Ask HN: When are you allowed to quit a startup?
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.
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.
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."
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.
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?
Thanks for any insight or personal experiences...
74 comments
[ 2.7 ms ] story [ 155 ms ] threadIs 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.
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.
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.
It's just aaahhh business and you're out of a job with no pie.
Getting out of there will make you way more available for opportunities. And almost any opportunity is better than what you're doing now, so I would get out in a hurry.
I have seen this situation far too many times (both with myself earlier in my career and with friends) - employees feel loyalty to their employer, but it is a one-way street. You have the added pressure of shouldering all of the technical work for the company.
There are too many red flags in your story (legal fees being too high to give you stock should tell you how much they really value your work). I think it is shocking that they didn't put you on a stock vesting schedule as soon as your trial period is up, considering that you are building the product. You should be the CTO/VP of this company, and part of that founding group - yet they want you to build the tech but treat you as a low-level employee.
Find a new role and quit asap. You were smart enough to see that the company is sinking, so use the experience you have gained from working for this company to find yourself a good role in another startup, or work on your own and teach these lessons to others as a consultant.
The alternative is an example that I went through myself. I was in a similar situation - in the financial field with a solid group of founders, the only tech guy etc. The company (this was 99-00) was running out of money. I re-negotiated my role to be the CTO, negotiated a solid slice of the company stock and built a fresh new prototype of our platform in 6 weeks - complete with integrated analytics, customer management and support (using a third party platform). We used the prototype and business plan to raise a new round - I got a pay kick at that point and a budget to bring in 5-6 developers. We fired a lot of the business people who were not doing a lot (they bought their big financial company work ethic with them to the startup). 18 months later we were acquired by a large financial firm, which was a solid outcome for all involved.
In case you decide to return to the company, this way you will have retained some of their respect.
But your point about being taken advantage of has been in the forefront of my mind. Thanks for giving that some credence.
This is always my argument when I'm confused about what to do, and it's always helped: We only have one life, that we know of. Might as well make the most of it.
If you feel your time is better spent somewhere else, than you have your answer. Best of luck m8.
Run.
Says something about their idea of a 'business'
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.
Part of me has wanted to be a bit more trustworthy as they've shown themselves to be very friendly people -- I regularly go to bars with the CEO outside of work, the COO and I share interests and talk about them/engage in them (being vague here), etc. But I think your point is pretty clear and well thought out. And pretty much not arguable. Thanks for that.
edit: I should add that in my case, the stock options were left out more out of ineptness than maliciousness. Either way it's a bad sign. The company imploded after a year and a half, but not before one of the employees mentioned the options in a disgruntled tone. In short, we wondered if the founder really cared about our contribution.
The big problem here is the bloated management structure, pre-launch vacations and failures to meet targets, all of which are strong signs the decision makers in the company are bad at their job. This implies that decisions about this person's future compensation and role in the company will be made by a committee that does not understand his value. I think that is the problem more than anything else.
Tomorrow never happens.
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.
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.
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.
Holy crap!
Sage wisdom, here. It's easy to seem generous when you're dreaming about carving off a tiny sliver from an enormous pie. Startups aren't an adventure, or a calling, or a mission from god - they're a business. And the fastest way to shed the BS and get down to reality is to insist on equity, in writing.
But, it doesn't really change the fact that your bosses appear to be not the nicest people in the world.
In the UK I'd tend to consider 4 weeks "normal" both in terms of what a contract would say and what I'd expect but that may be very UK specific.
There are some situations where you might want to extend it a little if you think it's in your interest (normally that would be about not leaving on bad terms if there's a chance that it might damage your reputation to go earlier or not leaving other colleagues in the lurch) but that doesn't turn weeks into months.
As someone said, this isn't personal, this is business. Take a good honest look at how they've treated you - if you think they've gone above and beyond for you then you might reciprocate but the reality is that most businesses will act in their own interest and you should do likewise. If the owners / managers get offended by this then they're really not cut out for it.
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.
It just sounds like an extraordinarily petty and ineffective way to deal with losing a team member.
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.
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.
It's just a job, and jobs end. Treat it like one.
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.
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.
>> "all of the founders (CEO/CFO/COO)"
>> "no equity"
WHAT? Quit. Now.
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).
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.
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.
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.
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.
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.
No offense but you need to quit immediately..