Ask HN: Middle School family biz founder; now adult, and parents have all equity

Here is a clickable link to the full version of my story: https://pastebin.com/JDGUtT3Q

I am not a lawyer, and I would bet that none of the answers you get here would be on par with a consultation with a legal professional.

I would have a conversation with yourself about what you want the end result of this to look like. What's the best outcome here for you? What's the worst? What about for your parents? And I'm not just talking about the cash: is it worth it to press this if it means losing your family?

This is clearly a really emotional thing for you, so while I understand, I urge you to be as rational as possible about this.

Let's talk about value. There are three types of value, in my mind: wisdom value, cash value, and potential value.

The cash value of this experience is your salary. You don't seem happy with it.

The wisdom value of this experience is hopefully clear: Take ownership, have things written down on paper, and don't do work for free. Also, another nugget of wisdom: Many people here on HN have been screwed in situations where they thought they were getting equity and they weren't - the difference is you lost it to family. This is actually not that bad. I'll explain later. The main point is to not make the mistake of doing free work for no equity again.

The potential value is pretty much zero. You're not going to get much more from this company, at least compared to the opportunity cost of working for a different startup that values you or starting your own. You've fooled yourself that there is potential because "you started it" and "you deserve it." but there isn't and you're screwed. Accept it.

From the little information I have, I think your next best action is clear: move on, do something new. Start a new company, you clearly have the chops and the experience. You have a distinct advantage over most people starting companies because your family is also made up of business people. (I know I know - your hear is sinking - but stay focused on being rational.) But this makes you incredibly lucky.

Lets say you move on - work for a new company - start your own - whatever. You live life. In 10 years you're married and you have a baby. Your parents are getting old and the company now has a lot of liquid assets and everyone is super comfortable. Your parents now buy you a house, or set up a trust for your kid to go to college. Very few people have this. You, again, become incredibly lucky. Your brother, too, will get these benefits. What luck! What a wonderful life all the cousins will have.

There is an African folk story about a man who fell from a very tall tree onto a medium size tree, and then from a medium size tree on to the ground. He was all scratched up, but he survived because of the interim tree. An elder looked at him scowling and reminded him, "don't ask god why, when you should tell him thank you!"

You made your family rich. You achieved IT, and I hope one day after the rawness of the emotions fades, you can feel pride about this entire experience. Your parents did not do the right thing - but thats okay, few people do. Maybe one day they will. But it is THEIR choice - the ball is in their court. These choices are difficult. Thankfully, it's not your choice! Forgive, learn, move on, and be thankful!

1) You need to decide what's important to you. Your family relationship or money. What could happen is that you fight it and the family turns against you, not just your dad but everyone else since he control's the money. Everyone else will get inline not to get cut off. So only fight if you don't care about the outcome. Don't assume that you can repair the relationship ever if it breaks.

2) Doesn't matter if you fight it or not. Don't let this hold you back. You have gone through the process, you know what it takes to build a business. Start your own, it might work out immediately, but keep trying. Only keep working for the company if the pay is enough, if you can command more pay go get a job else where. Work for the company as a consultant and charge higher pay. So instead of say $20/hr 40hrs a week. They can have you on retainer for $200/week for 1hr and after that $50/hr. Assuming you don't have much to do. That way you make more money working else where, but you still stay active in the company and hopeful the extra money will turn to more savings you can pile into your future venture.

Best of luck.

Either get a lawyer and take him to court, or move on and get your own business. No more hand-wriging and hoping.

Your father sounds like a snake, by the way.

Move on with this 1M lesson and build something worth a 100M :)

Lawyer up. Time to sue. Your family put you in this position. Most likely out of misguided greed. Get what is yours.

Your father has been treating you like a slave to build his wealth. He did so from the time you were a child. The fact that you call him a great guy baffles me and makes me think you suffer from Stockholm Syndrome.

Depending on how much time you initially put into the company, he may have also been in violation of child labor laws.

But the reality is that you saving the company helped you stay fed, clothed and sheltered, so you at least got that much out of it. And when you walked away, it began to unravel.

You need to read some negotiating books and decide what you want. You need to look to the future, not the past.

You need to put in writing what you want, such as "I get X amount of equity and credit for helping build this company or I go get a different job." Don't argue about the past, what's fair, how you helped build it, etc.

I would make it clear that I don't think the company can thrive without you. You saved it twice now.

But that doesn't mean it will get through to your father. You need to be fully prepared to leave if he doesn't give you what you want. The odds are good that he won't.

If the company gets into trouble again after you leave and they again ask you to come back, lawyer up and insist on getting your due. Get it in written contract form, not verbal agreement. If you don't get what you want, don't go back.

You need to make your peace with letting your father fail and going your own way. Or accept that he will always take advantage of you.

You can't really force other people to change. There are so many ways for them to just keep crapping on you if you are insisting on a fairness they don't really believe in. It would probably be best to quietly job hunt and just leave.

Accept that if you do so, the company probably starts its death spiral again. Your father isn't a talented businessman.

Legitimate question: Who paid for college?

If this business's profits paid for yours and your brother's college education, as well as supported the family while you lived there you need to take that into account. You may also want to take into account that even according to your own version of events, your dad had been running this business since before you created the eStore. Plus there's a huge gap in the middle of your story (college + job + own startup) where you didn't work for the business while your brother and dad did.

I guess what I am trying to say is: You deserve equity but not the 50/50 you seem to believe. According to your own version of events (which paints things in the best possible light for you), your dad still did the majority of the work, took the majority of the risk, and was paying for things for you while doing so.

I think your dad's greed is affecting his judgement, but frankly I think it is affecting yours too. As an exercise go rewrite this story from what you think your dad's perspective is, setting out what he did, and how things will look for him.

Again, you deserve equity, and I have no idea what he already gifted you. 20-30% would be in the ballpark of fair. But in general I think you're seeing green a little and just want more power than your brother for later, which isn't a healthy place to come from.

You could go get lawyers involved but win or lose, you'll lose.

You will likely go through life with many jobs. You will only ever have one father. Lots of people would kill for the opportunity to have worked alongside their father for years, even exploited. It's special.

I think you have to decide how much your relationship with your father is worth to you. If you can put a price on it, make darn sure whatever you do next is 100% going to result in that price, or more, and you won't lose any sleep.

Consider for a moment that maybe your father did more to keep the business alive than you think he did, and that maybe you did less to keep it alive than you think you did. You're not crazy to think you're a 50/50 cofounder, but you're probably wrong to think it.

I think you should consider opening your own warehouse across town, doing the exact same thing your current business is doing. Build a better engine, and skim the cream your current business is getting (for the 90% of inventory that generates 10% of the revenues, simply send them the business to keep your new venture and cash burn optimally-sized). Don't clue your family into what you're doing. If your father is essential and irreplaceable to the business model, then your venture could fail. If you're the essential one, then you can gift your family some nonvoting stock after your business takes off and theirs tanks (assuming Amazon doesn't eat both your lunches in the meantime).

But consider this all with the backdrop of only having one family. You can't put a price on that, or at least I can't.

I would like to relate a similar story I've heard.

Gary Vaynerchuk grew his father's brick and mortar liquor store from 4MM in sales to 60MM in sales on the back of digital advertising and ecommerce. He didn't get any equity in his father's company either. His salary also wasn't lavish. When Gary was in his 30s, he left his father's business and launched his own company.

You could take what you have learned from building your father's business and launch a company on your own, where you control the equity and call the shots. If you're not happy with how your family wants to compensate you, wouldn't it be better to forge a path on your own rather than expend time and energy fighting with family?

If you look on youtube for GaryVee, you can hear how he views all that work he did for his father's company. Hopefully it gives you a new perspective.

> I want to have a final meeting with my father -- I’d like to correct course.

Attitude matters, if you think you'll get a war -- you'll get a war.

Perceptions dominate ALL parts of negotiation. When people become angry and uncertain, mistrustful -- they physiologically hear less.

Relative to your father -- is important to take his 'emotional temperature' Figure out the pictures in his head and deal with it. See if those perceptions match.

You're right to love to your folks, support them the best you can. You know your Old Man better than anyone -- What will it take to persuade him?

Where the circle overlaps with your career and business interests -- sadly, lots of people have learned to keep them separated.

Incidentally, you might find Stuart Diamond helpful > https://www.youtube.com/watch?v=2QtZ-vObJrk

Have you talked to your brother about this (or better still, started with asking about his aspirations)?

Sounds like he will have his own expectations of equity (possibly not an equal share), views on your father's plans (I assume he intends to retire at some point) and view of how involved he thinks you should be in running things. He'll also have a view on how much work you actually did before you got on board and how important that work you did was to the company growth, which sounds like it will be not unfavourable to you (but also perhaps not the same as yours). And lastly, he'll have a better idea than any of us of how persuadable your father is on the issue or whether it's easier just to walk away.

I read through your notes on pastebin and I am saddened.

Your father took advantage of you and is taking advantage of you still. If it wasn't obvious to you when the issue of equity arose, it should have been glaring when he refused to pay you a reasonable salary after you returned to save the company.

Your judgement is clouded by the respect you have for your father. To get a sense of what's really going on, replace every occurrence of 'my father' in your story with a neutral name 'George' for instance, then read your own account again.

I get a sense that you are not very an assertive person and that you shy away from confrontation - at least insofar it relates to your father. This is a far from rare trait, but it has worked to your detriment in this case.

The way I see it, you have two options: walk away from the company now and never look back, abandoning all the effort of the past few years or get a lawyer and seek legal redress. What you should not do, is continue to work in this company where your contribution is downplayed and effort is poorly rewarded.

I'd say it's finally time to make some hard choices.

I read through the full version. One point that may be lost in all the comments, that I think is salient, is that this was his father's company to begin with. The son helped the father bring an internet presence to the business (eg, go the business online). Yes, the father took advantage and it's likely not ethical, it was still the business that the father started.

Of course, it could be argued that it was a new business when it exploded on the internet after near-bankruptcy, however, it could be argued the son was just "helping the family business," as their was no formal business agreement (it sounds like). This may be a tough legal battle to get really anything, and sounds like your father would fight it tooth to nail; it may be a a very long road that you don't want to go down.

IMO, you might do better just continuing to help out here and there (as you've got things pretty well in shape it looks like), and distance yourself somewhat both emotionally and energy/work-wise. Lighten up just a bit about it, and you'll likely get 50/50 anyway, when your Dad is ready to stop working/retire. This way, you have a better chance of not fracturing the relationship as well, and it allows you to sort of emotionally unwind.

Yes, continue to be the break/fix guy and the architectural/platform guru as needed, but don't invest that kind of emotional (and actual work/cycles) energy anymore, if you can possibly help it (obviously this will be difficult given the history and attachments etc). Sort of unwind yourself a bit, and I think things may just naturally work out.

Sounds like typical father behavior. I'm sure he is convinced everything he does is for your own good - but in reality has very little regard for your contributions and acts as a control freak, choking the life out of your best years.

Part of me would install log-less rootkits on all critical infrastructure and plant disc corruption and subtle misconfiguration here and there. Not enough to bankrupt the company but enough to drive any hired sysadmin mad, then refuse to answer the phone until the equity demands are met. Ok, don't actually do those illegal things.

@lostfounder111

I read the full version and I would consider walking away from the business. This would:

1) Save your relationship with your father and brother

2) Hopefully help your mental wellbeing

3) Create new opportunities for you (i.e. start your own business or get a job with a competitive salary)

Whether you like it or not, your father has 100% of the equity and is in control. After multiple conversations, you have no equity and are under-paid. You have three choices:

1) Lawyer up - from your comments, it appears you are unwilling to do this. This would probably destroy your relationship with your family and may not even result in you receiving partial ownership

2)Stay and hope that you receive equity. From what I've read, it'll probably happen when your father retires or passes away. The frustration you have, will probably eat at you and damage your mental health. I would advise against this as you may become bitter and resentful. This would damage your relationship with your father.

3) Leave. It sounds like you are young enough and have a wealth of fantastic experience. Go get a job with a competitive salary or start your own business (maybe re-use your code with permission from your dad). You'll probably still get equity when your father hands over the reigns. Say that you want to stand on your own two feet and have something of your own. Try to maintain a positive relationship. If they need you to fix the software, charge close to market rate and point to the fact they are making millions in sales.

Whatever you choose to do, good luck :)

Devil's Advocate

Trying to put together the timeline, lets say 6 years out of college, so you're maybe in your early thirties. Let's say your Dad had you in his late 20s, early 30s. So he was in his 40s when you and him founded the business, and you were a teen.

Maybe he doesn't think you are ready yet. Maybe he remembered all the mistakes he made in his thirties, and how in his mid forties everything came together when you helped him move online and save his business. But for a business man, all you did was tech stuff. He has seen you follow the start up path out of College and spend 4 years chasing the start-up-lottery dream, and doesn't want to give you $1.5M for you to continue chasing (in his mind) smoke and mirrors.

Maybe while you spent 4 years in college, and he was running the business, with programming employees, he found out that you created a serious hairy mudball that no one but you would ever understand. (I remember some of the first sites and software I made in the early 90s when I first learned web programming and kept building on them because they worked and were in production which now make me shudder to think of).

It might be that he thinks you still have fire to burn and things to prove, and are not ready to take over a company that is running well - that you might makes changes just for the sake of change.

Maybe he fears with more control you would kill the goose that lays the golden eggs.

And he could be very wrong. Made worse by the idea that maybe his assumptions are all wrong, and he is not doing this out of malice (as some commenters are quick to point out) but he genuinely believes he is helping you.

Who knows? We have your side of the story, and though I believe your side is true, it is just half of the story.

/Devil's Advocate

I wish you the best of luck. And I do think your father has some explaining to do.

(My view is formed by my being in my late 40s, having a 6 year old son who I love, and trying to think why my son in 25 years could think that I am a great person, but also think I am screwing him over).

Edit: Spelling

IANAL, but you should own the copyright on all the software you wrote unpaid, as well as the derivative copyright of everything that is based off of your initial software, which sounds like is pretty much the whole stack.

Let's try to list the options and see what optimizes for least bitterness/spite.

1. Leave the company to pave your own way.

  1.1 You're more successful than your father, but his company does well.

  - He's proud of your success

  - He's envious of your success


  1.2 You're more successful than your father, as the company flounders without you.

  - He's resentful of you betraying the company.

  - He's remorseful for not appreciating how valuable you were.

  1.3 You're less successful than your father.

  - You're resentful about your lack of stake in this success.

  - You're at peace, knowing your contribution wasn't necessary to the success of the company.

2. Lawyer up and fight for your right to the company/companies code base.

  2.1 Litigation is successful, and you're awarded meaningful compensation.

  - I only really see this souring relationships, but it might be mendable in the future, if you continue to grow the company.

  2.2 Litigation is unsuccessful.

  - Relationships are still soured, but nothing to show for it.

3. Continue status quo.

  - Your dad comes to value your inputs, and eventually rewards your diligence. I think this is unlikely, unless something indispose him from working.

  - Your difference in vision becomes more frequent, until you can't work with him anymore.

  - You continue with ownership limbo, as your bitterness about the situation grows.

There are probably situations I haven't accounted for, and the probabilities of these outcomes are largely dependent on you, and your dads personalities. My own bias is probably showing, but I think your best option is to leave the company, and forge your path.

He started the company, without the internet, so it is his.

That bit about the company being yours some day might well be true, assuming the company outlives your father. I take that to be the meaning of the promise. If he sells the company, there is still the money from that. The promise is only truly broken if he has a will that excludes you.

So, not really a problem there... but you are an adult now and may decide to go elsewhere for better pay or any other reason.

Time to write off the company and your family. Your father sounds like a classic psychopath and child abuser who clearly has no regard for you. Being stingy with equity or salary to a middle schooler is understandable, but getting you to work for free for a 3mm/yr business as an adult is not acceptable. There won’t be a company to be yours. You think what you’re doing will last 30-50 years until your father dies? You think he’ll actually deliver on his promise of giving you the company? He hasn’t shown any interest in giving you anything so far, what makes you think he will change? Just get out and try to enjoy the learning experience you gained.