Ask HN: Not feeling it from the CEO. What can I do? (equity split)

tell him to fuck off

This might be an unpopular opinion, but are you sure you deserve twice as much equity? You're both going to be working equally hard on this startup for years. The CEO took the risk of starting the company, came up with the idea, and raised VC funding - not trivial things to do.

Why did you join if the CEO is so-so? I think it can work out, if one of you leaves. Why are you so worried about his compensation compared to yours? If you feel you are undercompensated then demand more. If you feel like he is overcompensated, then question the board's judgement. It sounds more like sour grapes than anything the way you want to structure your equity with respect to the CEO.

The chaos coming out of an equity battle will make the 2 of 2:1 worth less than making the thing successful. You have no power here, as you should know as a c-suite guy, so suck it up, work hard and wait.

There is no good outcome here.

You clearly don't have mutual respect for the CEO (not that you should or shouldn't necessarily) and in less than half a year find yourself in pretty fundamental conflict. In what amounts to a founder level role at a startup, if you aren't on the same page about almost everything, then it will blow up.

My suggestion is to find someone to take over your role and go do something else. The VR space requires too much grinding and grit right now to succeed while not having a great working relationship between founders/C-Level people.

Wow. What I can suggest is that perhaps you have misperceived the purpose and nature of equity.

When your venture was 0 months old, it needed a CEO to get it funding. Even if he played golf the whole time and lent only his name to the venture while you beat the streets to scare that funding up, he delivered on his job.

A CEO's job for a startup is not to be CMO or COO. It's to scare up money, and that money done got scared up. And now you want to move the goalposts.

Even if he's still out playing golf and you're still putting in 20-hour days, that doesn't mean a 50/50 split is unfair. It's what you agreed to, on the off chance you'd be anywhere near as successful as you are today.

Hate the game if you must, but your failure to understand the game has probably put you on the outs with your cofounder, and that has destroyed a lot of the value in the company, both yours and his. The whole purpose of a 50/50 split is to avoid this petty squabbling.

The correct advice is thus: Quit rocking the boat, roll back your hours to 8 or less (the company is not "yours" and never was), limp toward your first half-decent exit (either the company itself or just you), and focus on a new solo startup where you can be the CEO and CTO.

I think a professional mediator may help resolve this situation. Everyone should feel they are fairly compensated. From a technical person’s perspetive they are doing all the work. A business person often looks at a chief technical person as a key component of the overall business model. In my opinion, the most important question is will both of you do whatever is necessary to make this startup successful? A healthy cofounder relationship is essential to this. Could you have done this startup all by yourself? Remember half of a billion dollar company is better than a 100% of a broken startup. I would also encourage you to look at several Harvard business cases where there was tension between a CTO and non technical CEO. Many times a technical CEO would be moved to a CTO role. Once they sold that company, investors would be confident in them being the CEO a next time. In short, I would suggest thinking of this from a lot of perspectives before jumping to a decision. In general, a healthy cofounder relationship is critical to a startup and please resolve this now rather than later. Best of luck!

> So even though joining this startup seemed ideal, I'm finding that the CEO is out of his depth and I can't follow him.

> I'd love to do this with the CEO in a lesser role.

Is this about equity or about who wears the pants?

No, I don't think it can - you are being completely unrealistic about equity. The time for negotiating equity is before you incorporate or before you take funding; not 9 months down the line.

Frankly, if you pursue this equity issue - it is very unlikely to end well - you are likely going to destroy value in your business based on what? Some online calculator, put out as lead-gen?

I think you are confusing two issues - equity and leadership. Leadership is a perfectly reasonable conversation to be having; yesterdays CEO might not be the correct CEO today. This is probably 9 months too late, but maybe something like 'Founders Dilemmas' could help you.

You are confusing 2 different things:

1) The choices that need to be made for the company to succeed

2) How much equity you have or should get.

“The vesting schedule means the massive contributions will only help me if I see it through” ...errm, yes, that’s the point of a vesting schedule.

As noted by others, the way to succeed is to make the whole pie bigger (and therefore your slice also becomes more valuable, even though it’s the same percentage). You should assume that your equity slice will never get bigger in percentage terms, the investors want you busting a gut to make the pie bigger, not fighting over percentages.

Now, if you really think the CEO is destroying value I.e. making the pie smaller, and you can’t resolve it between you, then both of you need to talk to your board investors. The likely result is that one of you will be leaving the firm, and that person’s equity will return to the company since neither of you has hit your 12 month anniversary, assuming you have a standard vesting schedule.

I feel like some of this is due to cultural differences between academia where it sounds like you were clearly successful, and vc-backed startup world.

You have a point on the amount of effort you are putting in.

But, there is a larger point here - People come up with ideas left and right. It is often said "Ideas are dime a dozen". Not many people put in effort to take a risk and start something.

So, when someone joins a startup they have to understand what they are getting into. Is the founder good enough or he is just hot air? People take a huge risk in joining a non-technical CEO on tech-oriented/facing projects. The founder/CEO might not be up to speed on tech methodology. They might even be reading stuff off magazine covers. And then demanding that their software work exactly like what they have read. This can be frustrating.

Unfortunately, not much can be done about it.

Asking a forum filled with aspirational CEOs whether the CEOs should give up 2/3s of her equity to an employee doesn’t sound like a promising idea.

If you feel this way, you should quit and start your own company, raise money, recruit a team, and be CEO yourself. You’ll never be happy in your current position, and you’ll never understand what your current CEO did and does until you do it yourself. Good luck.

You were asked as a CTO to a very young (yet VC backed!) company. You knew very well that a large part of the success of the startup would depend on your expertise. You agreed to 50% equity.

What has changed that you feel you are owed more now?

Do this simple thought exercise: what happens if you leave the company?

You lose a funded company.

They lose (I'm inventing now) the only chance to get the product to work.

A VC would probably want to help you settle this dispute, to avoid wasting a) the money and b) the opportunity to have funded a successful company.

People who have never started companies undervalue how hard that is. CEO's job is literally using sales and recruiting to get outcome. He closed the funding and recruited you. If you think you can do that, then you should have done it, and you've already screwed up that outcome by touching this.

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I just did the gust survey, it says 100%/0% in my favor. He builds, I do everything else in addition to build, including building v1 by myself. He is also theoretically fungible, like you are. I made him a 50/50 partner for good reasons: the product is worth $0 until its not, and morale/loyalty/not making posts like this is more valuable to my outcome than a larger % of zero. The survey is bullshit.

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I have a great therapist (ex-biglaw) to help me overcome personal psychological barriers. We all face our ego and great leadership stems from overcoming this.

I'm going to share here my friend's insight which I think is applicable.

He said: New startups that have one brilliant individual often fail because these people often think it's all about them.

EDIT: After reading OPs responses on this thread, I have reinforced my previous impression, and in addition I now think OP is dishonest.

OP has made it clear that this is in part about power and thrills, not just equity, and that he was looking to leave the academia in search of such power and thrills.

In other words, when OP shook hands with the CEO already knew that he wasn't happy with 50/50 and CTO title, but at the time he thought that was the most he could get, and now OP thinks he can get more.

Completely dishonest, OP is just considering how to execute the power grab he had planned.

You agreed on 50/50 when you joined, there is no way CEO will give his equity to you. Would you do it?

You sound like a talented person with a lot to contribute to the company. You're going to help build a great product, and if you combine that with the talents of other people you'll build a great company.

That last part is the important part. A company is MORE than a product. Do a google search for Steven Blank business canvas. Product is just one column in the whole thing. It takes a lot of work to build a good product, and you'll want to best person you can get for it (sounds like you're him!) but at the end of the day, you will also need someone who is going to help get it sold. You'll need a sales team, a marketing team, relationships with partners, you'll need all sorts of non-product related things. They're necessary. Products don't sell themselves. They just don't.

It doesn't sound like you have any experience building a sales pipeline, marketing, or business in general. Your CEO is going to work on those things so you can put your effort on a great product. If you don't think he's up to the task, maybe you need a new guy... but don't diminish his equity. He has an important job, he deserves as much.

If a share vesting schedule makes you feel like it's not your company, why not get rid of that?

Have both of you own equal 50/50 stock directly and without conditions — that's the only way to really feel like you're the entrepreneur. If he doesn't want to do that, it's a sign that you're not being trusted either.

The CEOs job is to sell the vision. To investors, employees/recruits, and early customers. That's the job. Not to code or do sprints or stay up 3 straight days testing a release.

I suggest reading the book E-Myth. It's superbly relevant to your case.

Technicians who start a company think that they are everything. Yes, you have the technical prowess but that means squat if you want to participate in market economy. If you want to be appreciated purely as a technician, academia is a better fit.

Entrepreneurs who start a company know that the product is not a company.

And a manager knows how to deliver results for the company not create the product.

Really good book...

Fire the CEO if you can. It seems like this CEO is one of the "who you know" ones.

When you do hire talented engineers they won't want a leader who exists out of nepotism, it has the potential to rot the whole company from the head(seen it more than once).

Sounds like the stereotypical clueless academic ego quite honestly. Asked for a response in writing? Using online equity calculators 5 months post facto? What planet are you living on? Maybe you are undercompensated and deserve more but the way you’re approaching this shows you are definitely not 2:1 CEO material. Reality check time.

<blunt>:

You have an over-inflated view of your own contributions, because, well, you're human, and we tend to view our own contributions as much more valuable (because we understand how complex and impactful they are, and we don't usually do so for other people's contributions).

My perspective, as a technical person who started doing startups in 2007 (as CTO in my first 2 startups), is running a successful company now (as CEO), and has advised a bunch of companies over the last 10 years, is that a 50/50 deal is extremely generous and if anything I would advise the CEO that he was too generous with you and probably set up this problem of your overinflated ego by doing that. Possibly this problem has sunk the company unless you're able to pop your inflated head balloon and get back down to earth.

Ideas aren't everything, but recruiting great people to work on your idea is part of execution. You got recruited 4 months in. You're an employee who somehow miraculously has as much equity as the founder. That is an insanely good deal and you are foolish and extremely greedy to be questioning it, especially at this point.

Now, about who wears the pants, which you mention in another comment - you need to clarify who wears the pants in what context. You're not an expert on everything, and neither is he. Obviously you have expertise in technical matters, and so it is reasonable that you will want to own technical decisions and have a strong say in product/vision decisions. But based on your post you sound blissfully unaware of all it takes to build a larger company (I notice you didn't specify how "successful" your online business was) so you should defer to the CEO on most of what it will take to get this to actually become a company. That's his job. And if you think he can't do it, quit.