Yes it is the founder and his buddy of many years. For many months now I've had that feeling that things are "not right". I've recently found out that he's one of those guys that will say anything to get the outcome he desires.
I am actively engaged with a lawyer who knows about equity deals. He and I agree and our position is to find out what's in the stock agreement without signing anything first. I just keep getting the runaround which is "oh you have to sign this nda / contract first and then you get your stock agreement". As my lawyer says "I'm gonna call bullshit on that".
The NDA might be legit; but he should be prepared to hand you the stock agreement within about 2 seconds of you handing him the NDA. And of course, you don't have to sign the contract first.
I have threatened this several times to which the founder freaked out and begged me not to stop. It's at a critical point. I believe mostly they are just trying to intimidate me. It's now come to a point where I absolutely can't trust them and I'm going to stop providing code until I get what I want. I believe you're right, when I threaten to stop things will happen rather quickly in my favor.
Tell them that you want a handwritten promise of what you agreed upon verbally. No specific details, just a simple hand written promise at this moment, with a specific 3 or 4 week deadline to make this formal. If they say no, you tell them that they are acting in bad faith, and that you are going to stop work immediately.
An agreement is an agreement - if you have emails or chat messages or so on, that's already a contract.
They have a choice - give you something handwritten now or they lose their developer at the point where they are about to close a deal, which is a really bad time. They will tell you that this is the wrong time to apply pressure, but for you, this is exactly the right time. This is when they are most vulnerable because the deal could fall through, so this is your best chance to get this through.
When they have investment, how useful do you think you will be? They will just get rid of you and hire someone new.
Don't just threaten, do. How long can it really take them to just give you the stock options? Especially when they realize they're screwed if they don't.
Maybe this points to the root of the communication problem between you and them. By threatening, instead of doing what an assertive person might do (which might be to simply walk away with the code that you own and wait for them to contact you with a sweet offer in writing), you might be sending them a message that is poisoning the negotiations. It is possible to be passively abusive to people. It might be your own greed and anxiety that is preventing you from being a stand-up person, doing the stand-up thing, and making money off of this situation.
In good faith I continued to work. This was after I was lied to and screamed at. This was in hopes that they would turn around and be more agreeable. Clearly not the right thing to do. It's not greed, it's about getting what I was promised. You're right though about one thing ... paranoia breeds more paranoia. I've been nothing but forthcoming and honest.
Why are you just presenting one side of the story? You are making yourself to seem like an angel and they like devils. At least balance your story a bit, it's getting a bit suspicious now.
No I've not been paid for anything. My lawyer at one point mentioned that if I was they could use that to say "oh we've paid him, that's what we agreed to as compensation". So I believe you're correct in this aspect. I"ll ask my lawyer again.
As it works here in the US, you can take anything you've personally wrote and go your own way with it unless the following exists... You've signed or >>cleary<< declared that you are relinquishing ownership of it to them, they own a patent to the work you're doing for them and thus they have priority over it, or you've been paid and on the terms of payment was that you were providing them with code. The last one about being paid is still arguable but worth noting as you can argue that they were paying you for a license to the code you were writing and you just happen to be more open to share information and listen to their opinion on the matter.
In a situation like this, if the idea is stellar enough (and you understand it enough) that you could do the idea without them and it would likely be successful, I would take it and form your own company, potentially file for patents on anything new, and look immediately for investors.
In the world of business there are two key things which separate one from another, and both must be present. The first is material, code, visual/displayable proof of concept, prototype, or product. The second is money to execute and grow the material and code. With those two things, you'll have the upper hand against them at any time. Some will argue in the long run, if they manage to survive being beaten out in the beginning by product and money, that they may have a greater vision or business sense to execute it more efficiently, but the success would be unlikely. From your description of them I would think they would quickly crumble under the matter and the fact that you did what he's so scared of and he drove you to do would render him utterly useless/dysfunctional.
THAT IS JUST MY POSITION AND TAKE ON IT. I AM NOT A LAWYER AND DO NOT CLAIM TO BE CURRENT OR ABSOLUTE IN MY LAW KNOWLEDGE. THE ABOVE IS JUST MY OPINION AND VIEWPOINT ON THE TOPIC IN QUESTION.
They have filed a provisional patent and this is an interesting point. Again however I've not been paid ever for anything. Never at any point have I declared that I would relinquish ownership of the code. The recent one sided contract they gave me had these terms in there. I obviously didn't sign that.
I think you might be over-reacting to these provisions. It's entirely normal that you sign over ownership of the code to the company in exchange for your equity. That's in every form stock agreement. Are you using an experienced startup lawyer? It sounds like maybe you are not. You don't need a big fancy law firm, but you do need a lawyer who is very familiar with startups and standard terms. You should confirm that your lawyer has worked with many clients who have negotiated with startups.
> It's entirely normal that you sign over ownership of the code to the company in exchange for your equity. That's in every form stock agreement.
Yeah, but he's being asked to sign over ownership, in order to begin the process of receiving equity. If he signs that, they have every opportunity to screw him, which they do not have now.
all my lawyer did back in the day was structure equity for Internet companies. He worked for one of the top firms. Trust me this guy is an ace in the hole. He like me is worried these guys have lied before and are doing it once again.
Were not asking for anything outrageous, we just want to know what is In the stock agreement. When you're told sign here and well tell you by those that have lied multiple times, that is the problem
You're right it is very stressful and difficult. I've thought of walking away many times since in my opinion dealing with dishonest people is not worth it. I haven't signed anything ever with them. It's all been on good faith. I've been doing work on their servers and checking it into their repository I'm not sure what that means. Up here in the north east where there isn't a large pool of investors / firms like silicon valley I feel pressure to comply so this investor doesn't vanish.
Are you worried about investors? This is the time to take your slice of the pie(I mean in honest sense). If investors find out you own the code and can walk away with it they will be hesitant in investing since once you walk away what are the founders left with? they'll lose investor.
Also if you think they are not honest trust me it is not worth trying more, down the road they'll try something else to get back the stocks even if they give it to you now.
If they are not honest with you take your code without telling them and start you own company or if you need a job find other one. It is very difficult to get the dishonest people straight, best thing is to find your way out.
if you didn't sign anything at all, you might want to talk to your lawyer about IP laws and also talk to this investor in a one-on-one meeting, talking about whats happening.
just because they have and are using your code might not necessarily mean that they can continue to do so without your permission, if you didn't sign anything.
