Hacker News Reader

Comment by ojbyrne | Hacker News Reader

That was pretty good. But there is a problem - there are ways around a lot of these things. For instance, board member - if everyone else (your partner(s), VC member on the board) vote as a bloc, your vote becomes powerless. Another example would be about access to financials - the company can just ignore your requests, and leave you to sue (which ain't cheap).

View on HN

Another minor problem with the suggestions is that the equity being asked for is basically participating preferred. I don't think you are going to get this from _anyone_ unless you are actually putting cold hard cash into the venture. Founders usually don't end up with preferred stock, so I can't see an employee getting any; if you want to prevent dilution then work to keep the burn rate low so that you don't need to ask for as much money from investors and endeavor to increase the valuation of the company when it becomes necessary to seek investment.

The only remarkable thing about the equity being asked for is the anti-dilution provision. I don't think he's suggesting you ask for liquidation preference or participating preference (which wouldn't make any sense).

Anti-dillution is there to prevent unscrupulous partners from buying tons of equity (issuing new shares) at absurdly low prices just to dilute you.

You should be as dilutable as your partners in a fair arrangement.

Yes, people can screw you. But if you have them put in writing that they WON'T screw you, if they do, you have a leg to stand on. Delivery on a promise and a promise aren't the same thing. But some people don't know what they should be getting promised, and this is a good writeup of the types of things you should look for.

Short of being $deity, I don't know how you expect to guarantee you get delivery.

That's why I said it was pretty good.

you get to ask to see the financials each quarter. you are minimising back-end pain by getting information 'installments'. if they don't give you the first quarter's results, you know somethings fishy and wcs you only blow 3-6 months of your life. knowing when to quit/walk is also a valuable skill.

Reply on news.ycombinator.com