Ask HN: When are you allowed to quit a startup?

Let's review: you're not a co-founder, and have no equity. Vague promises have been made about you "getting a share", but no commitments. The co-founders all went on vacation immediately prior to a launch, but you cancelled yours to get the product ready. The business is foundering, and you're not convinced that the co-founders are responding to the challenges in the right way, and you suspect the company will run out of runway before Christmas.

Is that a fair summary?

If so: why are you even thinking about staying, if you've got other options?

If you've got a plan that you think will put the company on a firmer financial footing, I'd pitch it to the co-founders, and ask to be brought in on the equity side.

Otherwise, I'd walk as soon as the right offer came along.

Well when you put it like that...

All kidding aside, I think that I've been stuck in a forest for the trees mode. From the outside, I think you're able to see whats going on a lot better than I. Thanks for that.

Why do they only want to give you a share when they're revenue-neutral?

A limited company, their liability is extremely limited, I'm assuming it's not a partnership. There's no reason for them not to give you equity right now.

From what they said was that to give out shares at this point would require additional lawyer fees. They are already formed as an S corp (I believe), so I'm not sure how much lawyer fees would be required, but nevertheless, I was young and naive when I first started (this is my first startup) and probably should have pushed a bit harder.

The truth is that they might actually believe that they'll give you a "big slice of the pie" once the money starts rolling in but in reality what will happen is that they'll a) get greedy and b) be able to afford someone(+) to replace you if you complain too much.

It's just aaahhh business and you're out of a job with no pie.

A startup whose founders can go on holiday for a week can afford lawyer's fees.

Vacations needn't be expensive. Sure, there's a loss of one week's income generation, but it's possible to have a fantastic week away on what it would cost to talk to a lawyer for half an hour. Some examples: camping and fishing, eating what you catch to save on food; rock climbing; backpacking; etc.

yeah, but the opportunity cost is pretty high.

"give out shares at this point would require additional lawyer fees" -> translate: they don't want to give you shares.

Don't get too excited about randomly leaving unless you have a particular plan in mind. If you don't have equity, it's definitely a good idea to separate yourself emotionally - but if you've got a steady paycheck, there's no reason not to keep cashing them until you have your next step sorted.

This is spot on. I think at this point I'm seeing the light, but just because things are looking like they'll end badly doesn't mean I'll put myself in a worse position because of it. Good call.

Actually, I'd counter that.

Getting out of there will make you way more available for opportunities. And almost any opportunity is better than what you're doing now, so I would get out in a hurry.

I can't agree with the comment above enough.

I have seen this situation far too many times (both with myself earlier in my career and with friends) - employees feel loyalty to their employer, but it is a one-way street. You have the added pressure of shouldering all of the technical work for the company.

There are too many red flags in your story (legal fees being too high to give you stock should tell you how much they really value your work). I think it is shocking that they didn't put you on a stock vesting schedule as soon as your trial period is up, considering that you are building the product. You should be the CTO/VP of this company, and part of that founding group - yet they want you to build the tech but treat you as a low-level employee.

Find a new role and quit asap. You were smart enough to see that the company is sinking, so use the experience you have gained from working for this company to find yourself a good role in another startup, or work on your own and teach these lessons to others as a consultant.

The alternative is an example that I went through myself. I was in a similar situation - in the financial field with a solid group of founders, the only tech guy etc. The company (this was 99-00) was running out of money. I re-negotiated my role to be the CTO, negotiated a solid slice of the company stock and built a fresh new prototype of our platform in 6 weeks - complete with integrated analytics, customer management and support (using a third party platform). We used the prototype and business plan to raise a new round - I got a pay kick at that point and a budget to bring in 5-6 developers. We fired a lot of the business people who were not doing a lot (they bought their big financial company work ethic with them to the startup). 18 months later we were acquired by a large financial firm, which was a solid outcome for all involved.

I've been an early employee / only programmer in a startup in the past, in which the founder said the exact same thing -- once we get to "revenue neutral," you'll get "a big share of equity."

It won't happen. They only said that to keep a carrot in front of you for a little while longer. If the company ever gets to revenue neutral, their idea of a "big share" will suddenly change. After all, why give a programmer a significant chunk of equity once the company is making money? That equity is suddenly worth something!

If you don't already have equity, you're not likely to get any. And it sure sounds like you deserve a significant amount of equity given how early you are and the risks you're taking; if you wait to negotiate how much equity you get until after the risk has gone down, you'll get a lot less equity. And that's if you get any at all.

Thanks for the experience based insight. I've had that nagging worry all along.

Part of me has wanted to be a bit more trustworthy as they've shown themselves to be very friendly people -- I regularly go to bars with the CEO outside of work, the COO and I share interests and talk about them/engage in them (being vague here), etc. But I think your point is pretty clear and well thought out. And pretty much not arguable. Thanks for that.

Sorry to be so blunt but in this setting, friendly and manipulative are synonyms.

I couldn't agree more, and add one to the folks who've been in the "when we become revenue neutral". The funny thing is that in my case, the entire company bought into the founder's line on that (well, only about 12 people), because none of us had done a startup before and we didn't know better. In any case, that's not how it works in the startup world. There's a reason why over the years, companies adopted vesting schedules.

edit: I should add that in my case, the stock options were left out more out of ineptness than maliciousness. Either way it's a bad sign. The company imploded after a year and a half, but not before one of the employees mentioned the options in a disgruntled tone. In short, we wondered if the founder really cared about our contribution.

I've been promised stock options that never materialized too. If it ain't on paper it don't exist, and if your boss is truly honest he won't pretend that it does.

I agree this guy should be looking for other work, but disagree that working relationships are always inherently manipulative.

The big problem here is the bloated management structure, pre-launch vacations and failures to meet targets, all of which are strong signs the decision makers in the company are bad at their job. This implies that decisions about this person's future compensation and role in the company will be made by a committee that does not understand his value. I think that is the problem more than anything else.

This is not a healthy working relationship - he is being manipulated. The equity participants are on vacation while the sole employee does all the work because they've made vague, non-specific promises that someday maybe he too can join them.

Yep. No big slice of the pie for you. Actually, what they'll do is give you a crumb that fell off the pie and make you wait 4 years before you can eat it.

Tomorrow never happens.

Good point on vesting. Chances are that your vesting would start when they start giving you equity (if they eventually do). Even if they were to give you the same amount it's not fair to you to have to wait a couple extra years to finish vesting.

The risks you're taking right now will also look a lot less once the company gets to revenue neutral. "we made it, so it wasn't that risky after all…" it'll be easy for them to negotiate down at that point.

Why does a company with only one programmer have a CFO and a COO? Also, why wouldn't you be the CTO and have a share if they are all about titles... I'd say it seems like maybe you are being taken advantage of and it might be time to jump ship. Good luck!

You'd be amazed ... when I first started I reported to the (then) COO who reported to the CEO. But we all sit in the same room, so I'd ask the COO my question, and then he would turn and ask the CEO, who would turn and answer the COO who would then turn and answer me.

But your point about being taken advantage of has been in the forefront of my mind. Thanks for giving that some credence.

It seems your skills are being mishandled, sir. I would recommend you keep the rainbow appearance (where all looks well) until you find another crutch to lean on (another job offer).

This is always my argument when I'm confused about what to do, and it's always helped: We only have one life, that we know of. Might as well make the most of it.

If you feel your time is better spent somewhere else, than you have your answer. Best of luck m8.

The very fact that they have both COO and CEO in startup mode is a huge red flag, btw. That "reply wave" that you describe is also an enormous wtf.

Run.

The first flag was when they told me that not to worry, when we brought on a second programmer, he would report to me. Heh.

So two programmers and the company would already have 4 levels of hierarchy? No thanks.

Says something about their idea of a 'business'

That was my first thought as well. 3 chiefs and one indian? That's an obvious problem.

>> "I'm the only programmer"

>> "all of the founders (CEO/CFO/COO)"

>> "no equity"

WHAT? Quit. Now.

One programmer and three CXX's already? and they haven't made a dime yet??? All their MBA training has taught them is how to profit off the sweat of others.

Good skill to have.

N non-coding MBAs (N>1) plus 1 software person is usually an antipattern, even if the technical person is an equal founder.

The possible exceptions would be if the MBAs bring giant domain experience, prospects-ready-to-buy, or enough funding to pursue a larger/longer-term vision (with a salary and extra tech staff).

I worked in a similar situation, though with a group of people who wanted to form an arts venue in the largest city in my state (I'm in the midwest).

When I agreed to come on (after leaving teaching), there was promise of salary. The salary never materialized, and so I was putting in 80-100 hours of free labor per week, and paying for my own expenses while doing so.

Meanwhile, the project ballooned from $250k to $2.7mil, and our investor (who is one of only 2 or 3 people I've ever actively disliked) bailed when he realized that the fellow I worked for was trying to extract quite a bit of money out of him.

I left after 7 months, and will never be reimbursed for the 2,000+ hours I put into reading, researching, writing, and networking. They still have exactly no money.

This isn't exactly analogous, but similar enough. Sometimes the boat's going to sink (to use your captain metaphor). Given that you don't own part of the company, and that your employers seem to think of you as replaceable, your obligation is minimal.

The fact that they're looking at changing what they do complete is not an encouraging sign, as it's very difficult to shift back from those changes.

Were I in your shoes, I'd quit and would be reaching back out to the startups who reached out to me, as well as to others that seem like good places to work. I would make it clear to my employers why I was quitting (in business, rather than personal, terms), and would hope that such honesty helps them to survive, or at least to make better decisions in the future.

This approach has worked well for me in the past, as it lets me maintain personal relationships (and even professional relationships) while extricating myself from situations neatly and efficiently.

There's a lot of sound advice in the thread (TL;DR: many red flags, get out now!)

I'd like to add my experience of having stayed at such a company, and getting the short end of the stick.

If you end up making the wrong choice -- yes -- you'll lose money, bills will be scary, etc etc. I hate to sound cliché, but you sound like a bright individual, and that stuff will eventually recede in your rearview mirror. If you stay and get screwed, you will still eventually leave, and then you will think about two things:

a) How stupid you feel for letting a company walk all over you. Like, "Aren't I smart enough to avoid those traps?" (Answer: only after you've fallen into them once or twice.)

b) Eventually, you'll appreciate the wisdom earned from failure. I worked for 4.5 years as employee zero, with little in the way of appreciation from my employer (not just material). I saw many things I now recognize as hallmarks of mismanagement. As much as I felt like a heel for not having the gumption to quit, I earned a great deal of experience that I rely on daily.

So -- if you end up staying, and you end up like me -- it's not all roses, but it's not all thorns either. Knowing what you don't want in an employer is often as valuable as knowing what you do want.

A final aside: there was no malice at my old company. They were decent people, but something else was always higher priority, and the results spoke for themselves.

> I saw many things I now recognize as hallmarks of mismanagement.

Could you expand upon those? Maybe they're obvious, but I'm curious and I'm sure there are people here who would prefer to avoid learning to recognize such things from experience.

Why does it matter that this is a startup? I mean that seriously: you don't have any equity, you're not a founder. If this were a job at any random, established company and you saw the end coming, you wouldn't hesitate to get out. And it doesn't sound like the best job in the world.

It's just a job, and jobs end. Treat it like one.

Your CEO, CFO, and COO are either completely ignorant of finances, or are cold-hearted jerks. It is simple and easy to grant you options (or even founder shares, although that would be unusual) in an S-corp right now (if you'd said LLC, then there would be a case to be made that they didn't want to issue equity until they converted to a C-corp, which is expensive - but it still means they're selfish and/or dumb for doing it that way).

Once you've got revenue, your company value is materially higher, and they can no longer easily transfer you shares (since you have to pay taxes based on the value of the shares). And any options they grant you must have a strike price of the current fair market value, which will be provably higher if the company has gone from no revenue to some revenue, which just takes money out of your pocket for no good reason.

I generally go by Hanlon's razor: "Never attribute to malice that which is adequately explained by stupidity." With the huge caveat that I've only heard your side of the story, it sounds like your cofounders are well meaning, drunk with power, and ignorant of how to do their jobs. Find a new job first, then tell them you're leaving. If they ask nicely and your new employer doesn't mind, you might give them 4 weeks.

But most employees err in the direction of too much loyalty to their last job, so resist the urges to extend further, do consulting, or otherwise fail to break the bond. You are probably doing the founders of this company a huge favor. They cannot run a successful company the way they're running this one. Giving them the wakeup call they need - politely, reasonably, and professionally, by departing gracefully - will leave them with enough runway to rethink their strategy and could save their endeavor. And it's definitely the right thing for you.

You are the hired help.

You came in looking for a job.

You will go out looking for one.

The legal fees for selling you stock in an S-corp are negligible, buy-sell agreements and employment contracts should already be in place...or there are none. In which case you don't want equity anyway.

There is nothing in your description which speaks in favor of staying.

The owners are just burning through OPM before they go bankrupt.

Do they read HN? Is there an office of four people (A programmer, a CFO, a COO and a CEO) all looking at each other thinking - is this us?

If I was anyone but the programmer I'd probably be crapping myself. Which tells you something about the position you are in. (i.e. one of power)

That's not necessarily true. I've run into this sort of situation in the past (never worked for them, just seen it), and the attitudes of the non-technical people towards the technical ones tends to be one of "they're just programmers: they're taking my brilliant vision and merely transcribing it onto the computer, like a typist!".

These kinds of people, who believe that building a successful software company is 99% inspiration and 1% perspiration tend to be egotistical and clueless. I bet they've never heard of HN, and even if they read this thread would be convinced they could find yet another poor 21/22 year old sucker to employ for under market rates. The unfortunate thing is that they're probably right about the latter.

Hah - I doubt it. With titles like this, I think they rather read the print version of Fortune magazine monthly.

From your description, I'm guessing that the company will go under the day you quit. The founders can go on for a while on empty, but they need you if for any of their hail mary plans to have a chance to succeed.

However, their only obligation to you is payroll. As long as they can pay you, they surely expect you to keep working for the team, and they probably wouldn't be happy if you jumped ship early.

Obviously, it's up to them to be candid about the situation and give you advance notice if money runs out. So, if I were you I would put it on the table. Make sure they understand you will quit if they can't pay you, and that you expect them to give you 30 day notice.

If you feel like things are not going well and you have other offers, jump. It's always easier to find work while you're employed than it is once you're unemployed, especially with the state of the economy. You feel that you owe them something, but they do not appear to share that view (that they owe you something). Go to greener pastures while the going is good.

Next question about startups and quitting -- how long is long enough notice? I've not gotten into specifics with any other companies yet, but is 2 weeks too little time for a startup?

It's no different to any other job - you look at what your contract says and that's it. If you have no contract then look at what the default legal position is in your country / state.

In the UK I'd tend to consider 4 weeks "normal" both in terms of what a contract would say and what I'd expect but that may be very UK specific.

There are some situations where you might want to extend it a little if you think it's in your interest (normally that would be about not leaving on bad terms if there's a chance that it might damage your reputation to go earlier or not leaving other colleagues in the lurch) but that doesn't turn weeks into months.

As someone said, this isn't personal, this is business. Take a good honest look at how they've treated you - if you think they've gone above and beyond for you then you might reciprocate but the reality is that most businesses will act in their own interest and you should do likewise. If the owners / managers get offended by this then they're really not cut out for it.

You can give notice, but in many positions, you'll be out the door within the hour. Nothin personal, but that's how it is. I've given 2 weeks notice and been escorted out the door within 30 minutes, and I've given 2 weeks noticed and asked to stay longer. Whatever you give, be prepared that that's your last day, and plan accordingly. They may see it as an act of betrayal or a loyalty issue, and will have you leave that moment. Or they may not.

Stop thinking in terms of this being a 'startup'. That term means almost nothing any more, given that companies with millions in funding that have been around for >2 years are still called 'startups' in some quarters. You work for a business, and may leave. Be prepared to leave. Give them a notice that you'll work out 2 weeks to wrap up and document stuff, train a replacement, etc. Don't give any more consideration to the long term health of this org - they've not given you any consideration. To that end, don't go out of your way to be a jerk, whether that's withholding info, trashing files, installing spyware, etc (I've seen it all happen). Just be professional and get out.

I find that "out the door within the hour" extraordinarily unprofessional. I wouldn't want to work in a situation where people think throwing someone out on their ass without collecting documentation, checking up on projects, and generally tying up loose ends is a good strategy.

It just sounds like an extraordinarily petty and ineffective way to deal with losing a team member.

It's only happened to me once, but it did happen, and the person who did it was regarded by others as petty and power-hungry. FWIW, I was brought back to do a bit of work later, and the number 3 guy in the place heard my story and was basically shocked that HR had handled things this way.

How this happened was I'd handed in my notice already - 2 weeks. But... I wanted to know if I was going to get my remaining vacation time as pay or not. I'd started before there was an 'hr handbook', but there was one in place. I wrote to HR and asked, and was told "it's in the handbook". I wrote back and asked what page it was on, because I couldn't see it in mine.

I got an email back saying something to the effect of "here's your vacation that's owed you..." and that was it. 10 minutes later the guy in the same cube as me said email to me bounced. I watched him send and it bounced back saying 'mailbox invalid'. An HR rep from our building came to my desk another 10 minutes later with a box saying "I have to escort you out of the building now". She was nice about it, and didn't seem to want to do it, but did it. So... the project I was working on was left in a broken state, client emails to me bounced, and they had no clue what was going on. I left, set up my own shop, and what do you know - that client decided to jump ship and stay with me instead of being charged twice the hourly rate for the kind of service they were getting. Basically, they considered their business too important to be cut off by phone and email from the people doing the work solely on the whim of one HR person.

Yeah, that was my rant. Again, only happened to me once, but it happened, and I've seen it happen to others.

Under the circumstances (which have been well covered in other posts) I wouldn't offer them a minute more than 2 weeks.

Doesn't your contract specify the legal minimum?

I'd like to add that the founders simply aren't pulling their weight. And one thing I've learned is founders don't get more generous over time.

A good founder, who cares about their employees would get the necessary legal instruments to get you shares. Period. A good founder would (a) probably also cancel vacation before launch, but (b) if they all took vacation, they'd make sure you took vacation after the launch completed.

it's not a fucking startup if you don't have equity.

What really caught my eyes is the Christmas prediction. I used to work for a startup that ended up belly, hmm, sideways, and the process a -lot- longer than I expected. Money ran out in November. In December, they laid off 10%, and then there was always someone to cough up some money to make the whole thing going, until June, when the company was bought up (and I said goodbye) - it took another 6 months for the new owners to decide to get rid off the team. It may have been lucky for us, but generally: belly-up takes time.

But, it doesn't really change the fact that your bosses appear to be not the nicest people in the world.

We've all discussed other options and belly up would be the worst case scenario ... they're hoping that they can, at worst, get bought up by some conglomerate to ease the pain. The safe "thing" about it, though, is that for the most part, they can't do what they want to do at all without me. So, while I may not enjoy the circumstances, I do have job security until the job disappears.

If they get bought up by some other conglomerate before they've been able to bring themselves to pony up the lawyers fees to give you equity, they make money and you don't. If the other conglomerate has their own programmers and their own preferred way of building things, you quite possibly still find yourself looking for another job.

You're just an employee, if you feel your company is going under, find other employment. Once you find another offer, they'll either offer you a share of the company to stay, or you can leave.

This is probably true -- though I've been in situations like that before (swap shares for money) and never take them as I just don't think that type of very passive "threat" (for lack of a better term) is ever fruitful. But, on the other hand, I don't have a ton of business experience, so maybe it would work out. Do you have any experience in those situations? Staying after discussing leaving?

If you discuss leaving, make sure to look sincere in the discussion. This means steer the conversation so it shows how you are worried about your future financially and therefore you need to be proactive (have them empathize with you and see you as a human, not an employee).

In case you decide to return to the company, this way you will have retained some of their respect.

I'm not talking shares for money: I'm talking about they pony up a share and money like they're getting if they want you to suffer through the broken/poor part of the companies existence.

Many articles have been written about this: don't ever accept a counteroffer (google "counteroffer" to find them). It is generally just a way to delay your departure until they can quietly find your replacement, at which point they will fire you. And you don't want to work at a company that only treats you fairly when you threaten them.

If you find another position, take it. Don't try to use quitting as leverage to make things happen - even if you stay on, your actions will always be there, lurking in the background.

Quit.

Agreed.

You know how that goes, if you're at a poker table for more than 5 mintues and still trying to figure out who the duck is, it's definitely you. So walk away.

Who's hiring: http://news.ycombinator.com/item?id=1659409

You don't owe them anything.

Let's get real about something: they're business guys, and you're the technical muscle, right? You seem young, and you're probably as good at sizing them up (note your "great people" comment) as the average MBA is at writing code; by this, I mean, not at all. Don't even try. Make your decisions based on hard facts, such as how much equity you have already and when you will start collecting a salary, and not based on "warm fuzzy" feelings of loyalty or how much you will get "when times change". Unless you're seasoned and have been in the business world for a decade or so, you are way out of your depth when trying to size such people and their promises up. (Of course you like them! Their job is to make people like them. They probably like you, but do they respect you?) Business people over-promise because the worst of them are sociopaths and the best of them have great intentions and are wonderful people but still are ridiculously overconfident, just because they have to be in order to succeed in that world.

They may be great guys, but you really need to get a firm commitment regarding equity. You're taking a risk and have a right to know what the rewards will be. A promise, especially a subjective one, means nothing. What does a "big" share even mean? If the company is valued at $2 million and you get 0.25%, that's a $5000 bonus, which can be described as "big" but is quite lousy in comparison to what you actually deserve. Remember that the business guys, due to the overconfidence that is characteristic of that sort, would still consider such a grant very generous. After all, it's going to be a $10 billion company one day, and that 0.25% is going to make you a millionaire many times over, no?

You're taking as much risk as they are, and you actually have the technical skills. You deserve a better deal. If your leaving would hurt them as much as you think it would, then they will give you equity, and they'll actually respect you more now that you're not letting them take advantage of you. Or, they might let you go, in which case you're better off to have this happen sooner rather than later, after having wasted even more time.

Wowzer. I really appreciate the honesty -- and you're right about the fact that they are quite established MBAs and I am just a young idealistic programmer.

The fact that the CEO will often pull code off the internet and say we should use it shows me that respect is not really there and from that, I've always questioned how much they respect me/my role/my abilities.

I think you're spot on about giving them the option of keeping me or not -- I don't generally like to threaten anyone about leaving, but I think if handled well, I can explain my expectations and what I'd like, and then go from there. With a backup plan of course.

Thanks for the insight.

So the CEO is also micromanaging you down to lines of code off the internet. Leave as soon as you can. Start looking for jobs today.

>> The fact that the CEO will often pull code off the internet and say we should use it shows me that respect is not really there.

Holy crap!

Agreed. Smiles, promises, and handshakes from the vast majority of MBAs mean nothing. If it ain't in writing it don't exist, and to proceed otherwise is great risk.

> After all, it's going to be a $10 billion company one day, and that 0.25% is going to make you a millionaire many times over, no?

Sage wisdom, here. It's easy to seem generous when you're dreaming about carving off a tiny sliver from an enormous pie. Startups aren't an adventure, or a calling, or a mission from god - they're a business. And the fastest way to shed the BS and get down to reality is to insist on equity, in writing.

vacations before launch and college loans..IMMEDIATELY! WTF is wrong with you??!

No offense but you need to quit immediately..