Ask HN: Bad co-founder breakup, what to do?

15 points by allanchao 14 years ago | 11 comments

Hi HN, I'm in a sticky situation now and thought I'd reach out and see what you would do.

I did about 3 months of work (and managed several contractor jobs) as a technical cofounder for this guy and the new direction for his existing company. Our original verbal agreement was very explicit that I would be an equity partner. Even though I pushed several times for formalizing our agreement, he never had time for it and we never had a contract (I should have stopped work after this red flag). Now, he has decided to have someone else handle the development aspect, which I'm OK with and in agreement because over the course of the 3 months that I worked for him, he departed from the strategy and vision that inspired me to join. While I am OK with not continuing the work for him, there are two "loose ends": first, he is avoiding reimbursing me for the contractor work that I paid for (and normally he has been reimbursing me); second, I feel that my own 3 months of work ought to receive some compensation - and it probably makes more sense for that to be in the form of cash rather than equity. So now I am out over $5,000 of reimbursement, and also have received absolutely nothing for my 3 months of time.

Any advice? What would you do? I already know there are lots of things I should have done to prevent getting in this situation in the first place.

By the way, word of advice for my fellow HN... the guy was super nice, friendly, and easy-going, which made it easy to not recognize the red flags (no contract, delaying contract, slow reimbursement). Don't get into my situation.

abbasmehdi 14 years ago |

Every story has 2 sides.

The code still belongs to you, so you can keep on working whatever inspired you. He didn't take anything from you, he just left. You should carry on. The vision inspired you, so maybe after your product hits big this $5k will seem small, half of which you were willing to pay anyway.

Your only loss to me here is $2,5k over 3 mths, and that is not even a loss, because you got work done the way you wanted for it, it;s just that you didn't expect to pay twice as much. On the other hand all the profits from future sales will be yours.

Note: The sky is never falling.

Joakal 14 years ago |

An official letterhead letter be a cheap way to demand reimbursement. The letter can say "<person> wishes to cease employment and requests reimbursement for $<amount> for <work> by <date>. Please avoid delays otherwise there may be further costs." The employer can then settle to avoid further costs for both sides. I don't believe that such demands mean you are required to take them to court. So, it's like a legal bluff.

That said, the work you gave them belongs to you unless you stated otherwise (look through your logs). If the employer uses it, then you can send them an invoice for a license to use your IP with a notice that there'll be annual charges starting <date>. The employer will want to come to you for a full IP release. Otherwise, send an overdue notice then later send the unpaid invoice to collections after the overdue date if the employer refuses to pay.

Or release the code/work to GitHub or similar. You own the code (unless waived otherwise).

Note: The employer sounds quite charming to you, you'll need to plan out what to do before meetings including attempts to 'understand your plight' for lower but legally binding settlement (eg undesirable $100 reimbursement). But most important: stick to your objectives, not theirs. Maybe bring someone who can provide strong support which you can say they are present 'as a witness'. Maybe take a look in seduction ;)

IANAL, you should seek your own answers from someone more local at least. There's many ways to go about it like I listed above.

volandovengo 14 years ago |

Nasty situation to be in. I would suggest talking to him in a friendly way and just outlining everything you said here. If he's not a dick, he should be happy to award you some equity. It's not fair to have 50% but you should get something.

Getting a lawyer involved immediately really escalates the situation and can make things quite hostile. I would only suggest it as a last resort.

allanchao 14 years ago | |

Thanks, I agree that lawyers can quickly escalate the situation. His email to me was already pretty hostile, but I am trying to keep it cool unless there is no alternative.

Benjo 14 years ago |

Usually in this sort of situation you would withhold all IP until he's made good on his verbal agreement. Is that possible?

allanchao 14 years ago | |

It's not, I deployed everything live, and he has access to everything.

mikeburrelljr 14 years ago |

Just move on. Lesson learned. Get things in writing.

JoeAltmaier 14 years ago |

Collection agency

massarog 14 years ago |

Get a lawyer.

DevX101 14 years ago | |

That he'll have to pay $5000 or more for?

allanchao 14 years ago | | |

so painfully true =(