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.
- 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.