How My Startup Got Robbed
torgronsund.com
torgronsund.com
Maybe I don't know how your countries legal system works, but surely the cost is borne by the state? I assume then you mean the cost of the time you would need to spend to support law enforcement? But the thing is, now you:
a) can't name this fellow,
b) if someone does a background check of him and his father in the future, they will not find this
c) his father, a layer (?!), stands a lose a LOT if this really is true, and would probably be smart enough to settle this ASAP,
d) if a customer had not paid, you'd probably consider writing off that as a bad debt, but still possibly engage a collection agency to attempt to recover the debt - you would only get a fraction of it, but you'd get some. You might have found a willing law firm to pursue the case, in return for a % of the settlement/award.
e) assuming a successful prosecution, most countries would block this young man from being a director of a company for a LONG time - that should be enough reason to follow through alone
I understand it's expensive but I, for one, feel that you have a moral obligation to take the evidence to the correct authorities, and let them make the decision on whether they have a case and to proceed or not.
Since it's up to the board to decide to pursue the case, it sounds like it's neither - probably some sort of breach of contract we're looking at, which is bad enough, but not robbery.
However, in the UK for example, cases of breach of fiduciary duty are not often of interest to the police unless there is a public interest angle.
Consequently, I presume that the OP is talking about a civil case where costs would be incurred to bring the case.
Although there is likely to be an ability to claim some element of costs from the losing side, there is still obviously the risk that the case may not be successful regardless of how solid the case is due to the inherently risky nature of litigation.
We had a choice here, we could have taken it to the police, we could have used the law to our advantage because technically he was embezzling. Instead myself and the other co-founders called for a board meeting, we sat him down and talked to him. We considered his misappropriation of the funds ground enough to fire him from the board/company and considered the money taken to be more than enough compensation for his share of the company (to which he agreed), in return we wouldn't pursue him. This worked out for the better for all of us, since it meant we didn't have to spend time and money on a lawyer/court case and he could walk away without any penalties.
We had him sign a document stating that he no longer held any interest in the company (we had already long deactivated any and all accounts he had on the company network/services and his access to the bank account) and let it go.
Every so often I will still get calls from people looking for references (his name can still be found on Google to be associated with this company), and I will simply state that I have worked with him the past, and he was let go.
Unfortunately due to various reasons it never really did work out and the company fell apart. We made some money, I learned a boat-load and had my first failure. We were trying to bootstrap the company ourselves, so the only thing lost was the equity we all put in to start the company.
I'm going the opposite route though, and forcing him to buy me out of the company instead (with the alternative resolution being litigation against him), so he can keep the mess he created, and I'll get out of the liability and get a lump sum payment on the way out..
The matter was closed, I would like to leave it closed.
It mostly just reveals that you're in the US.
That's not a particular statement about the person, it gives no version of events. If pressed, explain that this all you can say. You simply don't recommend him.
(Of course, IANAL, TINLA)
What has personally worked for me is providing company credit cards with a max limit of $25k to anyone who actually needs to be actively spending. Right now that's head of tech, head of marketing and CEO. My company is larger and spends quite a bit. If you are bootstrapping or have done an angel round, perhaps this number should be $5k or $10k. Either way, the important part is the limit.
As far as withdrawals go, a 2-signer system on all checks is a no-brainer, though in this case it sounds like an in-person withdrawal from a branch is what got you. I would check with your bank to see if they can setup a similar system for withdrawals over $X. I've worked with Silicon Valley Bank and they are super flexible to any of these custom needs.
Best of luck with getting back up after this. These are the kinds of events that you need to creatively persevere through.
The founder and co-founder's? Couldn't resist, :+)
In the months leading up to all this, the "evil" partner had bought an exact copy of all the machinery and software.
It was illegal what that guy had done and he was at risk of doing some time in jail. They eventually settled for a price that was way too low because the victim was tired of it, he couldn't stop thinking about it, he couldn't sleep, he wanted it to stop.
Here's the kicker. The evil partner had done it 2 times before and his latest victim knew about it when they founded the company, but figured it wouldn't happen again because the evil guy was close to retirement.
Lesson learned ? I don't know. Trust your gut ?
The lesson to be learned is that the biggest predictor of what someone will do is what they have done.
This doesn't only apply when dealing with others, but also with yourself. I've gotten quite good at recognizing when I'm bullshitting myself about something that I will do, and often now find myself saying, "Yeah Oz, but that's what you said last time. What's different this time?" When I don't have a good answer, I know I need to take a different approach.
Sebastian Marshall (HN:lionhearted) said it best. "Track records don't lie."
My co-founder didn’t have any formal position or rights at the company at the time. Despite several attempts at formally hiring him, he had insisted on not being employed. Rather, he wanted to function as a board member and a contractor.
Co-founders are generally there right from the start (or very close) and don't become contractors -- they hold equity and are deeply committed to the success of the company. Also, I'd not been able to find any references to a 'co-founder' in a search, and given that LingoSocial has a lot of mentions, it seems unlikely that all traces have been scourged.
He, lets call him Mr X. Created a software product which got quite popular and started making money, so he decided to start a company with this guy (Tor). Tor isn't a computer engineer, he is just an entrepeneur who like making companies or something. Anyway, they recieve some money from the norwegian governement through something called Innovation Norway. They both keep working in the company, but in separate offices, so none of them knew what the other was doing. Mr X keeps coding on the product, and Tor does something else (Mr X isn't really sure what). After some time, Mr X checks the bank account and notices that almost all the money they recieved from the Innovation Norway is gone. Thats when he makes the statement "give me 30 per cent of the companies cash", because he wanted out. Mr X had done all the work, Tor handled finances, Mr X realizes he can't trust Tor, so he wants his share and leave.
Long time since I've heard the story (happened like 4-5 years ago), so probably don't got all the details.
Just had to post this since Mr X wouldn't.
TL;DR
- Co-founder (Mr X) created a product
- Starts company with this guy
- Mr X does the product dev. This guy does the business part (I assume this also include finances)
- This guy takes money
- Mr X found out, and wants to bail with half the money left
Just to be fair.
[0] Do 'conscious' cognitive biases exist?
Yes, and apparently studies have shown that, counterintuitively, being aware of a cognitive bias only strengthens it.
2) Mr X and Tor failed to set proper expectations for what they would be doing
3) neither of them opened up a channel of discussion when things were not going as they expected
A good lesson.
There are cases where what Mr. X did would have been justifiable.
Either the OP was being very deceitful, or your friend Mr. X did a very poor job communicating his position.
(In the UK at least) being a director is quite separate from being an employee. I'm a director of two companies but employed by neither.
I know of a similar, somewhat high-profile case in the US[0]. The point is not even whether or not the plaintiff can win; the issue is whether they have enough of a case to make your legal fees + opportunity cost of time wasted in court sufficiently high.
[0] I'd try and find it, but I'm hesitant to Google the keywords at work!
D:
EDIT: Seems they were aware it was a crime and just did not want the hassle of appearing in court when they were busy with the company.
That the director of the board had access to the accounts boggles my mind. Board members are not management, they shouldn't have this kind of access.
Also, if you've kicked someone out in a dispute over cash ... get on the phone at 8am and lock them out of your accounts. Or get onto the internet banking admin screen (you know where that is, right?) and lock them out of your accounts.
And if I'd ended the post there, you might have actioned my advice.
It's terrible that this person has lost out, and more terrible that the person that wronged them got away scott-free. That's not fair, it offends my sense of fairness and justice, and even though I have no connection to the author I would be happier if justice was served.
But what would be far more terrible is if someone else, completely innocent, was caught in the cross-fire amongst our demands for justice. This could happen lots of ways. Someone with all good intentions could make a mistake when snooping, and post the wrong name (in this example, I used my own name). At the other end of the goodness-of-intentions scale, the submitted post could be a complete fabrication, designed especially for people to snoop out and target a specific victim.
Acting based on the say-so of someone on the internet that someone else did them wrong is a very bad idea: you have no reason to trust this person, and if you do believe what you hear on the internet then whether or not justice prevails comes down to which party submits their story to Hacker News first - not ideal.
Not only that, but you were able to successfully determine that this was the action that took place.
I do the same thing myself far too often - skim something quickly, pick a key word and then google it myself out of context. Wonder how many things I misinterpreted because of this behavior.
This is exactly what terrifies me when the mob starts baying for personal information. I've seen it go wrong too many times now (personally I think HN should follow Reddit's example and add a rule about posting personal information)
Draw your own conclusions, preferably in crayon.
But really, it's a few hundred bucks to have a lawyer draft one that is precisely configured to your requirements. With the added bonus that it will be written to your local legal situation, which generic templates can't be.