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Comment by absherwin | Hacker News Reader

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...

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In the countercomplaint, Jeremy says that he and Kyle first met in the beginning of October 2013.

Elsewhere in this thread, someone found that the company was incorporated in September 2013.

So a possible timeline is that Kyle creates the company with himself as the sole owner first, and goes looking for a technical partner. He finds Jeremy, they talk, they hit it off, and they decide to apply to YC together, and Kyle offers to split the existing company 50/50. But they don't put anything in writing, so on paper the company is still 100% owned by Kyle. Things go sour between them, and Jeremy leaves/is kicked out without the ownership of the company ever changing on paper. And then things move on, other people are brought into the company, shares and vesting schedules are formalized, and the whole thing is forgotten/buried. Until now.

> He finds Jeremy, they talk, they hit it off, and they decide to apply to YC together, and Kyle offers to split the existing company 50/50. But they don't put anything in writing...

One of the major questions is whether the YC application and any stated intent for a 50/50 split in it would be that writing.

Kyle fired(?) Jeremy after a month, was that a valid withdrawal of the verbal promise to give Jeremy 50% of the shares? Jeremy left, and did not in any way indicate that he still thought he had 50% of the company, is that an implicit acceptance of losing his promised shares?

That all sounds complicated and open to debate. Was Jeremy an employee? Did Kyle have any standing to fire him? What were the circumstances under which Jeremy left? Did Kyle use any primary IP contributions from Jeremy, like architectural designs?

Also, if there is sufficient evidence to declare that the 50/50 partnership existed, then Jeremy did not have to do anything to explicitly declare or let Kyle know that he (Jeremy) understood himself to still possess a 50% stake. There would be no such thing as an "implicit acceptance" of losing equity.

Basically the points you raise are not at all obviously addressable, and there are many ways they could play out that actually do support a significant award to Jeremy, regardless of whether that is a popular outcome.

The original paperwork might not have issued stock to anyone. It is quite common for people to organize a corporation while neglecting to issue any stock until a later date (often when an investor's lawyer first reviews the file). As you can see this creates a host of problems, which could be avoided if people would stop telling founders that the first thing to do is form a Delaware corporation.

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