One found a way to screw me out of all the equity as well, which would have made me a ten something millionaire.
Once people start smelling money things shift quickly.
When it started to look like the company would be sold, I politely asked if we could finalize an agreement in advance of knowing the sale amount, so that all would be clear. And I wasn’t expecting the moon, just fair compensation if the company was sold. We never even got that far.
2 weeks before the owners sold the company, and I was left out of the org chart handed to potential investors, I was “asked to leave”. I could have sued but I was young and didn’t have the money or energy to do it, so ultimately I left and moved on with my life. Not before going through a period of burnout and depression.
It still stings sometimes. The owners got off with all the money, and I never saw a dime.
A very expensive lesson learned.
That said, I have come to learn, I don’t think I would have been where I am if it had gone any differently - a place where I can sleep at night.
If they made 100, why not give you 0.1 and keep the 99.9 for themselves? In my home country, doing something like that would probably cause the founders to be worried about their physical safety (eastern europe).
Clearly you did wrong in not having it in writing, but if you were dealing with such vipers, who knows if having it in writing would have been enough anyway? Very shady
I think after that it was pure greed. It was a “family-run” business and the wealth stayed with “family”.... and I was just an employee.
The reason I said I can sleep at night is because later in life I realized, I was better off without their money. I would have not felt as good if I’d had gotten it given what I learned about their character and business practices which I had not known about.
That’s one of the reasons why I am not moving on to other opportunities even if my grant is almost all mature, I don’t want them to “forget my face” when the time comes, it might help them screwing me.
And I’m not talking about dilution, liquidation preferences, ... that stuff is business risk, I’m talking about dealing with greed of people.
But if you can stick through it I hope that on the other side of it you come out in a good way.
Depending on your agreement and country, one can only hope that what you have protects your interests well and can be enforced.
In my case, I could have gone after them because verbal agreements are actually still valid and enforceable, although complex and legally expensive to pursue. But I couldn’t get myself to do it and by now it is years past the statute of limitations.
I don’t know but somehow greed and survival and the human condition are all inextricably linked. All I can say is I wish you sincerely the best.
I still came out with something at the end - a cautionary tale, a lot more experience, and my honor. Depending on how you measure things, that counts for a lot to me, although it doesn’t necessarily put food on the table, or a roof over your head.
Amusingly, this identical vague mechanism was given 2 different names: "Management top slice" when talking to investors/managers, and "Engineering top slice" when talking to the engineering staff.
This ridiculous mechanism was never defined (and ultimately no acquisition occurred in that time-frame), arguments over it ultimately may have helped a few engineers get out so that was about all the impact it had.
The lesson is not to count on verbal agreements. If they don't put anything on paper it's because they don't want to and don't value you enough to care, not because "the time isn't right" or similar nonsense.
If they intend for you to reap the reward, they won’t care if you do everything above board and legally. They might even respect you for it.
Thanks
In other words, when the company goes bad and it’s forced to take heavy dilution or aggressive liquidation preferences it’s obvious that common holders are going to get wiped out. But, and that’s the part interesting to me, what greedy behavior from a company can make the common holders get screwed even when the company sale is a big success?
An example of getting screwed was the clawback clause that the Skype employees had, which gave the company the right of buying back the exercised shares from common holders at the original exercise price rather than the market value at sale time (or something like that). That’s called “being screwed”, not seeing your shares getting wiped out because your founders had to dilute the common holders (which many times includes themselves) 50% during a difficult fundraise.
I lawyered up but I can only afford a five figure lawyer, at that point they were willing to bring in a seven figure lawyer so that was that.
How would you protect yourself from getting screwed over?