Ask HN: I was fired from a startup I helped found, I'm fucked

[grumpymarketer]

I'm in a rough spot and I'd like to ask for advice from my fellow HNers. I was employee #1 at my startup and was fired 11 months in - 1 month from my cliff. I'm not necessarily bummed I was let go, things changed with the company and my role so I guess I just wasn't a good fit anymore. I get that. I'm sad because I'm out of money and and have no stock. I spent so much $$ commuting (SF to Palo Alto), eating out in Palo Alto, courting clients etc. I hardly have 2 months of personal runway saved up. And of course I worked my ass off. I never even expensed any travel expenses because I figured it was best to keep the money with the company. All the while I was getting paid a startup salary to begin with.

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.]

[paulsutter]

Tell them you'll sign the release if they give you the first 12 months of vesting. Firing someone at 11 months is a dick move. Remember: if you're not willing to walk away, you're going to pay retail (ie, end up with 3.5 months). I'll put odds at 70% that they give you 12 months and get the release they want, and odds at 30% that they give you no months and get no release. That puts the expected return of this approach at 8 months of vesting. In either outcome you keep your self respect (priceless), and the expected return is twice as good as caving.

The key to staying on good terms with them is being respectful and polite while you make your case. If you remain respectful to them, they will remain respectful to you. If you let them walk all over you, you're likely to lose their respect and may actually end up on worse terms with them.

EDIT: Even if you end up with no agreement, your situation still has an option value, a valuation exercise I'll leave to the reader. There's a reason they want that release, and that reason only matters if they become a successful company.

[achompas]

I really think you have it right: negotiate the release. Firing a month before OP's first year of equity vests is an incredibly low move. It's also suggested (and arguably correct) that OP might have legal recourse (the "option") if the company makes it big (which is why founders want OP to sign a release).

They don't want a mess if things get big, so OP has little to lose by offering this deal. There's a good chance the founders accept, too, since (a) they're high on their company's prospects, given their thriftiness with equity, and (b) negative press always sucks, and exercising the "option" would generate negative press.

I'll disagree, though, and say OP should ask for 11 months of vesting--that's what OP earned, after all. It'd be harder to get that extra month, given that OP wasn't there for a full year and the founders have worked to hang onto as much equity as possible.

EDIT: Consult with a lawyer when attempting to negotiate. A lawyer can help you get through the process while avoiding any suggestion of extortion, blackmail, etc. (which, unintended or otherwise, will torpedo you and ruin your rep).

[nilsbunger]

Unless you did something really wrong, custom would be getting your 1-year cliff and maybe a bit more (3-6 months vesting?), plus a month of salary or so as severance, in exchange for signing.

They're trying to get a "sweetheart deal" for themselves -they know you're not represented, and they figure it's worth a shot. The signature is irrevocable, so be very careful with it.

You should get an employment attorney to give you advice before you respond, and if he recommends it, have him fire off a nastygram to the company.

Showing the company you have representation is likely to make the company sit down seriously and give you something reasonable. No startup can afford to spend its $$$ and attention on legal back-and-forth.

I know you said money is tight, but an employment attorney doesn't have to be expensive. You'll get free advice in a consultation, and if you choose to engage them, usually ~$500-1000 will buy you nastygrams to the company from the attorney, a couple phone calls with their attorneys, and advice on a settlement. Doty Barlow is a firm I've used for employment advice - small group with lower rates but solid guys. (I have no personal connection or financial incentive for an endorsement).

Good luck, it's hard to lose your "baby", and worse to be hurt like that. Just keep the dispute private, and be a gentleman, and you'll walk away smelling like a rose :)

[n9com]

Any founder worth his/her salt would have ensured that the company has full legal insurance cover. I.E. it won't cost them money (other than a small excess) to get lawyers involved.

[snowpolar]

I am in a similar situation before (Being employee #1) and the way I'm thrown out is just by a simple SMS telling me that I'm not needed anymore, taunting me and locking me out of everything. I got so mad that I don't even want to accept their money as I agreed to help them (used to be friends) for free back then till they are profitable.

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.

[tweiss]

That sounds horrible - what kind person sends victory emails to former employees/friends they fired? Maybe that's one of the downsides of having very young & immature entrepreneurs running companies.

[wpietri]

Wow, I'd say getting kicked out early was lucky. I can't imagine anything worse than working for years with assholes like that. Plus, you learned a valuable lesson about choosing good partners.

[balloot]

The question here is why are you so concerned with keeping on good terms with the founders? This is a humongous dick move, and either they're very shady or they are extremely angry at you. Either way I am not clear why you would work with them again.

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.

[jtheory]

Burning bridges with the founders is usually more than just not working with them again in the future. Everyone has their own network, and the founders may be good friends with other potential employers, potential co-founders, etc. with the OP.

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.

[bmelton]

I hope you'll pardon me for making assumptions about your age, but if there were one lesson that I could teach the younger generation (or even just my own child), it would be 'assume good faith'.

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.

[guelo]

Equity isn't really worth anything for an early stage startup, it's a lottery ticket that probably won't pay, take what they give you and move on. You're actually lucky that they're giving you straight equity and not options that you have to come out of pocket to convert.

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.

[ricardobeat]

> You're actually lucky that they're giving you straight equity

No, he's not lucky at all. Maybe a tiny little less screwed.

[nowarninglabel]

Many lawyers will give a free consultation, have you considered consulting one to explore your options?

[jseims]

My guess is a lawyer will say "yes, you could sue" but they won't do this work on contingency.

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.

[dennish00a]

Talk to a lawyer. A good lawyer is your best friend and won't make things more confrontational. He or she will vastly improve the situation by making clear to you (and others if necessary) that you know what you options are. For what it is worth (IANAL), my understanding is that California law does provide some protection for employees in this situation, no matter what the contract says.

[wilfra]

This is the correct answer. Talk to a lawyer. Consider having that lawyer negotiate on your behalf.

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.

[tonystubblebine]

I complete disagree with the people saying you should talk to a lawyer. If you want to stay on good terms with them, anyone connected to the company, and anyone they know, then you need to work this out at a personal level. If you sue or even admit that you've talked to a lawyer then a lot of people are going to be afraid to work with you.

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.

[wpietri]

I disagree.

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.

[mst]

My initial thoughts are similar:

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.

[rayiner]

I disagree. As someone said above, talking to a lawyer does not mean filing a lawsuit. No professional business person is going to hold it against you for talking to a lawyer in a situation like this--that's what they're there for. And frankly you'd be a chump not to explore your options, but that's almost certainly what OP's founders are counting on.

[psychotik]

Man, that's a tough spot to be in. Your young age helps - you can still start from scratch and not be too much behind. I do not fully understand why you respect your other founders if they didn't treat you right. Even if what they did is within legal bounds, it certainly sounds like it could have been handled better (of course, I only know your side of the story).

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.

[mahyarm]

You shouldn't of felt bad about expensing business expenses. If the company pays for it, it's with before-tax money. If you pay for it and doesn't get reimbursed, it's with after-tax money since your an employee. If you felt bad about charging the company, then offer some of your own money in exchange for equity to cover the expenses, especially when a startup is just 3 other people. I think that way it will be still be a pre-tax expense. I'm not a accountant so ask one. If they are not willing to do that when the company is at that stage, then that is a big warning signal.

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.

[Mz]

A rule of thumb I use: Do you think you can get more out of them than you could earn if you invested your time elsewhere? Do not put more time into it than makes sense under that rubric.

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.

[waivej]

I would switch to survival mode and land on your feet. It's hard to deal with being rejected.

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.

[ciscoriordan]

Contact me (email in profile). We're hiring Marketers at my company, Meraki, in SF.

[grumpymarketer]

Thanks Cisco I will.

[Simon_Templar]

You have to ask yourself what is it that you brought to the table and why do they not need it now? They are dealing from a position of strength, because of this knowledge. you are the one that has to deal from a position of strength. What has changed. You hae some homework to do. They want you to sign away any future rights away. that means something is about to happen. I would not settle for less than 7 months full salary and expenses. You have your homework to do. Approach this as if it is a prospective client and you really want the contract. What has changed .

Good Luck but ablove all remain calm and methodical, don't panic. Like they said in Wall Street " never let them see you sweat "

[djt]

Everyone learns the hard way. I had a similar thing happen to me at one of my first jobs.

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.

[SeoxyS]

Walk away. Take the stock, you actually got a pretty damn good deal (assuming you weren't ripped off on your stock package in the first place). Even 1/10 of the stock package of a typical #1 employee is usually better than a #5 employee. Don't expect to get anything out of it.

Move on. Don't mull over it. It's actually a great time to be into startups… there has never been such a drought of developers. Hell, maybe learn how to code, while you're at it.

[achompas]

Hell, maybe learn how to code, while you're at it.

It's not clear that OP DOESN'T know how to code.

Also, OP wasn't employee #5--he or she was employee #1, and sacrificed a year of earnings as a result. You don't make that sacrifice, then roll over when the founders unceremoniously let you go a month before you're due to vest. I say fight for it.

[xrd]

What do you want to gain from this situation?

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.

[grumpymarketer]

great help, thanks xrd

[karljacob]

First off sorry you are in this situation it sucks. I have mentored quite a few people thru this situation and here are my thoughts. If you can afford it a lawyer is a good idea. It doesn't hurt your relationship with your other founders. They clearly consulted lawyers before letting you go which is why they are asking you for a release. On the other hand don't just use the lawyers to communicate with the other founders but do use them to understand your rights and your situation. Your co-founders should respect you even more if you stand up for what you believe in and what you are owed. It may be painful in the short term but generally I find people respect those who stand up for themselves. If they are asking for a release you have leverage and I don't think it is a big stretch to ask for your 12 months. One thing to discuss with lawyers is what were the terms of your offer letter. Was their acceleration? Are they trying to terminate you for cause? If so this is really hard to prove in California and its unlikely they would try to do so. Finally on the expenses if you have the receipts submit them its another item in your favor. In the end there is often a lot more to these stories than it seems so I am sure there is a lot more going on, but if you keep a cool head and focus on getting to something that is fair you can close this chapter and move on to your next with the knowledge that you got what you deserved and learned some valuable lessons

[HardyLeung]

Your bottomline is probably somewhere X months of equity, where 3.5 < X < 11. Why don't you (politely) email them that you are a reasonable person and believe it fairness. You don't expect full cliff vesting per agreement, but a 3.5 month compensation is simply not fair. Counter them something like 8 months worth of equity + expense report. Project a tone that you are reasonable and professional about it, but out of personal principle, you will fight against unfair offers.

Give them a hint (but don't say you are talking to a lawyer) that if the arrangement is unreasonable, you'll not just walk away. You'll spend the time and energy to right the wrongs. Give them hints that investors, public laundry, and/or legal means are within consideration (but don't do any of these yet) -- even at the expense of potentially not getting anything at all.

I think if the founders are serious about continuing with the startup, they'll think twice about this. What you are asking them is to just be reasonable, so they shouldn't have a problem with it. They would be far more worried about all these things you hint at (investors, public laundry, legal means).

If they counter with something -- say 6 months. Take it. Heck, if you do this correctly, you lose no karma, not even the relationship with them.

BTW the equity... probably worthless anyway. So, the other approach is to simply move on. I agree with others that this may actually be the better route, but it depends on your situation.

[btbuilder]

Ask about, and submit your expense report. Never feel bad about being repaid for money you've lent a company.

[tylermenezes]

There's a reason they want you to sign a release. You need to convince them it's a better deal to have you sign the release and give you your 12 months of equity, than to have you walk away without signing that release. Given that they're early stage, and it would be pretty easy to fuck them over, it shouldn't be hard. Posting this under a throwaway was a good move.