions.

------
taylorhou
Surprised I found this on Techmeme and not here. No matter what the outcome
actually became, this was a shtfest, rollercoaster, HBO drama, discussion, and
learning experience all in one.

Cheers.

~~~
SuperKlaus
Judging from the absence of a @sama blog post about the settlement it looks
like things didn't work out too well for him and YC....

~~~
aab0
Anyone want to speculate about how much YC & Vogt just lost? They acknowledged
him as cofounder based on a document in which he's listed as 50% owner; such a
concession sounds like a complete victory for Guillory, implying he still owns
50% of the initial equity, and Cruise was bought for $1b. But presumably as
cofounder he would have been diluted equally by the YC and any other
subsequent investments. YC only takes 1.5%, IIRC, which is fairly negligible,
but Cruise did 4 rounds according to
[https://www.crunchbase.com/organization/cruise#/entity](https://www.crunchbase.com/organization/cruise#/entity)
. So how much of that $1b did Vogt wind up getting? And does it come out of
Guillory's share entirely? (That wouldn't make sense, since Guillory might not
even have 50% left.)

~~~
ncallaway
It's almost certain the settlement wasn't for the equity he would have been
entitled based on the document that implies he had 50% equity at the time.
That is the disaster, worst-possible outcome from a trial so there would be
absolutely _no reason_ to settle for that amount. If you're willing to accept
that outcome you would be willing to go to trial and hope for the chance that
you're willing to win.

It would've been an amount that Guillory was happy to accept, and that Cruise
was willing to part with in order to reduce the risk that the legal
uncertainty would spoil their acquisition offer. I have _no guess_ as to what
this value was, other than to say it would need to be an amount far-below what
you would get if you assumed Guillory received 50% equity.

Additionally, Guillory probably traded some amount of financial compensation
for the public admission that he was a co-founder.

~~~
dragonwriter
> That is the disaster, worst-possible outcome from a trial so there would be
> absolutely no reason to settle for that amount.

Not entirely true: the disaster, worst-possible outcome from the trial is that
_plus_ an order to pay the other sides costs, _plus_ having racked up a bunch
of your own costs.

Which is why one _might_ , _conceivably_ settle for that without the expense
and delay of trial.

