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Ask HN: I was fired from a startup I helped found, I'm fucked
107 points by grumpymarketer on May 12, 2012 | hide | past | web | favorite | 97 comments
I'm in a rough spot and I'd like to ask for advice from my fellow HNers. I was employee #1 at my startup and was fired 11 months in - 1 month from my cliff. I'm not necessarily bummed I was let go, things changed with the company and my role so I guess I just wasn't a good fit anymore. I get that. I'm sad because I'm out of money and and have no stock. I spent so much $$ commuting (SF to Palo Alto), eating out in Palo Alto, courting clients etc. I hardly have 2 months of personal runway saved up. And of course I worked my ass off. I never even expensed any travel expenses because I figured it was best to keep the money with the company. All the while I was getting paid a startup salary to begin with.

But now I don't have anything to show for it and am going broke. They are offering me a tiny equity package which is approximately equal to 3.5 months of work but it seems like an insult. In exchange they are asking me to sign a document which basically says I can never take any action against them, ever. So should I ask or demand more? Do I have any other options here? I would like to stay on good terms with the 3 founders because I really do respect them professionally but I'm not sure what to do. Another potentially interesting detail: I'm in my 20s and they are all 10-18 years older than me.

Onward and upward,


[This is a throw away account obviously because I want to protect the identity of my former employer for the time being.]

Tell them you'll sign the release if they give you the first 12 months of vesting. Firing someone at 11 months is a dick move. Remember: if you're not willing to walk away, you're going to pay retail (ie, end up with 3.5 months). I'll put odds at 70% that they give you 12 months and get the release they want, and odds at 30% that they give you no months and get no release. That puts the expected return of this approach at 8 months of vesting. In either outcome you keep your self respect (priceless), and the expected return is twice as good as caving.

The key to staying on good terms with them is being respectful and polite while you make your case. If you remain respectful to them, they will remain respectful to you. If you let them walk all over you, you're likely to lose their respect and may actually end up on worse terms with them.

EDIT: Even if you end up with no agreement, your situation still has an option value, a valuation exercise I'll leave to the reader. There's a reason they want that release, and that reason only matters if they become a successful company.

I really think you have it right: negotiate the release. Firing a month before OP's first year of equity vests is an incredibly low move. It's also suggested (and arguably correct) that OP might have legal recourse (the "option") if the company makes it big (which is why founders want OP to sign a release).

They don't want a mess if things get big, so OP has little to lose by offering this deal. There's a good chance the founders accept, too, since (a) they're high on their company's prospects, given their thriftiness with equity, and (b) negative press always sucks, and exercising the "option" would generate negative press.

I'll disagree, though, and say OP should ask for 11 months of vesting--that's what OP earned, after all. It'd be harder to get that extra month, given that OP wasn't there for a full year and the founders have worked to hang onto as much equity as possible.

EDIT: Consult with a lawyer when attempting to negotiate. A lawyer can help you get through the process while avoiding any suggestion of extortion, blackmail, etc. (which, unintended or otherwise, will torpedo you and ruin your rep).

You are right - 11 months is better. It's the honorable ask.

Unless you did something really wrong, custom would be getting your 1-year cliff and maybe a bit more (3-6 months vesting?), plus a month of salary or so as severance, in exchange for signing.

They're trying to get a "sweetheart deal" for themselves -they know you're not represented, and they figure it's worth a shot. The signature is irrevocable, so be very careful with it.

You should get an employment attorney to give you advice before you respond, and if he recommends it, have him fire off a nastygram to the company.

Showing the company you have representation is likely to make the company sit down seriously and give you something reasonable. No startup can afford to spend its $$$ and attention on legal back-and-forth.

I know you said money is tight, but an employment attorney doesn't have to be expensive. You'll get free advice in a consultation, and if you choose to engage them, usually ~$500-1000 will buy you nastygrams to the company from the attorney, a couple phone calls with their attorneys, and advice on a settlement. Doty Barlow is a firm I've used for employment advice - small group with lower rates but solid guys. (I have no personal connection or financial incentive for an endorsement).

Good luck, it's hard to lose your "baby", and worse to be hurt like that. Just keep the dispute private, and be a gentleman, and you'll walk away smelling like a rose :)

Any founder worth his/her salt would have ensured that the company has full legal insurance cover. I.E. it won't cost them money (other than a small excess) to get lawyers involved.

Could you please recommend one or a few legal insurance providers that cater to startups in the US? Thanks.

Sorry, my startup is based in London, UK - the only insurer we found here that was willing to provide worldwide coverage for a tech startup was Hiscox.

Are you sure that's normally done? We had general liability insurance, is that what you're referring to?

It's not just about cost though, it's attention. Think of the google/oracle trial: Andy Rubin, Eric Schmidt, Larry Page, etc all have better things to do than be in a courtroom.

I am in a similar situation before (Being employee #1) and the way I'm thrown out is just by a simple SMS telling me that I'm not needed anymore, taunting me and locking me out of everything. I got so mad that I don't even want to accept their money as I agreed to help them (used to be friends) for free back then till they are profitable.

Having said that, looking back at it now, it is perhaps a good thing. I went on to have much better success elsewhere, while they had success in their business as well. Do I feel bitter? maybe in the past, but now I can't be brothered. He still send emails 2-3 times a year taunting me about his success with different email addresses which I simply send it to my spam folder.

Most importantly, what I learn is that, sometimes things just don't work out. The reasons for falling out could be many and weird. For my case, my 2 other founder friends are people who prefer 'Yes' men who agree with their groupthink all the time. I'm not one of them and hence it is not surprising we have to part (Although it turn out for the case which I'm arguing against and got them angry, I turned out to be correct as time passed)

It is up to you if you want to chase for more compensation. You may wish to consult a lawyer if you deem it's worth it. For me I don't want to waste further time hence I did not.

That sounds horrible - what kind person sends victory emails to former employees/friends they fired? Maybe that's one of the downsides of having very young & immature entrepreneurs running companies.

Wow, I'd say getting kicked out early was lucky. I can't imagine anything worse than working for years with assholes like that. Plus, you learned a valuable lesson about choosing good partners.

The question here is why are you so concerned with keeping on good terms with the founders? This is a humongous dick move, and either they're very shady or they are extremely angry at you. Either way I am not clear why you would work with them again.

But as for the deal, I think it's pretty reasonable given that they are exercising their ability to screw you over. Assuming you signed the boilerplate options paperwork everyone uses, you signed a contract that explicitly stated that you get nothing if you are let go before 12 months. They gave you 3.5/11 of what you were supposed to get. That seems pretty reasonable compared to 0, which is what you are entitled to.

Best of luck. Try not to dwell too much on this and I'm sure you'll land on your feet. As for your employer, karma will surely bite them in the ass if they pull stunts like this and screw over employees. Shame on them.

Burning bridges with the founders is usually more than just not working with them again in the future. Everyone has their own network, and the founders may be good friends with other potential employers, potential co-founders, etc. with the OP.

And if this dispute spills out into public -- "I want to protect the identity of my former employer for the time being" -- then everyone is usually tainted by the end of it. Once it's public, the founders will probably try to justify their decision (by smearing the OP, more or less politely and more or less truthfully), the OP (angry at being smeared) will say something still more stupid, and it will all be preserved for posterity, regardless.

I have no idea what the OP is entitled to, legally or in-all-fairness. But please think through every step very carefully before (and while) burning bridges.

I hope you'll pardon me for making assumptions about your age, but if there were one lesson that I could teach the younger generation (or even just my own child), it would be 'assume good faith'.

Because they want somebody out of the company doesn't have to mean that they're shady, or that they're angry. I can think of dozens of reasons why you might want to get rid of someone that wouldn't have any bearing on them personally.

If there's one lesson that I could teach the younger generation, it's that you ought to trust what a person shows you & tells you about their honor and the value they place on their word. When a person shows you who they truly are by acting like this, don't make excuses for them, don't rationalize it, don't give them a third or fourth chance, and certainly don't "assume good faith."

Assuming the best when a person shows you the worst makes you a rube, begging to be taken.

We're not talking about a friend who lied about why he couldn't come to your wedding or babysit your kid.

You don't get more "bad faith" than firing somebody right before you were about to owe them a lot of money.

When a person dicks you over, the best thing to assume is that they are a dick. This not only protects you in the future, it equips you to deal with them in the present. If you wish and hope that underneath they really mean well, you will only be disappointed and ineffective.

If they were acting in good faith, they would have A: fired him sooner, or B: given him the proportional share of what they originally agreed.

Leaving aside bankruptcy or serious, newly-come-to-light malfeasance on behalf of the employee, the only explanation of a firing right before the cliff, AND a disproportionally low offer (just over 25%!), is bad faith.

Even if they decided he's a terrible fit and they hate him, it's their responsibility for not taking action sooner. They need to fulfill their side of the agreement. Otherwise they are bad actors, acting in bad faith. It's just that simple.

NB: when we fired 2 employees who were not working out at all, I paid them both severance, even though I had zero obligation to do so. Why? Because I believe in acting in good faith. Yes, it hurt my business, but it was the right thing to do.

Equity isn't really worth anything for an early stage startup, it's a lottery ticket that probably won't pay, take what they give you and move on. You're actually lucky that they're giving you straight equity and not options that you have to come out of pocket to convert.

So you have two months to find a job, no biggie if you're any good and have startup experience in the SF market. Actually even if you aren't that good you should be OK. One advantage to keeping things friendly with your ex-bosses is that you can use them as references for your interviews. I would talk to them and ask them if they could give you really great glowing reviews, most people will do that for you if you keep things friendly.

Your new full time job is to find a job, it's a crappy job but at least you can do it from home in your undies. I've been there and it's really not that bad. One thing to remember is that you do have that two months runway, feeling panicked you might be tempted to take the first crappy offer that comes your way, but a job is a big portion of your life for years at a time so you should be as choosey as you can be and try to get something that you can live with and be happy.

> You're actually lucky that they're giving you straight equity

No, he's not lucky at all. Maybe a tiny little less screwed.

Many lawyers will give a free consultation, have you considered consulting one to explore your options?

My guess is a lawyer will say "yes, you could sue" but they won't do this work on contingency.

However, if you tell your former employer that you feel 11/12 of your cliff in equity is fair; otherwise, you'll pursue a law suit, my guess is they'll pony up without you having to take this any further.

> otherwise, you'll pursue a law suit

IANAL and this isn't legal advice, but I want to comment on your wording. You should word the "threat" as saying that you may pursue a lawsuit, not you will.

The difference is really subtle to most people, but I once heard a story, on HN in fact IIRC, about someone who was sued because he said he would sue a company and then didn't follow through.

The company's claim was that they had been operating under the assumption they were about to be sued, and had incurred legal fees and lost productivity as a result. The company won.

Basically, word it as lawyer-friendly as possible. You want to let them know that you're seriously considering options that they would prefer you didn't, but you don't want to legally commit yourself to a particular action.

Again, IANAL, and this is based on my faulty recollection of a comment I remember seeing a while back.

Is there any legal standing to sue? The 1-year cliff is very specific, and while firing someone at 11 months just to avoid the cliff (if that's what happened) is a complete dick move, it might be legal.

Then why did they ask for release? :-)

Talk to a lawyer. A good lawyer is your best friend and won't make things more confrontational. He or she will vastly improve the situation by making clear to you (and others if necessary) that you know what you options are. For what it is worth (IANAL), my understanding is that California law does provide some protection for employees in this situation, no matter what the contract says.

This is the correct answer. Talk to a lawyer. Consider having that lawyer negotiate on your behalf.

Lawyer != lawsuit and it doesn't have to make things confrontational. It is just smart. If they are smart they talked to a lawyer about how to let you go.

Agreed. The Bay Area lawyer I've used for a dozen years is Adam Slote: http://slotelaw.com/

I strongly recommend that you talk to someone like him. An experienced lawyer will be able to put this in perspective for you in short order: industry norms and expectations, legal options, negotiating tactics.

This could go all sorts of ways. On one memorable occasion, this lawyer wrote a short letter and got me $20k in wages owed. On others he's advised me to just walk away.

I'd also suggest you consider cash instead of equity, especially payment for expenses. You may prefer a longer runway (or a month recovering on a Mexican beach) instead of more lottery tickets.

Can't agree more. There were a couple of "Ask HNs" recently that were job related and made me wonder why people aren't immediately contacting a lawyer.

I complete disagree with the people saying you should talk to a lawyer. If you want to stay on good terms with them, anyone connected to the company, and anyone they know, then you need to work this out at a personal level. If you sue or even admit that you've talked to a lawyer then a lot of people are going to be afraid to work with you.

Thankfully, it's a pretty easy conversation to have with them. Tell them that working for them has left you in a financial straight. Then ask them if they could include any sort of cash in their severance package.

I disagree.

First, you don't have to admit that you talked to a lawyer. You can just get their advice. Second, as a hiring manager, I have a lot more respect for people who are smart enough to get advice when they need it. Third, lawyers are professional negotiators, so talking to one before you negotiate something can be immensely valuable. Especially when negotiating with much more experienced people.

My initial thoughts are similar:

Screw finding a lawyer.

Do point out that you were leaving the money with the company, and would they mind horribly if you submitted your last 2-3 months' expenses (or whatever a sane expense period is) so that you're less out of pocket.

Don't waste time fighting it, because if they do well they'll be able to afford to squash you and if they don't then there'll probably be no money left by the time you win anyway.

The last paragraph is the most important; if it matches up to your view of current reality then it really doesn't matter who's in the right or wrong here, what matters is it isn't worth your while to pick a fight over it.

I disagree. As someone said above, talking to a lawyer does not mean filing a lawsuit. No professional business person is going to hold it against you for talking to a lawyer in a situation like this--that's what they're there for. And frankly you'd be a chump not to explore your options, but that's almost certainly what OP's founders are counting on.

I agree. The parent poster is also giving bad advice in encouraging this guy to tell his former coworkers that he does not have the money for a lawyer/lawsuit.

I'm not a lawyer, but a bit of searching online suggests that the behavior of the company may be illegal in California under a law called ERISA (see the third bullet point under "ERISA Violations" on http://www.lawyersandsettlements.com/case/stock_option.html). The onus would presumably be on the employee to establish he was fired in order to avoid having his shares vest, but if the company had no other reason to be dissatisfied with his performance and never communicated any concerns before his termination he might have a case.

Personally, I think he should ask for his full year of equity and try exchanging equity for severance if they are reluctant. The thing to remember is that he might only have been on good terms with one of the founders, which means there are group dynamics to how any action he takes will be interpreted on their side. It may also only be one of the founders who cares, and the offer may be a negotiated settlement offered from a negotiation between them rather than any specific desire to formalize anything and avoid a lawsuit.

Man, that's a tough spot to be in. Your young age helps - you can still start from scratch and not be too much behind. I do not fully understand why you respect your other founders if they didn't treat you right. Even if what they did is within legal bounds, it certainly sounds like it could have been handled better (of course, I only know your side of the story).

Outside of what others have suggested, I recommend spending a year or two working at a larger company to build your reserves, and to build confidence that you can go and do something like this again. You can keep exploring opportunities on the side while building your bank account, resume and experience.

You shouldn't of felt bad about expensing business expenses. If the company pays for it, it's with before-tax money. If you pay for it and doesn't get reimbursed, it's with after-tax money since your an employee. If you felt bad about charging the company, then offer some of your own money in exchange for equity to cover the expenses, especially when a startup is just 3 other people. I think that way it will be still be a pre-tax expense. I'm not a accountant so ask one. If they are not willing to do that when the company is at that stage, then that is a big warning signal.

Since people out of the company can have their stock diluted to nothing, and you are on bad terms with the founders, I would suggest the business expenses you still have records for instead 3.5 months of equity.

A rule of thumb I use: Do you think you can get more out of them than you could earn if you invested your time elsewhere? Do not put more time into it than makes sense under that rubric.

I am disinclined to sue people, fight with them, etc. Go ahead and ask for more and see what you can get. Then move on. Work on building a life for yourself. Try to learn from your mistakes so you don't repeat them. (If you do it right, you get to make entirely new mistakes on a regular basis.)

Best of luck.

I would switch to survival mode and land on your feet. It's hard to deal with being rejected.

Take time to honestly assess if you could have done things better. Try to resolve your emotions with the situation as quickly and cleanly as you can to get your thinking straight and take care of your financial situation.

Dealing with lawyers seems like a distraction unless there are contracts with your name on them or loans/financing.

Contact me (email in profile). We're hiring Marketers at my company, Meraki, in SF.

Thanks Cisco I will.

That was funny.

You have to ask yourself what is it that you brought to the table and why do they not need it now? They are dealing from a position of strength, because of this knowledge. you are the one that has to deal from a position of strength. What has changed. You hae some homework to do. They want you to sign away any future rights away. that means something is about to happen. I would not settle for less than 7 months full salary and expenses. You have your homework to do. Approach this as if it is a prospective client and you really want the contract. What has changed .

Good Luck but ablove all remain calm and methodical, don't panic. Like they said in Wall Street " never let them see you sweat "

Everyone learns the hard way. I had a similar thing happen to me at one of my first jobs.

Things to take away: - first employee =/= founder. - negotiate stock or wage before you start. Always. - research the founders and ask their past staff. - trust your gut if you think there is something fishy. - learn from this experience and move on.

Walk away. Take the stock, you actually got a pretty damn good deal (assuming you weren't ripped off on your stock package in the first place). Even 1/10 of the stock package of a typical #1 employee is usually better than a #5 employee. Don't expect to get anything out of it.

Move on. Don't mull over it. It's actually a great time to be into startups… there has never been such a drought of developers. Hell, maybe learn how to code, while you're at it.

Hell, maybe learn how to code, while you're at it.

It's not clear that OP DOESN'T know how to code.

Also, OP wasn't employee #5--he or she was employee #1, and sacrificed a year of earnings as a result. You don't make that sacrifice, then roll over when the founders unceremoniously let you go a month before you're due to vest. I say fight for it.

What do you want to gain from this situation?

What position are you in professionally after this experience?

Meditate a lot on those two questions. Remember that there are countless stories like yours, and this does not prove that the people in charge are assholes, just that they are in the throes of the startup rollercoaster. They are probably failing all over themselves, and you were an easy fall guy. It does not excuse their behavior, but this is a very common circumstance.

If the answer to the first question is that you want to get another job quickly, take the high ground and ask them how you can make things easier AND how they can help you. If you did nothing unscrupulous they should be willing to help you find another position and move on, and you should be expected to put them in a position where they can honestly look future investors in the eye and say we negotiated a settlement with past employees that will not screw us and your money in the future. If you did not help them succeed at the level they needed to (and this does not say you are a bad person, it just says you did not succeed at the level they needed you to) then it is good that your future has been freed up. It is honest for both parties to look at it this way.

If the answer to the second question is that you are in a bad position after this, then you really need to make sure you act responsibly and rationally or you could have a very hard time the next time you interview. Saying to an interviewer "I can't have you talk to the people I worked with the last two years..." is a huge red flag. The best advice I ever got was when I was on the playground and another kid punched me in the chest and the teacher had us understand we were equally responsible. I was livid, and she was right.

Taking the high road at this point in your career is a great opportunity for you because this situation is common and there is nothing worse than working with someone who has a chip on their shoulder because of something like this. If you become the type of person who can get through this and take the lessons well, you will prove yourself as a valuable employee anywhere.

great help, thanks xrd

First off sorry you are in this situation it sucks. I have mentored quite a few people thru this situation and here are my thoughts. If you can afford it a lawyer is a good idea. It doesn't hurt your relationship with your other founders. They clearly consulted lawyers before letting you go which is why they are asking you for a release. On the other hand don't just use the lawyers to communicate with the other founders but do use them to understand your rights and your situation. Your co-founders should respect you even more if you stand up for what you believe in and what you are owed. It may be painful in the short term but generally I find people respect those who stand up for themselves. If they are asking for a release you have leverage and I don't think it is a big stretch to ask for your 12 months. One thing to discuss with lawyers is what were the terms of your offer letter. Was their acceleration? Are they trying to terminate you for cause? If so this is really hard to prove in California and its unlikely they would try to do so. Finally on the expenses if you have the receipts submit them its another item in your favor. In the end there is often a lot more to these stories than it seems so I am sure there is a lot more going on, but if you keep a cool head and focus on getting to something that is fair you can close this chapter and move on to your next with the knowledge that you got what you deserved and learned some valuable lessons

Your bottomline is probably somewhere X months of equity, where 3.5 < X < 11. Why don't you (politely) email them that you are a reasonable person and believe it fairness. You don't expect full cliff vesting per agreement, but a 3.5 month compensation is simply not fair. Counter them something like 8 months worth of equity + expense report. Project a tone that you are reasonable and professional about it, but out of personal principle, you will fight against unfair offers.

Give them a hint (but don't say you are talking to a lawyer) that if the arrangement is unreasonable, you'll not just walk away. You'll spend the time and energy to right the wrongs. Give them hints that investors, public laundry, and/or legal means are within consideration (but don't do any of these yet) -- even at the expense of potentially not getting anything at all.

I think if the founders are serious about continuing with the startup, they'll think twice about this. What you are asking them is to just be reasonable, so they shouldn't have a problem with it. They would be far more worried about all these things you hint at (investors, public laundry, legal means).

If they counter with something -- say 6 months. Take it. Heck, if you do this correctly, you lose no karma, not even the relationship with them.

BTW the equity... probably worthless anyway. So, the other approach is to simply move on. I agree with others that this may actually be the better route, but it depends on your situation.

Ask about, and submit your expense report. Never feel bad about being repaid for money you've lent a company.

There's a reason they want you to sign a release. You need to convince them it's a better deal to have you sign the release and give you your 12 months of equity, than to have you walk away without signing that release. Given that they're early stage, and it would be pretty easy to fuck them over, it shouldn't be hard. Posting this under a throwaway was a good move.

Termination sucks but a they would never have called it a cliff unless you can get pushed over it. Your termination agreement sounds like the typical thin futon parked at the bottom of the cliff. If you can dig up receipts you could ask to get your expenses paid. Suggest you sign and move on unless you have a discrimination lawsuit in mind.

Do you feel this company has a viable future? If not, I'd ask for the cash equivalent of the equity package they offered and see what they say...

I agree with this -- get as much cash as possible, not equity. If they are not successful, you come out ahead. If they are successful, you will probably be so diluted, that it won't matter to you. Get your expenses and 11 x (difference between your monthly salary and a market salary).

(I AM NOT AN ACCOUNTANT, but) If they give you equity, and the company has a set valuation (if they took funding), then the equity has an established value that you pay taxes on (cash out of pocket).

1) Why did they let you go? 2) What was your role in this organisation? 3) What does your former organisation sell? 4) Your age in this scenario is irrelevant unless you provide more detail.

I was in charge of marketing and also did all sorts of bd under the CEO.

Something I did not mention is that the CEO was cultivating an overly confidential culture. Over the past couple months I did not know who our clients were, how much they were paying, status updates from our software development. It felt like I was mindlessly rowing a canoe with blinders on and earlplugs in. While this definitely is one management strategy, I don't agree with it. As a result I think I got a little unplugged and they didn't like it.

I don't want to reveal what we sold yet to preserve confidentiality for them.

Heh - if you were in charge of marketing and didn't know who your clients were, your CEO's out of his tree and your stock's never going to be worth anything anyway.

I'd take the 3.5 months worth of equity just in case and start looking for another job.

(Oh, and next time do your expenses and take a sustainable salary! Early-stage employee doesn't equal martyr.)

"Early-stage employee doesn't equal martyr" >> I think that's my biggest lesson so far

Right, and if you are going to take a significant pay cut over market, make sure that equity vests every month. You are being compensated in equity in these arrangements. Make sure the equity is not a future promise for sacrifices today.

That's just not how it works. Pretty much every startup uses the 1 year cliff. And rightly so, because for a very early employee 1/48 of the employee's options is not a trivial amount of equity. You could hire a guy that comes in and works for a few months and then leaves and takes .3% or whatever of the company. That is just as bad of a screwjob as what happened to the OP, and companies are right to protect themselves.

Anyway, the right answer here is to work for someone who doesn't pull crap like this. And if the OP was competent at his job, I would hope the other employees have seen what happened and are properly aware of their employer's shady ethics. In any regard, this is just bad business and likely killed morale to some degree.

The deals for early employees are much more flexible than for later employees. If he took a significantly below-market salary in exchange for equity, asking for a shorter cliff is not unreasonable.

Right, anytime I take reduced compensation my cliff becomes very short. If it does not then it is not the deal for me. Any other arrangement leaves you in a position to hold the bag. Now there are a multitude of way that that vesting can be scheduled for example an introductory 3 month window where there is no vesting and then a sliding scale where each month compounds until fully vested at 12. I am sorry but any deal where you take reduced compensation with no equity until 12 months is a bad deal. This post being a prime example of why.

I really wish I had taken this track back in the day.

OP, listen to kls...now that you've seen how this can go you will really be a lot stronger when you negotiate your next job. There's different kinds of options available too, but unless you ask about which kind you get, you'll just be given the default (i.e. cheaper for the company).

It's fairly standard to have a 1 year cliff with no vesting, followed by monthly vesting.

No that is the standard for companies, it is not the rules, you can negotiate any terms that you are comfortable with. Me personally, I am not comfortable taking reduced compensation for a year before I earn the replacement of that forgone compensation. To me it would be no different then someone saying to me, hey we are going to pay you half of market and then at the end of the year we will give you a bonus that pays the other half of your rate. My response to that would be, and if I am terminated you prorate that bonus and issue me the prorated bonus on termination. I would allow for a 3 month window but that is as far as I am willing to risk reduced compensation for a future promise.

Worst kind of lesson to learn first hand as well. At least you are still young and have a long road ahead of you.

Unless they kept it secret from him for a reason. Anyway, I agree, take the 3.5 months of equity.

As far as the lawyer goes, this is all very interesting, as if they were preparing to push you out before your 12mo. Did they keep the information from you? Don't blame yourself, it may be that they unplugged you first.

You were the head of marketing and you didn't know who your own customers were? ... Excuse me?

If you feel you were wronged, sue them for what you feel is right and move on as quickly as possible. This entire situation sounds insane. Either you or they are completely off the rocker.

Try and talk to them about (back-dated) expense reports, but that's probably it if you in fact want to keep relationships with the founders.

PS. If I read between the lines correctly, the "tiny equity package" basically reflects their opinion of your contributions to the business, i.e. it wasn't much. This in turn implies you were let go because of that rather because "things changed" and you weren't a "good fit anymore". If this is close to reality, then I can certainly appreciate the general mood you are in, but take it as a valuable experience and learn from it. If money is an issue, just tell them exactly that - "I'm in a crunch, please help." The chances are that they will. I saw an absolutely abysmal programmer get hired back on a short contract as a favor, because he would've lost his home otherwise. Just don't lawyer up for crissake (or do it very discreetly), that's an ass move that will not make things any better.

asking a lawyer is good to know one's options. doesn't mean you're going to yell it at every door. you gotta know your rights. blaming people for that is just wrong. Talking like "i spoke to my lawyer and ur in troubles!" is just as wrong obviously.

Take what they give you and move on. If you're good, you'll have a new job in no time, everybody's hiring in the Valley now. Theoretically, it could be that with lawyer etc. you could get more. But fresh startup probably doesn't have much more than equity, and even that equity would not be worth anything for years, and chances are - never. And you'll spend your energy dwelling in the past and nurturing insults done to you. Not a good strategy for a guy in his 20s. IMHO just move on, you'll have many good opportunities. Next time you do startup remember to be more careful and have some cushion - in this case you got let go, but startup could also just fold through no fault of anybody.

For what it's worth, whenever our family has a conflict that's possibly legal with someone, it is resolved pretty quickly once something is sent on my father's legal stationary.

Lawyers scare people, can't hurt.

1. If it is a lowball offer, you won't keep respect if you accept it. Nobody respects a schmuck.

2. As a minority shareholder, everything revolves around what they are contented to give you. Facebook movie got something right - if majority want to screw u they can (depending on how much effort they are willing to spend doing so!)

3. How can you keep a good relationship with them? - e.g. I work some hours per week for free and keep on good terms with founders to retain my minority shareholding.

I am an engineer type, so read above as random engineer dude advice :-)

I think it's hard for anyone to tell the reason why he was fired. But 11 months is just suspicious. They didn't realize he wasn't a good fit sooner? Fire him sooner, or wait a month so he vests to do the right thing.

Sounds like they used a young guy to do their dirty work while they were small, and once they got funding and didn't need someone who had rights to such a large portion of equity in the future, brought on people who would take less.

Pretty sketchy.

Unless you were underage when you took the contract (or someone pointed a literal gun to your head) you were fully capable, should have known the the risks of the position when you started.

You took a gamble on a startup and you lost. You're not a unique or special snowflake in this regard. Brush yourself off, maybe take a paying position to build back your reserves, and maybe attack the next gamble with some more wisdom.

At least under California law, his legal rights may extend beyond just "brush yourself off." It is incredibly shmucky for him to not find out what he is entitled to.

Did they fire you for cause? If so, take the 3.5 months and run. If not, I'd ask for the full 12 months of equity and a month's severance pay.

How do most startups quantify a month's worth of equity? Is there an obvious formula based on current valuation?

Presumably it's his equity divided by 12 months times 3.5.

It is the # of shares the offered me divided by my total restricted stock agreement. This represents the total % of equity they are granting me after letting me go, then I multiply this by 48 (because my equity grant vests over 48 months). The results is about 3.5 months.

How much equity (%)? Curious as I'm looking at first employee position offer at 2.5 and nOt thrilled.

I'd prefer not to state publicly but you can email me disgruntledmarketer@live.com (another dummy account I made).

Here are some other things to consider:

1. EXPENSE REIMBURSEMENT LAW: You didn't say where you're located, but check out California Labor Code section 2802, especially subdivision (c), at http://law.onecle.com/california/labor/2802.html:


(a) An employer shall indemnify [that is, reimburse] his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer, even though unlawful, unless the employee, at the time of obeying the directions, believed them to be unlawful.

(b) All awards made by a court or by the Division of Labor Standards Enforcement for reimbursement of necessary expenditures under this section shall carry interest at the same rate as judgments in civil actions. Interest shall accrue from the date on which the employee incurred the necessary expenditure or loss.

(c) For purposes of this section, the term "necessary expenditures or losses" shall include all reasonable costs, including, but not limited to, attorney's fees incurred by the employee enforcing the rights granted by this section.


2. WRITTEN AGREEMENT? You didn't say whether you had a written employment agreement, stock-option agreement, etc. Any of those might contain a mandatory-arbitration clause; a jury-trial waiver (probably unenforceable in California); and/or other relevant provisions.

3. TIME SUCK: Lawsuits and arbitrations against former employers are a huge time suck for all concerned, but especially for the (former) employee. Ask yourself whether, at this stage of your career, the upside of equity in this particular startup justifies your making such an investment of your time. Because no matter what happens, you'll never get that time back.

4. SIGNAL TO FUTURE EMPLOYERS: If you file a lawsuit, future prospective employers won't know who's right or who's wrong. All they'll know is that you've sued a former employer. (They may well find that out when they run a background check.) That will trigger the fear that someday you might sue them. And that in turn could color their decision whether to hire you, or instead to hire the next person, who isn't suing their employer.

5. THE REST OF THE STORY: Your former employer's founders will have a different perspective. If you sue them, there's absolutely no doubt they'll tell their side of the story. Consider whether you want that made a matter of public record.

6. BRIAN REID EXAMPLE: Check out Brian Reid's story: He was fired from Google at age 52, nine days before the IPO. His options apparently would have been worth $10 million at the IPO; presumably they'd be worth a lot more now. His lawsuit against Google for age discrimination has been pending for years. Dr. Reid has a clear upside, plus what the court of appeal felt was a triable case, i.e., a case that at least had sufficient merit that it deserved to be decided by a jury instead of being summarily tossed out. From the facts you've given, it's not clear that either of those things is the case for you. http://en.wikipedia.org/wiki/Brian_Reid_(computer_scientist)...

7. KEEPING GOOD RELATIONS: Other commenters have made good points about the upside of keeping a civil relationship with your former employer, in the (perhaps-vain) hope that in the future they'll give you a decent reference or perhaps someday even want to hire you again.

8. USUAL DISCLAIMER: I'm not your lawyer, the above isn't legal advice because we don't have all the facts here, etc., etc.

How do you go from number one to out the door? What protection did you have in place? Isn't your name on any paperwork?

I thought when a founder leaves you get some sort of payout for time and cash put in?

Don't sign anything without getting advice.

You might as well ask for more, because why not?

But either way... 3.5 months of severance at such an early stage company is actually pretty good. That plus your own 2 months of savings puts you in a much better spot than you seem to think you're in.

Just to clarify...it's 3.5 months worth of equity so it's not liquid and not worth much right now.

I would take that deal, then put it behind you and start on the next thing. Maybe it will be worth something some day.

However, move ahead and start work on your next thing. Don't delay--it is very easy to sit and stew.

Here is what works for me in serious times of stress.

Spend most of your energy working on your next deal.

And then, say, one hour per week, allow yourself to internally mope about this. I am quite serious. I call it "the hour of sniveling", and when that is done, you haven't necessarily solved a problem, but you have let those feelings express themselves, but then move forward.

(I admit this sounds very goofy, but I use this approach to positive effect.)

This isn't so goofy - it is like the same advice they give to people losing weight, they are allowed to have a pig out day once in a while.

I would ask politely for 11 months, as that is what you feel you are due given the work you did - anything more is unreasonable. Then take what you are offered on the second round, which may be less, but should be more than 3.5 months. They want the release, you want a bit more for your efforts - there's bound to be a settlement somewhere in the middle.

These shares might be worth a lot in a few years time, or (more likely) they might be worth nothing, they are therefore not necessarily worth sacrificing lots of your time and money over, unless you are convinced that they will soon be worth millions. Remember also that even if you get these options, the board could still dilute them to virtually nothing very easily. They could easily make them worthless by fiat (by expanding the shares pool and assigning you no more) if they want to in future.

What's important for you is to move on with your life feeling you have made the best of a bad situation, rather than wasting energy on a potentially fruitless lawsuit or public spat, neither of which will do your career or character any good. You don't want to end up in Jarndyce v Jarndyce for the next few years and waste some of your life, only to find at the end you have some worthless bits of paper and lasting bitterness.

I agree with pretty much everybody in that you should ask for more. I would also work on those expense reports. You can try to have those paid out or use their total value to negotiate a better equity position.

To leave on good terms you might ask that the equity position allow you to claim 'advisor' status. Let them know you will continue to advocate for the company and are more than happy to answer their questions and handle the handover. You might also consider crafting an agreement whereby you receive a revenue share or additional equity for any business you generate for the company.

Sounds like an unfortunate story (I'm torn between recommending a lawyer or walking away) - but the positive thing is that you're so much younger - it all comes around, just hang in there.

forget it and move on. Focus on delivering value. energy you spend on dealing with your old company is better channeled on new things.

Beware that even if you had vested stock you typically would have to buy the options for whatever they were worth when you were hired, within 90 days. If you're broke now, you'll need to find some place to get the money to buy those options, which may or may not be a good investment.

Get a lawyer. Immediately. That is the only advice that matters.

Why is profanity in a title on the front page?

No sh*t. You are on your way to being the next Steve Jobs.

Newbie here... wants to know why the above motivational comment is been downvoted? This will help me.

I have no idea too.

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