Ask HN: My co-founders are trying to get rid of me. What should I do?

I will prefer Third option if not work then second.

It's a sad situation. But if I were in your position, I would simply play hardball:

1. Leave immediately.

2. Don't work on the project alone. Just sit it out. Why? Because you could be accused of taking the IP, or something similar.

BTW 1: I doubt the incubator is being run by moral people if they are letting the other co-founders act like jerks.

BTW 2: How much time, effort, talent and money did the other co-founders contribute? Who came up with the idea?

Gather all of your correspondence, particularly anything written that discusses equity and speak to a lawyer. A short consultation won't cost very much and they'll be able to give much better advice that is specific to your situation than a bunch of random people on the internet.

If any code you've written (or anything you've produced that constitutes IP) is in their released product, they have to compensate you for it. In startups, the compensation is typically in the form of equity.

As others already alluded, in any case, it does not seem that you want to go forward in business with either the founders or the incubator.

dont give them access to your code, try not to share anything include idea, system knowledge etc until they are give the 30% like they promise.

For me, will take option 1 with consider above consideration.

There's not a lot you can do. You've done work for the company, but it seems they have not compensated you for it. Legal action is possible, but would be a horrible end.

The code is under your control use that as bargaining power, but you need to actually intend to leave (but I wouldn't work on it, without a lawyer reviewing it, with the intention of continuing the project on your own, that could get legally hairy) with it if this is not resolved immediately. That said they've screwed you majorly already do you really think that would be the end of it if you got your 30%?

I'd say demand 10% for the work you've done and for you to part ways amicably.

Huge red flag IMO. I would leave ASAP. If they didn't see your value from the get go, they probably won't see it until its gone.

If you try to demand the equity and they actually do give it to you(which I highly doubt will be anything remotely close to 30% IMO), you're going to have a huge target on your back in the future if you do continue working with them. They didn't even consult with you before deciding on the numbers. They did not give you ANY equity at all. So none of the 3 other founders said anything to back you up?

What legitimate reason is there to not give you the 30% from the get go?

As others have noted, you are in a very strong position given your ownership of the code. DO NOT SIGN ANY IP AGREEMENTS! Also do not take any money from any of your co-founders or the incubator. Maintain your leverage over the situation and ask yourself if you really want to be in business with any of these people? To be honest it sounds like your best option here is number 2. The incubator acceptance is your personal market validation, think about incorporating your current effort and make this company (which you maintain 100% ownership of until you need a co-founder) the holder of the IP.

Another co-founder may have come up with the idea, but ideas are worth literally nothing so do not let that sway you. Above all, walk away. Quickly. And take everything with you.

The suggestion to talk to a lawyer is not a bad one, but I'll add my voice to those suggesting you just walk out the door. It sounds like you haven't been working on this very long anyway. Have you been compensated in any form at all? If so, you might have to give them the code you've written. But if not, seems to me (IANAL) that all you had was a verbal agreement which they've reneged on -- so they have nothing to hold over you and you can do whatever you want.

If you've described the situation accurately, then it doesn't sound like your co-founders have thought this through very carefully. Who do they expect to build the product if you don't? Maybe if you actually walk out it will bring them to their senses.

Walk, if they want you back, charge them ludicrous consulting rates.

> " I absolutely trusted my co-founders and didn't check the incorporation papers but it seems that the incubator (+ the mentors in that incubators) and my co-founders didn't want me as a founder"

There is already broken trust at this stage. Normally I would want you to ask yourself if you are sure you are reading the situation correctly and recommend you consult an attorney...but I've seen these stories play out time and time again.

Even if you work past this issue, the trust is gone, and it's just a matter of time before there is another falling out.

Even if you did get your 30% equity, very few startups survive messy founder breakups and I don't really think the equity will ever be worth anything.

Your best option (if you can legally) is to leave them and start a new company where you own 100%.

Your next best option is to demand a hefty payout in exchange for the code base and/or agree to finish building it out for a premium fee on your time.

Bottom line, get out of there ASAP...

I think it's unlikely that you'll fix the situation and remain a member of your company with your 30%; cofounder disputes, especially at such an early stage, almost never end amicably, and they ruin many, many companies. It sucks; I'm sorry that things ended this way.

So it seems like you have two options: 1) Walk away 2) Walk away and hire a lawyer

Whether or not you hire a lawyer depends on whether or not the company is worth anything. The answer is probably no, if you're relatively new and have just been accepted into an incubator, but if the company has significant revenue, a real valuation, or other overwhelming signs that it really is valuable, then you could consider hiring an employment lawyer, with the knowledge that it will be a large out-of-pocket expense.

If you're passionate about the idea, go do it on your own, or with new cofounders. Don't take any code - it's not yours and it's a good way to cause yourself more problems in the future - but run with the idea and out-execute your old team. And good luck.

I agree with the sentiment in the other comments, except that

as with most complicated situations, there is often the urge to "do what's Right", such as "walk immediately" in this case, out of frustration. While that's understandable, it is also often the case that you should Think Through the situation before acting.

You are not under pressure to respond right away--there is no explicit hard deadline, so you should take your time to think clearly, consult lawyers, and weight all your options before making a judgement. It could very well be that you might decide, after contemplating more, that you should walk, but do take the time to think about the pros/cons first and try not to make rash decisions. Your goal is to choose the option that benefit you personally the most given the situation

2. quit the company and work on the project alone.

What is the current state of traction? As many will tell you, ideas are worthless...and in many cases, product is near worthless too. What is of value is customers. Do you/they have any? If not, you're not really walking away from much as it is, better to just leave this mess and start fresh with someone else or on your own.

Lol. Funny to read you are in my situation 3 years back. Had joined a team where I did not at all trust that one guy but the others were ok. They asked me to join on an equal share basis and asked me to lead the dev team in Chile and relocate from Germany for that. That one guy came over for just the first month. I was not a beneficiary of the incubator and after a month in Chile, we had to found a company and that company was to be owned by only two of the four founders, with "that guy" putting himself at 50%. I brought up the topic in a skype meeting with 15 supporters and at the time I had figured that mentioning that I signed up for 25% of the cake might get people angry and "that guy" yelled at me he would fly down to Chile and kick my butt … anyway, long story short, I took my hat and our Chilean founding partner made sure I got my 90% reembursement of the reembursable money I had put in, and 100% of what I paid to our developers to make them good for what "that guy" and the other German partner didn't pay.

At the time, I was super stressed and worried and tried to document everything in case it will be of relevance later on.

Yeah, that was three years ago and I'm forever thankful for our Chilean partner that took a great financial hit later on when the startup finally went down but that I only heard second hand …

Anyway, I'm still in Chile and like it here.

Not all startups will be the next Facebook. Being in an incubator is not only a job. Make up your mind. Don't sign stuff against your interest.

They need you to raise the money they'll use to replace you.

leave

Option #2 is a very good way to get sued and spend the next 2 years in court.

Walk away, and learn a very expensive lesson. Read your damn contracts!

Flow like the river. River always reaches its destination no matter what and how many obstacles she faces. Corny as it may sound it has worked for me so far. This may mean any of the 3 forks and other meanderings others have suggested. Get buy in for the value you create from as many people(team, investors, other stakeholders not even considered like family) as you can get support from responsibly. When majority sees/expresses value, minority tend to think twice about deliberately ignoring that value. Good luck!

I would walk away. Actually, consider yourself lucky that they've shown their true face so early on and you can get out now :-)

When considering hiring a lawyer etc., also take a look at opportunity cost: Even in the best case scenario, will you get more money out of it then if you freelance for a similar amount of time? Probably not...

(Also, learning from the Winklevoss twins, it seems preferable to sue a company when it is actually successful, because they got way more to loose at that point then now. Although I strongly doubt that they'll be successful...)

Speaking from personal experience, ignore such warning signs at your peril. I wrote about what happened to me a while back, and there are enough similarities here that you might be interested in giving the story a read [1].

If you choose to fight over this issue, it's going to come down to the attorneys. You'll have to decide early on what the desired outcome is: do you want out, presumably compensated for your earlier investment, or do you still want to be part of the company with the rights due a shareholder? If, as I assume based on your wording, you invested money into the company as well as your labor, that helps make things much more clear cut which would make an agreement more likely. It'd still be long and messy, but not as long as a fight without that investment. It's also possible that just hiring counsel will help them budge. Legally, there's no real reason for them to delay awarding equity for three months unless they're purposely trying to prevent you from exercising any input during the incubator program (and with any negotiations that occur during that time). At a very minimum, it makes things more difficult for them by hampering your relationship--and that's something any outside investor will eventually stumble upon and start asking undesirable questions about assuming it doesn't scare them off entirely to begin with.

That said, even if you prevail without having to litigate, you're still going to lose. That, unfortunately, is inevitable: your co-founders have already amply demonstrated a willingness to stick a knife in your back. Even though shareholders have certain rights available to them, there's no guarantee your co-founders will bother recognizing those rights. There are a myriad of different ways in which a minority shareholder can be oppressed and frozen out of the business. Whether they're making decisions without informing you, cutting your wages outright (it's not like they'll be paying dividends for some time), or purposely diluting your shares, they have the ability to make your life miserable with a fig leaf of justification thanks to their majority status and your only option for recompense is through the courts. And while it's likely that you'd eventually succeed, it'd only be after lengthy and expensive litigation--assuming, of course, that the startup doesn't fail by the time you're done (and the battle itself would certainly harm the company, particularly in the eyes of potential investors).

Leaving hurts. Being forced to leave hurts even more. But sticking around? Even if you feel that you win this round, even if they capitulate immediately, the knowledge that countless more are waiting just around the corner will wear you down. It'll wear you down, suck away your savings to pay for constant legal advice even if you manage to avoid litigation, and it'll do so while destroying every last thing that made you want to found a startup in the first place. One day, you'll wake up and wonder just what happened to you thanks to what was, in the end, nothing more than a pyrrhic victory.

You won't be the first, and you most certainly won't be the last. As it stands, you're in a no-win situation. Consult with an attorney before you make a move to avoid any potential problems (for instance, how much code did you write yourself versus other programmers/employees), take your code, and walk away.

P.S. - If they're planning to get rid of you once all "the code" is written, it's unlikely that the startup is going to succeed in the end anyhow. That sort of short-sighted attitude makes it abundantly clear that your partners have no real desire to improve upon the product over time.

[1] https://news.ycombinator.com/item?id=7579845

Surprise no one has asked yet but which incubator is advocating removal of a founder and is okay with the other guys doing this?

Also age or whatever is not an excuse.

4. Quit the company. Find better co-founders.

As a technical co-founder, you're the one in high demand. Why stay at a company that undervalues you? The opportunity cost is very high. Find better people working on something interesting.

I wouldn't continue working on this. Sunk cost fallacy. Recoup the cost instead. Ask them to pay you for the work you've put in so far before you give them the code. Then I'd move on to bigger and better things. Focus your energies on your biggest opportunities, not your biggest problems.