1) There was an actual agreement between Guillory and Vogt that they would be a 50% owners. The YC application is a memorialization of the fact that this agreement existed.
2) Even if there wasn't an actual agreement, Cruise is using IP that Guillory developed.
The relevance of the YC application is this: Oral contracts are in general perfectly valid, unless they apply to a specific situation that requires a writing. A YC application listing the parties as 50-50 co-owners is at least strong evidence that an oral contract exists with those terms. It's reasonable to infer that if people have a writing proposing to do X, then they actually did X or have already agreed to do X.
While a vesting schedule might be typical, it's not going to be implied into existence unless there is some evidence the parties intended for there to be a vesting schedule. For similar reasons, questions of how much Guillory actually contributed will be relevant to (2) but not (1). A 50-50 joint venture is like marriage. Come the divorce, the assets will be split 50-50, even if one party earned all the money. The law won't come in and try to value peoples' contributions after the fact. That would be impractical. The law trusts that people say what they mean and mean what they say.
This case will turn on whether Vogt has any evidence to counteract the inference that may be made from the YC application. It will also turn on legal issues such as whether a writing, not just an oral contract, is required for the sort of arrangement Vogt and Guillory allegedly made, and if what's in the YC application is a sufficient writing to meet that requirement. IIRC stock issuance requires a signed writing in Delaware so that could be a stumbling block depending on how the agreement is framed.
Given that the company had been incorporated prior to the YC application, there are two possibilities: The original incorporation paperwork shows a 50:50 split or it contradicts the YC application. In the latter case, assuming that one party handled incorporation but made the other believe it said something different, wouldn't that constitute fraud?
Of course, it's also possible that they discussed resolving the equity when they split but never put it into writing...
With the final irony probably being that the acquiring company may lose its taste for the acquisition given the dispute, meaning they are just fighting over who gets half of the ashes of a bonfire of money.
Well, at the very least, moving forward if there is a mention of another founder on a YC application, that later leaves, I'm sure YC will probably suggest that the departure is formerly written/signed/witnessed to avoid this type of issue in the future.
Thanks for the summary - perhaps a slightly more philosophical Q: if applying to YC implied an intent to split the company 50:50, then would the notion YC usually asks a company to have a vesting schedule of that sort imply that it was intended?
Interesting, so if the case hinges on the YC application as evidence of the equity split, then we also know that YC requires all founders to sign an employment agreement with their company and restricted stock purchase agreement, following a very standardized YC template, that would include a vesting schedule. Other requirements include an employee incentive pool and of course enough common shares for YC to purchase their portion.
Honestly, I think this whole story is a case of Kyle and Sama making a serious misstep in how they treated a fellow human being.
It's clear Jeremy was involved and contributed in some capacity. If we ignored the legal for a minute, he is arguably entitled to at least a discussion about the cap table and some sort of payoff.
However, Kyle telling him he gets nothing and than offering him $100k of his own money is both very insulting and very telling. It is a low ball offer starting a negotiation.
It all went downhill from there. It was no longer about money, now it became about justice, and from a justice perspective Jeremy deserves some credit, acknowledgment and respect for his contribution.
Just read Jeremy's complaint and you see he mentions the rewriting of history and the lack of mention of him in the press coverage, etc...
Ronald Reagan had a plague on his desk that read, "Man can achieve anything so long as he doesnt mind who takes the credit."
If Kyle would have shown some respect to Jeremy, this problem would have went away for a couple million.
I don't blame sama, he started with a preconceived notion of charlatans coming out of the woodwork and was also biased to one side. His anger is the most telling sign of all. It is anger at not respecting Jeremy initially, leading to digging a massive hole.
Walking away from this story, I want to side with Jeremy. If we lived in a meritocracy, I am inclined to believe he is not really entitled to much more than an honorable mention as the brains that started it all...but this was mishandled in such a way that any judge would WANT TO SIDE WITH THE LITTLE GUY, and the YC application and video is enough basis to let them find in Jeremy's favor...even though we all know he doesn't deserve it all.
I think an apology, and public acknowledgement of Jeremy's contribution to the direction and strategy would go a long way in settling this dispute...that and a few million dollars.
> In early October 2013, Guillory met with 28-year-old Vogt, a self-proclaimed MIT drop-out who had spent a month to earn a degree in installing Microsoft Windows, and whose most impressive technical achievement by his own account was to build a device to crack certain kinds of high security safes. But Vogt had a shared interest in the emerging self-driving field from his days at MIT and its entry in the DARPA challenge. More importantly, Vogt had millions in capital from his successful sale of two previous start-ups in TV and video gaming, along with investor contacts.
Can someone shed light on this paragraph? Twitch sold for $1B, so it's probably a bit disingenuous to take so many digs at Kyle's expertise & accomplishments... If anything, Kyle's software expertise is just as (if not more!) valuable than Jeremy's MechE skills for the early Cruise product.
EDIT: Also, I'm pretty sure Kyle worked on MIT's DARPA entry [1]. At the very least, I know he was working with laser rangefinders -- I wrote an article back in 2008 using photos of his SICK LRF teardown [2]. If anything, after reading this "he stole my expertise/idea" claim, I'm more inclined to side w/ Kyle & sama.
I would imagine that this is supposed to help support their argument for conversion, that Kyle was inclined to use Jeremy's IP contributions in part because Kyle was otherwise incapable of practically accomplishing the company's goals.
It does seem harshly written, but the same could be said of the complaint and sama's post.
As someone who has both started and worked very early at multiple startups, it's so incredibly outlandish to hear someone claim that they brought in a business plan and some ideas, and that ideas alone should represent an equal percentage ownership to someone who actually worked on building a business for multiple years. In startups no battle plan ever survives first contact with the enemy. There is a reason why most successful companies release an initial version of a product early, then adapt to market conditions rather than sitting down, writing a long business plan, and executing it.
If Jeremy's MechE experience and background in self-driving cars was so valuable how did Cruise manage to pivot from just offering an autonomous driving add-on that only worked on the highway to building a fully-autonomous city-based driving solution without him. How did they manage to raise millions of dollars, write all the code, and build all the hardware without him. It just doesn't add up.
> it's so incredibly outlandish to hear someone claim that they brought in a business plan and some ideas, and that ideas alone should represent an equal percentage ownership to someone
This is a filter bubble that startup founders need to snap out of...in the real world, two people can agree to anything, and general startup best practices dont dictate or say anything about the past, they can just guide you in the future.
That startup advice about how to split equity is sound advice and it is arguably outlandish to not follow it...but that in no way shape or form makes it the reality of what actually happened. People agree to all sorts of things all the time.
> it's so incredibly outlandish to hear someone claim that they brought in a business plan and some ideas, and that ideas alone should represent an equal percentage ownership to someone who actually worked on building a business for multiple years.
I really don't understand your view here. If the value of the business plan didn't merit equal percentage, that should've been made clear at the onset. At the time, according to Jeremy's complaint it was valued at 50% of the company:
... Vogt agreed that Guillory should be a co-founder and 50% equity owner of Cruise.
If the business plan and some ideas didn't merit 50% ownership, Vogt shouldn't have agreed that Guillery should be a 50% equity owner of Cruise. Simple as that.
The most interesting thing to me is that Cruise went through YC, several funding rounds and most of a massive public acquisition - apparently before anyone did enough due diligence to find out about this being even a potential problem (if the claimant has any grounds - which it seems there are at least some amount) and heading it off at the pass.
Agreed, this is a massive fuck-up by everyone involved (Altman, Cruise Board of Directors, Spark Capital, etc). Even if the claim has no merit it should have been dealt with long ago, before the company got to this stage. Now all the employees might get screwed as a result.
If you had a partner who left after a month - then do a financing right thereafter with vesting schedules and the like it's easy to assume that those same schedules apply to everyone. If it were to be caught- it would have been at the Series A but it sounds like so much time passed and his involvement was so short people just forgot about the guy.
If Jeremy never said a word about it since it would never come up. If I owned 50% of a company and it did a financing- I'd certainly inquire about my shares. Sounds like he never even did that.
Kyle probably feels like shit I am sure- it's a sickening case to read but to be honest I could see it going down exactly like that.
The facts seem to be more on Jeremy's side than Kyle's except that the application video demonstrates that Jeremy believed Kyle also knew something about robotics.
Regardless of the outcome of this incident, if you apply to Y Combinator with someone who knows the YC partners better than you, and your cofounder decides to push you out, your cofounder will be supported by YC against you. This is now something that every team of founders will have to think harder about now. It will harm founder cohesion which will reduce the success percentage in each batch.
On the other hand, this is a positive signal to people who want to exploit a cofounder to get past the YC application process and then push them out of the company.
> The promise was memorialized in the October 21, 2013 Y Combinator application, submitted by Vogt with the knowledge and approval of Guillory, that identifies Guillory and Vogt as the founders of Cruise and lists Guillory as a 50% shareholder of Cruise Automation
This is interesting, as the YC Application does require breakdown. ["If you have not formed the company yet, describe the planned equity ownership breakdown among the founders, employees and any other proposed stockholders. (This question is as much for you as us.)"]
"According to Kyle, Jeremy did not write any code or build any hardware during this exploratory period. He did help find an office for the company. At the point of Jeremy’s departure, neither he nor Kyle had signed employment agreements, stock agreements, or any documents of any sort with the company. Even if Jeremy had signed a stock agreement, he wouldn’t have reached the standard 1-year cliff for founders to vest any equity."[1]
This whole case is really surprising. I would expect intellectual property assignment agreements and a vesting cliff, particularly after cofounding Twitch.
On the other hand, I know how normal it can feel to trust each other, procrastinate on docs, and just get all over the tech.
As a self-proclaimed expert on co-founder issues[0], I'm glad that we're hearing both sides of the story. As expected, they don't match at all. Hopefully, SamA will read both, try to find an honorable middle ground, and write another blog post.
Basically, One mistake seems to have been made: writing on the YC application that they are both founders, possibly stating a 50/50 split. That's one mistakes, two years of hard work, and one billion dollars.
[0] As the author of the co-founder equity calculator, I still receive about one email a week from founders asking for advice about co-founder issues. After several years, I think I have seen about every possible problem with co-founders.
According to Jeremy, he gave him. an exploding offer, tried to get him to fire his counsel. Then he wrote a public blog post, upvoted here, and read by pretty much anyone in Silicon Valley about how slimy and unreasonable this Jeremy guy is (when he clearly has a vested interest in how this plays out). Nope, I don't think we'll see a 'middle ground' anytime soon, Sam is clearly playing on one team. That's fine. He picked his team. But I still think a public blog was a wrong decision from all perspectives: legal, strategic, and moral. And it will for sure be brought up in court as an underhanded tactic.
The complaint suggests that he was asked to make up his mind really quickly without extended discussion with a lawyer.
"Altman, also said he was authorized to negotiate on
Cruise’s behalf and offered Guillory triple the amount of Vogt’s previous offer, but only if Guillory would agree to sign a formal settlement agreement that same day. Cruise’s attorneys then sent Guillory a lengthy settlement demand and Altman told him he could have only two hours to propose any changes. When Guillory told Altman he would not be able to meet that deadline because he needed to review the proposed terms of the agreement with legal counsel, Altman told Guillory he should fire his lawyer if he had already retained one, and offered to send him a list of lawyers to consult. Guillory could not comply with Cruise’s unreasonable deadline, and as a result, it passed on Friday, April 8, 2016."
the application that Vogt himself submitted to Y Combinator described repeatedly that Guillory was a founder of Cruise Automation and states unequivocally in response to a question asking “who are the shareholders and what percent does each own?” that “Cruise Automation is a Delaware C Corporation created in September 2013. 50/50 split between Kyle and Jeremy."
If true, that could be worth hundreds of millions, which is an even larger amount of money to walk away from.
If he doesn't have the money to pay the attorney out of pocket, he is then most likely going to pay them with a big % of his "winnings", if he does succeed. In which case, the attorneys would fight tooth and nail to get as much as they could "for their client."
I wouldn't read too much into that or anything said in the complaint until the actual source documents are filed and we see the response to the complaint filed in court.
That could very well be the nuisance value of the suit for them in their situation. Trying to judge a case from just the initial complaint is far too incomplete a picture to go on. I'd withhold judgement until there are more facts established that both sides have had a chance to argue over.
Almost everything you read in the media is ill-informed analysis of non-lawyers. Haven't had much good coverage since Groklaw.
After reading the various viewpoints posted, here are my thoughts.
Jeremy sounds a bit greedy, and probably won't get 50% compensation, but probably will get a significant amount since it sounds like he wasn't dealt with fairly through the whole process if his claims hold up.
However, based on Sam Altman's actions as depicted, this makes me not to ever want to work for a YC company, and I've been approached by plenty at various stages (early to late). With an investor that wants to resolve things in bad faith, I cannot trust that I wouldn't ever potentially get screwed the same way, all because an investor believes "That person does not deserve compensation, so we'll operate shadily to make it end that way."
It makes all the talk about nice people and such from YC leaders sound as fake as the reputation of many tech industry people in the Bay Area is touted to be.
"After Guillory engaged counsel, cross-defendants then precipitously filed and made public their lawsuit, accompanied by a public blog post by Cruise investor and Director Sam Altman that wrongly accuses Guillory of extortion and an attempt to disrupt General Motors (“GM) acquisition of Cruise."
This is why you don't speak publicly about a court case you're involved with. Now every single word Sam wrote will be put under the microscope and whether or not he "meant" something won't matter. All that will matter is what the jury believes he meant by it.
Jeremy was "waiting", while Cruise raised seed, Series A then B, and congratulated them assuming that he still had 50% and was happy to see his work grow?
He never thought to protest, or sign any documents at each round giving his consent. If this isn't extortion I don't know what is.
It will be pretty easy for Cruise to prove he wrote no code/prototyped nothing. All he has is association with Kyle and Cruise for 4 weeks before they parted ways.
Sad to think all the engineers at Cruise, working their ass off, getting fucked over by this guy. He'll probably end up with more than all of them.
I agree in principle that Jeremy does not deserve any proceeds of the sale, because he did not contribute to any of the valuable IP that GM wants to acquire.
But there is one serious issue here I don't understand (devil's advocate mode) ....
If Kyle and Jeremy actually founded a Delaware C-corp in Sept 2013 (claim #11), then both their names would be on the officer's list. If that charter specifies a 50/50 split of corporate control, then legally Kyle has no ability to simply tell Jeremey that he's "fired" (claim #14). In fact, I don't think it's legal to fire a significant shareholder outright, unless you have an official company meeting and hold a vote. In this case, it's just 2 guys, so theoretically some impromptu meetup counts as a shareholder meeting. Also note here that the courts don't like having shareholder meetings without records, and in such cases leads the courts to treat such activities as non-corporate events (aka unofficial). In any case, it boils down to what ownership was declared when the C-corp was incorporated.
If someone controls the majority voting rights (or a collection of voters), then they can vote to remove someone from the shareholder's group. However, as far as I know you cannot simply seize ownership from the person you remove from the shareholder's group. The company must then be valued, and the person being ousted must be compensated for the value of his share. Furthermore, you can't simply revise arbitrarily future ownership. Jeremy's holdings would be appropriately diluted whenever fundraising events occur. Weirdly, Jeremy expected to receive his "50%", which as any person should know would have been diluted by investment rounds. Major investors are always involved during these events, and everyone knows exactly what they are getting. The fact that he thought at the end he would "get his 50%" leads me to believe he never cared about asserting ownership until the final big payday arrived.
I think Cruise as a company has a serious problem. If the documentation exists to prove this 50/50 ownership in Sept 2013, there is no way this lawsuit will be smooth sailing.
The engineers will not be screwed over. They get the same amount -- whether Jeremy wins or not. Jeremy is seeking half of whatever Kyle is slated to receive, i.e., his diluted pre-seed 50% stake.
The media coverage of this dispute, Sam Altman blog post, details of claims and counterclaims are doing nothing more than tarnishing YC brand. YC need to settle this dispute as quickly as possible.
Protecting YC reputation as the ones in founders corner in the world of "Angels are demons and VCs are vultures" is more important. The salacious details of strong-arming, fire your lawyer hire mine, and exploding offers are doing nothing more than giving appearance of YC that it is not much different from the people they were trying to help founders deal with.
It looks like this whole case rests on whether Jeremy can actually produce any document that shows a 50/50 split. This can be the corporate charter, or it can be some sort of paper with both their signatures. IANAL, but even the YC application alone may be sufficient if it indeed does say they're joint owners.
As a side note, Sam Altman's recent blog post [1] vilifying Jeremy really rubbed me the wrong way. Sam is hardly a neutral player in this, and his post really felt like an attempt to ruin Jeremy's reputation in Silicon Valley. Sam really should have kept his mouth shut here, because depending on how this case plays out, it may be his own reputation that may be endangered.
after reading this, YC and Sam altman might be the dagger to kill the acquisition by GM...
if true of course... but cant deny that he was a founder and has somewhat of a claim. do i think he deserves 50% in any possible scenario? no... but he was being strong-armed into taking the deal (which is just business as usual).
if this goes to Jury trial he has a case for more than the measly 4.5million
edit: "deserves" was a bad choice of words, i meant entitled.
This is why sama should have stfu and not said anything. There are two sides to every story and the argument presented is compelling, so it's up to a judge and/or jury to sort this out. Of course sama has a dog in this race, which makes it even dumber that he commented at all. I hope he learns from this.
[+] [-] rayiner|10 years ago|reply
1) There was an actual agreement between Guillory and Vogt that they would be a 50% owners. The YC application is a memorialization of the fact that this agreement existed.
2) Even if there wasn't an actual agreement, Cruise is using IP that Guillory developed.
The relevance of the YC application is this: Oral contracts are in general perfectly valid, unless they apply to a specific situation that requires a writing. A YC application listing the parties as 50-50 co-owners is at least strong evidence that an oral contract exists with those terms. It's reasonable to infer that if people have a writing proposing to do X, then they actually did X or have already agreed to do X.
While a vesting schedule might be typical, it's not going to be implied into existence unless there is some evidence the parties intended for there to be a vesting schedule. For similar reasons, questions of how much Guillory actually contributed will be relevant to (2) but not (1). A 50-50 joint venture is like marriage. Come the divorce, the assets will be split 50-50, even if one party earned all the money. The law won't come in and try to value peoples' contributions after the fact. That would be impractical. The law trusts that people say what they mean and mean what they say.
This case will turn on whether Vogt has any evidence to counteract the inference that may be made from the YC application. It will also turn on legal issues such as whether a writing, not just an oral contract, is required for the sort of arrangement Vogt and Guillory allegedly made, and if what's in the YC application is a sufficient writing to meet that requirement. IIRC stock issuance requires a signed writing in Delaware so that could be a stumbling block depending on how the agreement is framed.
[+] [-] AndrewKemendo|10 years ago|reply
[+] [-] absherwin|10 years ago|reply
Of course, it's also possible that they discussed resolving the equity when they split but never put it into writing...
[+] [-] hoodoof|10 years ago|reply
[+] [-] ghshephard|10 years ago|reply
[+] [-] wastedhours|10 years ago|reply
[+] [-] hoodoof|10 years ago|reply
[+] [-] leelin|10 years ago|reply
[+] [-] davemel37|10 years ago|reply
It all went downhill from there. It was no longer about money, now it became about justice, and from a justice perspective Jeremy deserves some credit, acknowledgment and respect for his contribution.
Just read Jeremy's complaint and you see he mentions the rewriting of history and the lack of mention of him in the press coverage, etc...
Ronald Reagan had a plague on his desk that read, "Man can achieve anything so long as he doesnt mind who takes the credit."
If Kyle would have shown some respect to Jeremy, this problem would have went away for a couple million.
I don't blame sama, he started with a preconceived notion of charlatans coming out of the woodwork and was also biased to one side. His anger is the most telling sign of all. It is anger at not respecting Jeremy initially, leading to digging a massive hole.
Walking away from this story, I want to side with Jeremy. If we lived in a meritocracy, I am inclined to believe he is not really entitled to much more than an honorable mention as the brains that started it all...but this was mishandled in such a way that any judge would WANT TO SIDE WITH THE LITTLE GUY, and the YC application and video is enough basis to let them find in Jeremy's favor...even though we all know he doesn't deserve it all.
I think an apology, and public acknowledgement of Jeremy's contribution to the direction and strategy would go a long way in settling this dispute...that and a few million dollars.
[+] [-] beambot|10 years ago|reply
Can someone shed light on this paragraph? Twitch sold for $1B, so it's probably a bit disingenuous to take so many digs at Kyle's expertise & accomplishments... If anything, Kyle's software expertise is just as (if not more!) valuable than Jeremy's MechE skills for the early Cruise product.
EDIT: Also, I'm pretty sure Kyle worked on MIT's DARPA entry [1]. At the very least, I know he was working with laser rangefinders -- I wrote an article back in 2008 using photos of his SICK LRF teardown [2]. If anything, after reading this "he stole my expertise/idea" claim, I'm more inclined to side w/ Kyle & sama.
[1] http://web.mit.edu/6.111/www/s2005/PROJECT/Groups/15/main.ht...
[2] http://www.hizook.com/blog/2008/12/15/sick-laser-rangefinder...
[+] [-] lazyant|10 years ago|reply
[+] [-] tclmeelmo|10 years ago|reply
It does seem harshly written, but the same could be said of the complaint and sama's post.
[+] [-] jamiequint|10 years ago|reply
If Jeremy's MechE experience and background in self-driving cars was so valuable how did Cruise manage to pivot from just offering an autonomous driving add-on that only worked on the highway to building a fully-autonomous city-based driving solution without him. How did they manage to raise millions of dollars, write all the code, and build all the hardware without him. It just doesn't add up.
[+] [-] davemel37|10 years ago|reply
This is a filter bubble that startup founders need to snap out of...in the real world, two people can agree to anything, and general startup best practices dont dictate or say anything about the past, they can just guide you in the future.
That startup advice about how to split equity is sound advice and it is arguably outlandish to not follow it...but that in no way shape or form makes it the reality of what actually happened. People agree to all sorts of things all the time.
[+] [-] foobarqux|10 years ago|reply
[+] [-] TAForObvReasons|10 years ago|reply
I really don't understand your view here. If the value of the business plan didn't merit equal percentage, that should've been made clear at the onset. At the time, according to Jeremy's complaint it was valued at 50% of the company:
If the business plan and some ideas didn't merit 50% ownership, Vogt shouldn't have agreed that Guillery should be a 50% equity owner of Cruise. Simple as that.[+] [-] prawn|10 years ago|reply
[+] [-] AndrewKemendo|10 years ago|reply
That alone speaks volumes.
[+] [-] hendzen|10 years ago|reply
[+] [-] imron|10 years ago|reply
Move fast, break things.
I bet this is one thing that will be fixed for all future applications.
[+] [-] forgetsusername|10 years ago|reply
It's also pretty scary that YC are willing to railroad a co-founder in favour of a SV insider.
[+] [-] jboydyhacker|10 years ago|reply
If Jeremy never said a word about it since it would never come up. If I owned 50% of a company and it did a financing- I'd certainly inquire about my shares. Sounds like he never even did that.
Kyle probably feels like shit I am sure- it's a sickening case to read but to be honest I could see it going down exactly like that.
[+] [-] 1123581321|10 years ago|reply
Regardless of the outcome of this incident, if you apply to Y Combinator with someone who knows the YC partners better than you, and your cofounder decides to push you out, your cofounder will be supported by YC against you. This is now something that every team of founders will have to think harder about now. It will harm founder cohesion which will reduce the success percentage in each batch.
On the other hand, this is a positive signal to people who want to exploit a cofounder to get past the YC application process and then push them out of the company.
[+] [-] minimaxir|10 years ago|reply
This is interesting, as the YC Application does require breakdown. ["If you have not formed the company yet, describe the planned equity ownership breakdown among the founders, employees and any other proposed stockholders. (This question is as much for you as us.)"]
[+] [-] a_small_island|10 years ago|reply
"According to Kyle, Jeremy did not write any code or build any hardware during this exploratory period. He did help find an office for the company. At the point of Jeremy’s departure, neither he nor Kyle had signed employment agreements, stock agreements, or any documents of any sort with the company. Even if Jeremy had signed a stock agreement, he wouldn’t have reached the standard 1-year cliff for founders to vest any equity."[1]
[1]http://blog.samaltman.com/cruise
[+] [-] pbreit|10 years ago|reply
[+] [-] iandanforth|10 years ago|reply
"Vogt, as the sole Director of Cruise Automation, Inc., authorized the issuance of 50% of the Company’s stock to Guillory;"
That seems like a very clear statement. It's either true, in which case Guillory has a very strong case, or it's false and he doesn't.
[+] [-] kvogt|10 years ago|reply
[+] [-] rboyd|10 years ago|reply
On the other hand, I know how normal it can feel to trust each other, procrastinate on docs, and just get all over the tech.
[+] [-] alain94040|10 years ago|reply
Basically, One mistake seems to have been made: writing on the YC application that they are both founders, possibly stating a 50/50 split. That's one mistakes, two years of hard work, and one billion dollars.
[0] As the author of the co-founder equity calculator, I still receive about one email a week from founders asking for advice about co-founder issues. After several years, I think I have seen about every possible problem with co-founders.
[+] [-] llamataboot|10 years ago|reply
[+] [-] DenisM|10 years ago|reply
[+] [-] aresant|10 years ago|reply
I assume the attorney would only make that statement if they had supportable documentation.
Given that Guillory appears to be a "needs a paycheck" guy that's an awful lot of money to walk away from without a damn good case.
[+] [-] iandanforth|10 years ago|reply
"Altman, also said he was authorized to negotiate on Cruise’s behalf and offered Guillory triple the amount of Vogt’s previous offer, but only if Guillory would agree to sign a formal settlement agreement that same day. Cruise’s attorneys then sent Guillory a lengthy settlement demand and Altman told him he could have only two hours to propose any changes. When Guillory told Altman he would not be able to meet that deadline because he needed to review the proposed terms of the agreement with legal counsel, Altman told Guillory he should fire his lawyer if he had already retained one, and offered to send him a list of lawyers to consult. Guillory could not comply with Cruise’s unreasonable deadline, and as a result, it passed on Friday, April 8, 2016."
[+] [-] imron|10 years ago|reply
the application that Vogt himself submitted to Y Combinator described repeatedly that Guillory was a founder of Cruise Automation and states unequivocally in response to a question asking “who are the shareholders and what percent does each own?” that “Cruise Automation is a Delaware C Corporation created in September 2013. 50/50 split between Kyle and Jeremy."
If true, that could be worth hundreds of millions, which is an even larger amount of money to walk away from.
[+] [-] kirillzubovsky|10 years ago|reply
[+] [-] Natsu|10 years ago|reply
That could very well be the nuisance value of the suit for them in their situation. Trying to judge a case from just the initial complaint is far too incomplete a picture to go on. I'd withhold judgement until there are more facts established that both sides have had a chance to argue over.
Almost everything you read in the media is ill-informed analysis of non-lawyers. Haven't had much good coverage since Groklaw.
[+] [-] Bahamut|10 years ago|reply
Jeremy sounds a bit greedy, and probably won't get 50% compensation, but probably will get a significant amount since it sounds like he wasn't dealt with fairly through the whole process if his claims hold up.
However, based on Sam Altman's actions as depicted, this makes me not to ever want to work for a YC company, and I've been approached by plenty at various stages (early to late). With an investor that wants to resolve things in bad faith, I cannot trust that I wouldn't ever potentially get screwed the same way, all because an investor believes "That person does not deserve compensation, so we'll operate shadily to make it end that way."
It makes all the talk about nice people and such from YC leaders sound as fake as the reputation of many tech industry people in the Bay Area is touted to be.
[+] [-] refurb|10 years ago|reply
This is why you don't speak publicly about a court case you're involved with. Now every single word Sam wrote will be put under the microscope and whether or not he "meant" something won't matter. All that will matter is what the jury believes he meant by it.
[+] [-] theoracle101|10 years ago|reply
Jeremy was "waiting", while Cruise raised seed, Series A then B, and congratulated them assuming that he still had 50% and was happy to see his work grow?
He never thought to protest, or sign any documents at each round giving his consent. If this isn't extortion I don't know what is.
It will be pretty easy for Cruise to prove he wrote no code/prototyped nothing. All he has is association with Kyle and Cruise for 4 weeks before they parted ways.
Sad to think all the engineers at Cruise, working their ass off, getting fucked over by this guy. He'll probably end up with more than all of them.
[+] [-] silverpikezero|10 years ago|reply
But there is one serious issue here I don't understand (devil's advocate mode) ....
If Kyle and Jeremy actually founded a Delaware C-corp in Sept 2013 (claim #11), then both their names would be on the officer's list. If that charter specifies a 50/50 split of corporate control, then legally Kyle has no ability to simply tell Jeremey that he's "fired" (claim #14). In fact, I don't think it's legal to fire a significant shareholder outright, unless you have an official company meeting and hold a vote. In this case, it's just 2 guys, so theoretically some impromptu meetup counts as a shareholder meeting. Also note here that the courts don't like having shareholder meetings without records, and in such cases leads the courts to treat such activities as non-corporate events (aka unofficial). In any case, it boils down to what ownership was declared when the C-corp was incorporated.
If someone controls the majority voting rights (or a collection of voters), then they can vote to remove someone from the shareholder's group. However, as far as I know you cannot simply seize ownership from the person you remove from the shareholder's group. The company must then be valued, and the person being ousted must be compensated for the value of his share. Furthermore, you can't simply revise arbitrarily future ownership. Jeremy's holdings would be appropriately diluted whenever fundraising events occur. Weirdly, Jeremy expected to receive his "50%", which as any person should know would have been diluted by investment rounds. Major investors are always involved during these events, and everyone knows exactly what they are getting. The fact that he thought at the end he would "get his 50%" leads me to believe he never cared about asserting ownership until the final big payday arrived.
I think Cruise as a company has a serious problem. If the documentation exists to prove this 50/50 ownership in Sept 2013, there is no way this lawsuit will be smooth sailing.
[+] [-] Denzel|10 years ago|reply
[+] [-] a_small_island|10 years ago|reply
[+] [-] akg_67|10 years ago|reply
Protecting YC reputation as the ones in founders corner in the world of "Angels are demons and VCs are vultures" is more important. The salacious details of strong-arming, fire your lawyer hire mine, and exploding offers are doing nothing more than giving appearance of YC that it is not much different from the people they were trying to help founders deal with.
[+] [-] enraged_camel|10 years ago|reply
As a side note, Sam Altman's recent blog post [1] vilifying Jeremy really rubbed me the wrong way. Sam is hardly a neutral player in this, and his post really felt like an attempt to ruin Jeremy's reputation in Silicon Valley. Sam really should have kept his mouth shut here, because depending on how this case plays out, it may be his own reputation that may be endangered.
[1]http://blog.samaltman.com/cruise
[+] [-] Dwolb|10 years ago|reply
[+] [-] the_zodiac|10 years ago|reply
There is a reason you should listen to lawyers and not just write something 'before the lawyers get to you'.
[+] [-] unknown|10 years ago|reply
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[+] [-] sergers|10 years ago|reply
if true of course... but cant deny that he was a founder and has somewhat of a claim. do i think he deserves 50% in any possible scenario? no... but he was being strong-armed into taking the deal (which is just business as usual).
if this goes to Jury trial he has a case for more than the measly 4.5million
edit: "deserves" was a bad choice of words, i meant entitled.
[+] [-] steven2012|10 years ago|reply