My startup crossed $2M/yr and now co-founder is going for a power grab
Everyone is 20% owner.
Currently my team has 9 people. Chief UX officer team is 3 people. Total company is about 17 people.
Our business model is basically...we collect publicly available data, clean, normalize, and enriched with other data sources. The data is made available via an API as well as front end.
I basically architected the entire backend infrastructure that manages all of our data pipelines as well as was significantly involved in development of the models/algorithms for enriching data. Chief Development Officer helped out with some execution in early stages.
Chief UX officer was responsible for front end. He also manages the API operations after we publish data to the db he manages.
During formation, ~3 years ago, we agreed no one would have the role of CTO. About a year or so after formation, CUXO said he wanted his title to be changed to CTO. Chief Dev Officer and I strongly opposed this and with the support of CEO, we decided that there was no need to change things from what we had originally agreed on.
Chief Development Officer left the company about a year ago and all his responsibilities fell on me. Though tbh, he wasn't doing much since I had hired a team of offshore engineers.
(Today)
CUXO is the last person to quit his job and go full time. We had a meeting this morning and he said that He wants to change his title to CTO when he starts next month. His stated reasoning was pretty silly to be honest, He said that he wanted the title because it would be better for his career after the startup - which to me is probably the least compelling reason possible.
CEO and COO said that didn't want to get involved and it was for me and CUXO to sort it out ourselves.
I'm planning on having a meeting 1:1 with him this weekend and explaining that I think the role of CTO implies a set of responsibilities far broader than would be appropriate for either of us since we've kept a very sharp line between front end and back end in terms of management. I think him being CTO will also cause confusion with regards to our roles in the company, both internally with our respective teams and externally when we have client meetings.
I also feel like I've built an extremely sophisticated back end system on a pretty unbelievable budget...and having him as the CTO I feel would massively undermine the work that I've done.
Lastly, I don't like the idea of us trying to go back and change the original agreement. We all decided on equal equity (20%) as well as no CTO because we wanted to make sure everyone felt equal.
Aside from the fact that I don't think he deserves the role of CTO, I really don't like the idea of us re-negotiating the terms of the business formation. Suppose he gets the CTO role, will he later come back and argue for more equity?
I should also mention that the first time he asked to be CTO, he said he deserved it because he setup the slack and gmail instances so that makes him CTO. This indicates to me that he is fundamentally unrealistic in his outlook. Also combined with the fact that our relationship has always been a bit tense, I expect him to react very negatively to me opposing his title change.
Another important piece of information is that the CEO and CUXO are old friends which I think might be impacting his desire to avoid getting involved in this.
I often read about startups failing because of disagreements with co-founders, and I'm really concerned that this could become a much bigger deal than it should be depending on how insistent the CUXO is. I strongly object to him taking this role and I feel like he strongly feels he deserves it.
Does anyone have any advice they can give on how I should proceed?
63 comments
[ 4.2 ms ] story [ 1630 ms ] threadIt may be impossible to remain amicable once you lawyer up. Using "I saw a lawyer" or "I am seeing a lawyer" as a weapon won't help you.
Have you thought about a formal external mediator? Doesn't have to be a lawyer, could be interesting to facilitate the difference between you.
People want different things in life. Sometimes the differences are irreconcilable.
Do you have VC funding who you could discuss this with? Do you have a mentor? You probably need somebody in the business space who can advise you f2f not randoms online.
Not me. I tried to help a friend (at his request) in a situation around IPR and I fucked it up, he isn't a friend any more and nor is the other party. Don't want to be that guy ever again.
To be clear, I haven't had a talk with CUXO yet, so maybe I'll just explain my reasoning and he'll accept it. However, I don't feel like that's likely.
It's hard to explain but I feel like he's been planning this move for some time now. Little things, like inserting himself in some of my teams communications and insisting on us publishing final data to his db.
There are a lots of people who will always try to push a bit at the margin for their own benefits, and when it happens you can either yield, push back or stand firm. From your post it seems you want to stand firm, and exploring all the possibilities and rights you have will clear your mind on the next step. Short of you waiving all your rights, there are actually very few things that could happen in these kind of situation
Good luck.
Some of what you say goes to a loss of trust and full disclosure to motivation and intent between you which is sad, but alas also very normal.
But I do suggest you at least seek advise from somebody you pay, to advocate to you, privately of what is normal and also necessary here.
You could put the burden of finding a solution on him? Share your concerns - that you did the bulk of back-end technical work, and feel that giving someone else the CTO title would devalue it. If he can find a way to get a better title (CTO or something else) without devaluing other roles, then you would not object. Since he's the one that wants to change things, it seems fair that he come up with a solution.
Not for the business.
Like others have said it’s at least the CEO’s role to work it out and if they said it’s not their problem then there are bigger concerns.
So it's not just going to be just a title. Responsibilities will shift towards the title. It is very much a power grab, and if they do not have the power, then that title will hurt them in the future.
I think this is probably the best approach, however I find it hard to believe there is a possible title that he could suggest that wouldn't similarly undermine me somehow.
I'm trying to avoid the conversation turning into an argument about whose done what for the company because I think it would irreparably harm our already tense working relationship, however I think without a doubt I have overwhelmingly been responsible for the companies success from a CTO perspective, especially since taking over the responsibilities of the former Chief Dev Officer. So much so, during client calls I'm often introduced as the CTO by our CEO. CUXO has had practically zero client interactions since he has so far not been working full time for the company.
CUXO is obviously a ridiculous title as are both CDO titles.
Sounds like you are already doing most of the CTO work and virtually getting recognized as such. Step up and claim the CTO position.
That said, changing the deal you had all agreed to at the start also makes working together harder. Instead of focusing on the company, you find yourselves also fighting among each-other, since the clear lines you had drawn up at the start are apparently up for negotiation. Good fences make good neighbors, as they say.
Note that I have no experience in such matters, I can only offer a fresh, hopefully clear, perspective. Good luck.
uhm, no. CEO's job is to run the company and this is tearing it apart. he cannot shirk this responsibility.
very sorry you are running into this situation. sounds like the 5 of you were NOT full time up til recently? i would suggest recapitalizing the company if possible (i have no idea how this works) since your nonfunctional CDO probably has a chunk of the company in exchange for not doing much.
CDO was bought out last year with his equity being distributed evenly.
>uhm, no. CEO's job is to run the company and this is tearing it apart. he cannot shirk this responsibility.
Yes, I agree. I'm hoping to resolve with without needing him to come in to mediate but it feels unavoidable and I think it will ultimately cause harm to the group. I'm also concerned because I feel like I need to start actively guarding against the CUXO from trying to encroach on my area in an attempt to assert himself as a "leader"
How about we vote on this?
What would happen if CUXO were to quit?
Who is more qualified to be a CTO between you and him going forward? i.e. If the company were to scale x2, x5, x10, would you or the him be able to fulfill the duty better?
Would the CEO and COO agree?
At what point do you need a dedicated CTO that is neither you or the CUXO?
How much leverage do you have over the CEO and COO? Does COO have your back?
If all he really wants is the title, this would give him that. Meanwhile, it gives you ownership.
By the way the sort of rules that dictate everyone will be equal or some title shall not be given, never last. The more you attach yourself to it, the more likely you’ll lose. Rather than sticking with “there should be no CTO”, just make the case for you being CTO.
Is the CEO actually a CEO? I.e., does everyone else report to them? If so, they should get involved and help you resolve.
If they don’t want to, take your equity, cut your losses and move on.
I'd also ask everyone in the room: What's in the best interest of the business?
2) The CEO needs to make the CTO decision for their team. They can take recommendations or arguments, but they can’t let this org structure problem fall to the team they manage.
It seems like they're sending you a signal that the CUXO's argument has at least some merit. Last time they were aligned with you and this time they're telling you to sort it out yourself. Ask the CEO and COO is they have some feedback for you that they're holding back on.
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Some questions that might better influence someone’s response to you:
- Why did two founders recently quit?
- How is that 40% equity being handled (did they take the equity with them)?
- If the 2 departed founders didn’t take equity with them, do you now have 1/3 voting shares? (Since there’s only 3 founders left)
- Do you feel you deserve the CTO title?
- Why do so many people in the company want CTO title? What does CTO title represent to people?
- why do people care about titles when there’s only 17 employees (no intended disrespect with this question)?
Ask him how much equity he would give up in order to have the CTO title. Then after he says how much he thinks the title is worth, you get to pick whether you give up the equity (to him) and get to be CTO, or whether he gets to be CTO but you get a piece of his equity.