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This is very interesting to me. From this thread: https://news.ycombinator.com/item?id=43472971 https://news.ycombinator.com/item?id=43472971, I am wondering if

This is very interesting to me. From this thread: https://news.ycombinator.com/item?id=43472971 https://news.ycombinator.com/item?id=43472971, I am wondering if there are anecdotal stories of how equity is being handled after a split. On one hand, if the leaving co-founder retains all equity, it creates a sandbagging situation on a cap table that's no longer useful to the business. On the other hand, it feels right for the leaving co-founder to enjoy some upside for the years they put in.

tptacek 1y ago
This problem is what vesting is for.
- necubi 1y ago
  Standard 4-year vesting doesn't work well for this situation. A founder leaving a worthless startup with 20% of the equity is a huge problem. The remaining founder will need that equity to offer outsize offers to senior (and eventually C-level) folks to replace them. And it's demoralizing for the remaining founder and team to be working extremely hard to make the company successful, while the departed founder reaps the rewards with no effort. Opinions will differ here, but I think if you're leaving a pre-PMF startup you've created essentially no durable value, and should return nearly all of your equity. I've heard of startups doing 10 year vesting for founders (with double trigger) to align this better.
  - tptacek 1y ago
    I'm sympathetic. We tried to get 10 year vesting together at my last company. But 4/1 is industry standard, and my rebuttal is that partners just bake 4/1 expectations into their decisions. If the partnership is uncertain about a member 6 months in, and kicks the can down the road another 7 months, that's on the partnership, not the structure.
    - dadrian 1y ago
      If you can't do 10 up front, you can usually reset founder vesting back every funding round to slow it down. This is fairly common.
      - tptacek 1y ago
        You're counting on one reticent founder not jamming everything up, though.
        dadrian 1y ago
        Yeah, but this also offers a clear exit opportunity (during the raise), and limits the "blast radius" to time-since-last-raise, rather than progress against the first four years of the company.

tptacek 1y ago

This problem is what vesting is for.

necubi 1y ago
Standard 4-year vesting doesn't work well for this situation. A founder leaving a worthless startup with 20% of the equity is a huge problem. The remaining founder will need that equity to offer outsize offers to senior (and eventually C-level) folks to replace them. And it's demoralizing for the remaining founder and team to be working extremely hard to make the company successful, while the departed founder reaps the rewards with no effort. Opinions will differ here, but I think if you're leaving a pre-PMF startup you've created essentially no durable value, and should return nearly all of your equity. I've heard of startups doing 10 year vesting for founders (with double trigger) to align this better.
- tptacek 1y ago
  I'm sympathetic. We tried to get 10 year vesting together at my last company. But 4/1 is industry standard, and my rebuttal is that partners just bake 4/1 expectations into their decisions. If the partnership is uncertain about a member 6 months in, and kicks the can down the road another 7 months, that's on the partnership, not the structure.
  - dadrian 1y ago
    If you can't do 10 up front, you can usually reset founder vesting back every funding round to slow it down. This is fairly common.
    - tptacek 1y ago
      You're counting on one reticent founder not jamming everything up, though.
      - dadrian 1y ago
        Yeah, but this also offers a clear exit opportunity (during the raise), and limits the "blast radius" to time-since-last-raise, rather than progress against the first four years of the company.