Background: this is a deck I made to explain to our investors why we killed Speakeasy, our event venue marketplace product. Now that our most recent product was acquired (Gymsurfing -> ClassPass) I am cleaning out our old assets and found this deck to share with HN
Just a warning, dropbox blocks access to often requested files. And HN has a tendency to create a lot of requests... So be prepared to provide a mirror
i don't think hats are even involved here, unless we're living in a world where wget and SVN and incrementing query strings are considered crimes...wait...doh
Hmmm, so the "cofounder" didn't even have a lawyer. Ok, here's a possible guess on what might have happened.
You wanted to build an app for the idea you have. For gyms. From your personality and app, I'm guessing you like working out. You needed someone with some technical ability. Maybe you recruited this cofounder or he was a friend of a friend? Maybe a close friend? You made a deal with him because you couldn't pay him, but "generous equity" in the company. He stayed at your house etc, because he wasn't getting paid in real money while you guys were building the app. I have a hunch you had a lot more business experience and money in the bank. Then it sounds like its likely a combination of him being a bit over his head and realizing that he wasn't a real cofounder and was just an employee. Then you decide to fire him and he says, "Hey wait, I've been working for free all this time!". Then the legal bit ensues and you have to "pay him" for his portion of the company that he likely said was for his work.
Did I get close?
And your comments about the lawyer are definitely not the kind of thing I would do publicly about a friend and definitely gives me insight into your character in general. You might want to reconsider keeping this public.
This was our previous company, two years ago. It was an event product.
We each had equal equity and equal pay. He was a fine designer and developer and was able to rapidly prototype for us just fine before.
Our vision for the product was very similar, and this was our focus 100% of the time. We quit our jobs, moved out to California together, and were living in a house working on this product day in and day out.
But after our living situation improved (nice food, house, car) his motivation to work disappeared completely.
I'd say he got a pretty nice payout considering that company didn't end up going anywhere.
It's a good question - we had wondered, will there be a situation in which a cofounder and investor could collude to get more equity for themselves? That sounds like the stuff of conspiracy theories more than young startups with very little money, though
He became very skilled at making excuses, and saying he needed to "step back and strategize more." And it always kind of looked like he was working, but in reality he was producing 0 lines of code. That's when I brought on my current cofounder, who revealed that when he tried to work with cofounder 1, he got pushback, aggression, and eventually discovered from Github commits that he was doing literally nothing but living in our house for free and driving our car.
For what it's worth, that sounds very anxiety-driven to me, and the response of a relatively young developer. From a tech cofounder, some tips for next time:
Structure the work so that there is frequent, visible progress. At my last startup, the work was broken down into lumps that were at most a few days in size. Modest, regular accomplishment makes progress transparent to you, and smooths out the emotional roller coaster for you cofounder.
Be present. My last cofounder and I spent most of our time within easy speaking distance. Later, as we hired more engineers, we kept him close to all the engineers. Whenever we had a product question, we just had to turn our heads to ask. The easier you make communication, the more you'll get.
When there are issues, explicitly bring up both process and emotion as needed. The reason I became a developer was that it let me hide away in my parents' basement and not talk to people. That was great for coding skills, but not so great for knowing how to work with others or to understand my emotions. E.g., in this case you might have said, "Hey, I know that getting funding is really putting pressure on us. Honestly, it scares the hell out of me sometimes. So let's break the next few months work down into micro-deliverables. That way you'll always have something clear to work on, and I don't have to worry that things aren't making progress."
Depending on circumstance, it can also be worth bringing in a business coach or therapist to help sort out these things.
Just in case you need to check on something like this in the future -- github commits are separated by branch, so there is a chance he was working on a branch for which you didn't get a report. It is also possible he didn't push his commits to a remote repository at all, in which case you wouldn't have seen his work. This is generally not a good idea b/c if you lose your laptop, you've lost your code, but I'm just pointing out what 'could' have been happening. He could have been endlessly typing a single comment over and over
#All work and no play make Jack a dull boy
and committing to a 'shining' branch.
Did he admit to not working, or were you past a point where communication was possible between you two?
Completely agree. They seemed clueless about the fact that they could issue a restricted stock agreement and still allow us control of the company without having vested. It was awful.
