Ask HN: I was fired from a startup I helped found, I'm fucked
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,
-grumpymarketer
[This is a throw away account obviously because I want to protect the identity of my former employer for the time being.]
101 comments
[ 4.5 ms ] story [ 178 ms ] threadSomething 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.
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.)
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).
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.
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.
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.
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.
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.
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.
(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).
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.
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.
Good Luck but ablove all remain calm and methodical, don't panic. Like they said in Wall Street " never let them see you sweat "
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.
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.)
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.
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.
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.
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.
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.
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'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.
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.
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.
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.
No, he's not lucky at all. Maybe a tiny little less screwed.
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.
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.
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.
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.
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.
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.
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.