Company 1: The company went bankrupt, founder renamed the company, started a new company with the same name as the original, transferred some assets for pennies on the dollar. It later went public, but collapsed in the dot-com crash.
Company 2: Company raised $50 million during the dot-com boom. After 5 or so years, it still did not have much revenue to speak of. After several down rounds, it was eventually was sold to a major corporation for pennies on the dollar. All common stock was worthless.
Company 3: Still working on it. There have been several down rounds. All employees got their options re-issued at the lower price after a key employee threatened to walk...
> Company 1: The company went bankrupt, founder renamed the company, started a new company with the same name as the original, transferred some assets for pennies on the dollar. It later went public, but collapsed in the dot-com crash.
Is that legal? It looks like the CEO of the company willingly harmed the company's interest to enrich himself, which is basically fraud.
My understanding is that it was done in a legal manner. The majority of the investors were "friends" and had to give sign off. They got a smaller stake in the new venture and promise of larger returns, etc.
Happened to me three times... upvoted to bring light to this as startup finances is tricky for most mortals. Dilution, premium vs standard, cliff, etc.
When I was negotiating my current job, I had a competing offer for around $100k more plus equity but it was essentially Engineer #1 after the technical co-founder.
In my negotiations I inquired about said equity and the other founder was vague as hell around all of those important questions that early employees need to ask.
The extra $100k wasn't worth it and I'm making the difference in real, liquid equity (and then some) from my current employer.
They know full well what they are doing or they are naive. It’s so important to know the terms before you commit. However, another ace is living in at at-will-to-work state so I can just quit once I realize I was bamboozled. I’ve done this. I’m not proud of it, but my time is mine. I have goals. Help me achieve my goals and I’m all yours to help you achieve yours. Sad to say but there are founders/CEO’s that know engineers are itching for an early-in to a “rocket ship” and will manipulate to get momentum. Don’t buy it. Do your due diligence. Research. Ask about the terms, the equity, the stock, current value? Dilution? Who’s invested? Who has what stake? Who’s on the board? Prove to me it’s a rocket ship... sales? When do you recognize revenue? How? Opportunity pipelines healthy? All of these things are proxy to an engineer yet all of these things effect the engineer joining the company as employee <50.
Well they state it right in the movie that he deceptively tried to screw Saverin over and his own lawyer in a nutshell said "Settle. Because what do you think a jury will say?"
