So what explains the rote implementation of this logic on single founders too?
I expect to be heavily downvoted for even suggesting these things on this board (as my original comment was) but this logic reeks of VC bullshit and I suspect you won't refute that despite your assertion that this is totally only about co-founder protection you wouldn't hesitate to impose such a vesting schedule on a solo founder, likely using some of the other arguments in this thread that you've even discounted in the original post.
Perhaps the downvotes are because you call it "VC bullshit" — which is not a very thoughtful or productive way to debate ideas.
Having it for solo founders makes sense in case another founder or executive comes later, in which case a similar issue can arise. If you truly are a single founder, there are very very few situations in case you'd leave involuntarily, given there wouldn't be anyone with the power and voting stock to fire you, and given your departure would likely mean the death of the startup.
There's very little downside to accepting a vesting schedule as a solo founder.
Kenneth — to defend the posters in this thread, I would wager that there’s a nuance to term sheet / contract negotiation here that’s easy to be ignorant of if you’ve never been in the situation. If you haven’t been through the ringer re: fundraising, building a business it’s very easy to assume that (A) if a company is successful then (B) I can define the terms, fuck all the rest. The reality of most successfully funded startups is that there’s no one reality, and it’s easy to understand that an HN reader might think; “vesting for founders? That sounds like bullshit!” Without having gone through the logical leaps of;
- Is the opportunity real?
- Can I build a product to start testing the hypothesis?
- Can I recruit believers (customers, investors) to help test my hypothesis and make it a reality?
- Finally, do I believe there’s a hypergrowth opportunity, what are the risks associated with pursuing that, and how do I minimize them without affecting the size of the opportunity space?
Once you get to the latter step the largest risk early on is lack of access to capital, and there are a lot of ways to negotiate that materially affect hypothetical “hypergrowth” potential (valuation / dilution, liquidation preferences, you name it) which make founder vesting schedules borderline irrelevant beyond aligning cofounder expectations and making sure people are bought in. You see it in a term sheet and go, “okay, what’s this?” — forward it to legal and get back, “standard terms, bigger fish to fry, move on.”
If you’ve never put the blood and sweat in to get to this point in negotiation it’s probably easy to overemphasize the role a founder’s vesting schedule plays early on.
You do see the irony in shouting down my characterization and then shamelessly exemplifying it don't you?
A vesting schedule is someone feeding you your equity back to you over time. Pure and simple. Of course it's easy to see why someone would accept such terms: VC's are offering to hand over large amounts of money. If it's a term most founders are willing to accept without getting much additional in return that is perfectly fine and up to each founder.
Anyone who accepts it as "a favor this VC is doing for me" is delusional.
I began as a solo founder and I (gladly) accepted a vesting schedule as part of our first money in.
There are very few legitimate reasons that founders shouldn’t be willing to accept vesting schedules for their own ownership — I mean, there’s one: that you believe the value and potential of your company to be so great in a short time horizon that you can get rich quickly and leave within a couple years, and also believe with 100% confidence that the risk to do so is negligible and external factors (market downturn, you name it) will not be able to impede your progress. Call me when you build that company; it’s roughly equivalent to the perpetual motion machine of company-building.
Vesting schedules for founders are standard terms and there are a multitude of reasons they’re standard — as a founder I can give you reasons, and VCs can give you plenty more. As somebody who began a solo founder, there was no intracooperative founder risk to me accepting a vesting schedule and I did so anyway without hesitation, for the reasons I outlined earlier.
Let’s say you launched a company, bootstrapped it to the tune of say $500k, have customers and business, then a VC comes along with “standard terms” trying to put you on a vesting schedule, for your own damn company... what is your response going to be? Quite likely it’s not going to be - “I run it by my legal department and they said Ok”.
I expect to be heavily downvoted for even suggesting these things on this board (as my original comment was) but this logic reeks of VC bullshit and I suspect you won't refute that despite your assertion that this is totally only about co-founder protection you wouldn't hesitate to impose such a vesting schedule on a solo founder, likely using some of the other arguments in this thread that you've even discounted in the original post.