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Ask HN: Key employee probably going to prison. How do we best tell investors?

16 points by thisblows ↗ HN
Our only employee who's been with us for around 6 months is likely going to prison for several months for a fight of some sorts.

Unfortunately, we are learning of this same week as when we have a partner meeting with a VC that could very well lead our seed round.

How do we best disclose this to the VC in the most accurate manner? Should we do it in the meeting itself? After it?

Realistically, this sets us back couple months but is far from a company-killing event. The employee was stellar in his performance but is far from irreplaceable.

13 comments

[ 2.7 ms ] story [ 24.4 ms ] thread
declandewet
If I were involved in upper management of a VC I would want to know as immediately as the information was found out, but I would also want to know that the founders were competent enough to discuss the matter in full with each other before making a decision.
anigbrowl
Wow, that does blow. There's a yes/no question I would like to ask you in confidence, if you don't mind sending me an email.

If you have an ongoing relationship with the VC then I would inform that person up front of the basic circumstances and say that you will present a plan of action for moving forward at the meeting. Be circumspect, as you have certain responsibilities towards your employee by law so you shouldn't disclose more than you absolutely need to (so as not to expose yourself to possible employment litigation).

thisblows
email?
anigbrowl
username@gmail. Sorry, I keep forgetting the email field in the HN profile isn't visible.
erichurkman
Curious: Is there any chance of a work-release type program?
declandewet
I'm not a criminal attorney (which is who this question should be directed to) but my opinion is that the sentence is too short to validate such a program.
btilly
It has been managed before. Read the story of Johnny DLP at http://consultingadultblog.blogspot.com/2010/02/life-in-boys... where Sun got someone to have a workrelease for 2 months out of a 3 month sentence.
declandewet
It's worth noting that Sun Micro-systems is pretty far up the corporate ladder and likely had the resources to prove the candidate was irreplaceable during that time. This might not be the same for OP.
btilly
That is a good note. But Sun circa 1987 (the year they introduced Solaris) was not exactly the household name that you remember from the dot com era.
true_religion
True but that was a year after the IPOed, they were pretty wealthy at the least.
kenshiro_o
How does this work? I am surprised that you could be allowed to keep (and in fact still be part of) your current job when you are supposed to go to prison.
mattwritescode
There are a couple of ways of looking at this, these are all thoughts or considerations you should make.

If he is not yet been sentenced then there is no point in telling them. It could be he gets a slapped wrist or community service in which case there is no need to disclose this information as he can continue to work as is.

Also if your VC meeting is before the case then there is also a probability the case could be dropped (no matter how big or small). In which case he it will not effect them.

Is he still under probation? You could release him? Then its up to you what you say to investors.

If you tell the investors they might be rather brutal and say they want him gone before any investment talks, or funding. This could be especially bad if he is not proven guilty.

There is more than one thing to think about here, and not knowing all the facts just means we can only give you thoughts and ideas. Its up to you to work out whats best given the information you know.

kio
The man is innocent until proven guilty. Even if he started the fight he may have felt threatened. I would say nothing at this point. I would hire another talented programmer and go for the seed money to grow your business. With your growing business you'll be able to rehire the fellow if he in fact does have to do time. You did say he was stellar.