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Comment by minimaxir | Hacker News Reader

> 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.)"]

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Well, according to Sam Altman:

"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

Right, but even without contracts, if there's a document listing that the planned ownership split is 50%, and that they're both listed as cofounders...

It sounds like there's documentation that this was the original agreed upon split. If there's no documentation of some sort of "vesting" or "minimum effort required", I don't see the legal argument for this person to not have this split.

Contracts are documentation of agreements, but the agreements themselves are what hold legal strength. The contracts just help when there's a dispute over the facts.

To have a valid contract you need consideration: you can't get 50% for doing nothing, you have to put up something in exchange (money, skill, resources, etc).

edit: (I'm not saying anything as to whether Jeremy did so).

IANAL but it seems plausible they could argue that the 50% was for the original concept and all the work he had done on it up to that point. Or are they really arguing that they threw all that away and started with nothing after he left? I agree with those saying that ideas don't make a company, but startup companies don't suddenly become worth a billion real dollars to GM without ideas. If what GM is buying is largely IP, and that IP is largely based on the departed co-founder's ideas, then his claims seem reasonable to me.

Edit: reading further I guess they are arguing that none of his IP is in what GM is buying. So I guess that will be the real point of contention.

My point was merely that a contract isn't valid without consideration, which may exist in this case.

In any event, breach of contract isn't the only claim being made.

I don't think this is true. Unless said contract specifically says that your 50% of the share is contingent upon a list of explicitly spelled out contributions, you would actually be entitled to the 50% even if you did nothing.

I don't think one month of work should be worth 50% of the company, but it looks like he did actually do work. And he never got compensated for it.

Yes, but what if, for example, the work that he had done prior to beginning that one month's involvement in Cruise was the majority of the IP that GM wants to buy? Would you still interpret it the same way? I have no idea whose IP is in there, at all. Just pointing out that simply stating he did "a month's work" could be quite disingenuous.

The issue is (assuming what Jeremy says is true) that he was forced out after 1 month with no say in the matter, no agreement & no buyout of stock.

So while 1 month probably shouldn't be worth 50% of the company, you also can't just decide that you don't want your co-founder to have a stake in your company any more, and push them out.

At the end of that 1 month, they had both done equal work (about a month's worth) and had equal share (50% each). It sounds like (according to Jeremy's story) he still owns that because no one agreed to a formal change in ownership.

Claim 27 of this response enumerates the (claimed) consideration.

Yes, I know. I was only pointing out that the issue is more complicated than having an agreement that lays out a 50/50 split.

Conspicuously absent from this paragraph (and Sam's post) is any mention of the technology that Jeremy claims to have brought to the initial partnership from his previous work.

From this paragraph, it sounds like Jeremy could have been any dork off the street who can find some office space. The question then is why Kyle worked with Jeremy at all, and in particular, why he proposed to Ycombinator to found a self-driving car company with Jeremy as an equal partner.

The statement is suspiciously precise. It says that he didn't build hardware, write code or file any patents. But that's obviously not the stuff to be doing at that stage of the company. It would make sense that he's doing research and planning out what the build steps might look like. And Sam's post conveniently omits any reference to this kind of work.

..ir indeed do other invention work and introduce IP to the company from his years of prior engineering and design work. And no time to patent it before he got thrown out.

From the YC application video alone, there seems to be a major point of contention about what Jeremy actually contributed. In the video they are talking about specific plans involving commodity hardware, that they devised a way to constrain the engineering problem to make it feasible, and that they had co-developed a business plan to get it to market quickly.

That's all just plainly in the YC application video.

That doesn't seem compatible with what Sam Altman says, so either the video does not depict Jeremy's contributions up to that point in time, or else Sam is incorrect and has omitted many contributions from Jeremy. Those contributions may or may not justify Jeremy's claim, but they certainly complicate the issue and present a very legitimate position for Jeremy to at least make the claim.

Jeremy's claim may ultimately not be considered or may not be upheld, but either way the degree to which Altman seems to think it should be categorically ignored does not seem to match the facts regarding the initial formation of Cruise at all.

When I re-read this carefully, I get the feeling an analogy might work:

"You see, your honor, I meant to pay my bill at the restaurant, but they threw me out on the sidewalk before I had a chance to pay it."

As in, one of the two parties might have been genuinely interested in signing such documents, and one of the two parties might have had reasons to want to avoid letting the other one sign those documents.

So is "planned equity" "equity"?

This is exactly the right question. It's clear that Jeremy is not and has never been a formal shareholder in Cruise.

The question is whether having explored (and subsequently abandoned) a potential co-founder relationship constitutes sufficient basis for an equity claim.

I think the majority of this (counter)claim is that Jeremy provided critical IP to the company as consideration for (promised) equity. That makes the issue more complicated, unless Cruise can prove that they threw out 100% of the intellectual property he brought in during his short tenure.

Or would Jeremy need to prove he provided the IP?

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