Ask HN: Should I leave my startup?

[throwawayAug16]

I've been with the company 7 years and am employee #3. I started as a senior engineer and worked up to VP Engineering but for all practical purposes I'm the CTO.

I manage 5 engineers down from 15. The 10 that left did so because we couldn't afford to pay them market rates. In my opinion we were understaffed even at 15.

It would take > 3 senior people to replace me. I know the company can't afford it. I know for certain 3/5 of the remaining devs would definitely leave if I left (an the other 2 probably would after that). Plus I have a lot of proprietary knowledge because I'm a specialist in multiple areas.[1] I don't think the company can survive me leaving. That means 20+ people losing their job.

I make $109k but haven't had a raise in 4 years. The company can't afford it. I was promised $170k almost a year ago (never happened).

I live in a medium COL area. Cheaper than SF but still expensive. I have a mortgage to pay.

I started at <1% options and I now have >5%. On paper it is work over $1MM but I can't see liquidity happening for a few years.

The company owes me more than $60k back pay. I went 6 months at minimum wage and have a note promising to pay me back but there is no interest built-in so they have no incentive.

My non-compete an invention clause are very strict and I live in a state where they are legal. We do consulting to pay the bills (the lean startup way) so my non-compete pretty much covers every industry you can think of.

I have 4 weeks vacation but my average I can use is 1 because there is always a deadline looming and the company loses a lot of revenue for every week I'm not here.

On the plus side: I love the team, I think they are great. And I have a high degree of freedom I probably wouldn't have elsewhere.

[1] Note: I try very hard to spread the knowledge but every time I get close they leave for better offers.

[BobbyH]

It sounds like you and the CEO both want something, which is often the basis for a reasonable compromise. You want to be let out of the strict non-compete clause, and you want your back-pay and ideally a raise. Meanwhile, the CEO doesn't want his company to fall apart in the wake of your departure. You could approach your CEO, and ask him to deliver a plan to pay down your backpay. During that discussion, you can tell him that since you're underpaid and haven't gotten a raise for years, you'd like to amend your employment contract so that the non-compete and invention clauses only apply to your corporate work (and not your consulting work). You can explain that this would let you do projects on the weekend that would help you make some more money to compensate for the undermarket salary.

Not tying the reason to your desire to be able to get another job easily also helps the CEO from freaking out as much. Also, limiting the non-compete edits to the consulting work helps him feel that his corporate work isn't threatened, while getting you what you want.

Amending your non-compete would also give you flexibility if you choose to leave, so that would be my primary goal here. To increase your leverage, you can also ask for a raise. Assuming he says that giving you more money is impossible, that increases pressure on him to concede on the only term that is non-monetary.

[throwawayAug16]

Thank you for the advice. I have tried similar in the past, but I have stopped shy of putting him in a corner.

I have gotten him to agree to let me work on side projects in exchange for the company getting 20%. But I found the hours I need to put into my main job are so long that there is no time left for the side projects (unless I neglect my wife, daughter, and/or my health) so it's an empty promise.

And obviously I can't contract on the side. That would be direct competition.

[BobbyH]

Taking a step back, it seems like you want to present a perfect solution to your boss that he can just adopt. I mean this in a friendly way, but that's not your job. Your job is to tell your boss what you want. Your boss's job is to figure out how to meet your needs.

Along those lines, I would just tell him politely that you'd like a plan to get your backpay over time, you'd like a raise although you understand that funding may preclude that, and you'd like your non-compete to be altered so at least it doesn't apply to your consulting work, since the scope of the consulting work is so broad that you wouldn't be able to ever get another job. You can mention that given the natural instability of a startup, this fact is stressing you out and making you lose sleep.

I would also ask to "paper" the backpay, so you have more than a verbal commitment on that.

If you talk nicely and respectfully about these issues, it is very likely that he will agree to the one term that doesn't cost him any money. (He will likely stall on all the other terms.)

[simonpure]

From your additional comments, it sounds like the CEO has access to money from his personal wealth, but is not willing to put it to work at his own company. This sounds like he has not enough confidence in his own abilities and the team to make a decent ROI. I consider this a big red flag.

I'd recommend reconnecting with the 10 engineers who already left to see if they can help you line up a new gig. Once you have an option, you can have a conversation with your CEO and try to negotiate a better offer that would convince you to stay. If he fails to do so, he at least had a chance and you will find out quickly how much you are worth to him.

Good luck!

[throwawayAug16]

It's a good idea.

But I just want to correct one thing. The CEO has generously put a lot of his own money into the company. Nearest I can figure close to (if not over) half his net worth. I don't blame him for not wanting to use his whole net worth. If anything that is part of the issue, he's used his money to lengthen the runway but it hasn't been able to take off. He's also used that as a guilt-trip on me a few times.

[x0x0]

Who has the bigger call on you: your wife and daughter, or your ceo? Who is more important? Answer that question, then man up and do what you obviously need to do.

ps -- I'd talk to a lawyer (it's free for a consult! Write down the details so you don't miss anything and can be dispassionate, then ask one or two to review your situation and options!) about filing a wage claim for that $60k, or some other type of compensation.

One last thing. You know what you call people whose leaving would crater a company? Owners. If you're that crucial and only have < 5%, you're a sucker. Sorry man. This is a lesson; don't let it happen again.

[throwawayAug16]

Thank you for the advise.

My daughter and my wife are certainly doing well but not as well as they can be. It's not like I can't provide for them at $110 per year.

I think I will be talking to a lawyer if I do decide to leave.

And if you think 5% is bad... I negotiated up from 0.5%. I'm not sure I agree that 5% is bad. It is above average for a CTO from what I understand and I'm sure many of those CTOs are just as critical to their companies as I am to mine.

As far as the wage claim... I don't think I can. Technically it is on the books as a deferred bonus. The company paid me minimum wage for that time and I stupidly agreed to it. I'll talk to the lawyer, though.

[x0x0]

I disagree. It's simple: if you're crucial to a small company, you're an owner and you get comp like an owner. If you have less than 5%, two options: (1) you're not actually as crucial as you think you are, or (2) you're being ripped off. (Could be some of both!) Buttering up employees and telling them they're crucial is, btw, free. Just like titles. Don't let your boss pay you with free things.

[throwawayAug16]

Do you have any numbers or articles I can refer to to back up #2?

There are actually a lot of investors in the company and it raised a fair amount of money before I came on board.

I won't rule out #1. However, I'm basing that assumption on a lot of inside knowledge of how the company works. It's an evidence based assumption not an emotional one. And it's based a lot on how long I have been here and what has come to depend on me. I absolutely 100% do not think I can move to another company and be as irreplaceable, it is a niche I moved into by being the only one who could pick up the pieces when each of the other people left.

[throwawayAug16]

Just to add to it, there is a saying that comes up in my mind all the time (I'm paraphrasing and I don't know where I heard it):

"The only thing worse than a failed startup is one that is doing just well enough to barely stay alive."

[BatFastard]

Just "staying alive" when you have a major piece of your life invested is a bad situation.

If you are an officer of the company, you should know what your future prospects are. When will you get out of Raman mode? Talk to the CEO, if he does not have a good answer, bail.

[throwawayAug16]

Depends on your definition of "ramen mode"... on my salary I can certainly afford more than ramen. (as previously mentioned, I live in an area cheaper than SF)

I'm not sure asking him the plan would help, though. I've been told the plan before only to have us pivot when that doesn't work and essentially reset the clock on the plan.

And yes, I realize how awful that sounds saying it out loud.

[throwawayAug16]

Some notes because I ran out of room:

I am a full-stack engineer with deep knowledge of devops, architecture, cloud computing, middle-tier, back-end, and front-end development. I wouldn't call myself expert in any of them but I'm at least a level III in all of them and a level V in some. I also have a fair amount of engineering management experience.

I have a computer science degree from an accredited and regionally well ranked school but it doesn't rank high nationally.

I've also written several books and regularly speak at conferences.

I think it is fair to say that finding another job would be low risk if it weren't for my non-compete.

[stevenwiles]

I am a level V in all of the things you've listed. I also have a computer science degree from a school that actually IS well ranked. And, as you probably guessed, I have also written several books and people have paid to hear me speak numerous times over the course of my career.

The point I'm trying to get across is - you aren't as amazing as you think you are. You have a long way to go.

[angersock]

On the bright side, if they're a job shop and live on consulting work, they probably can't afford to go after you for a non-compete.

It sounds like you're not in a good situation. Good luck!

[throwawayAug16]

The CEO has a fair amount of money personally, I wouldn't put it past him to go after me with his personal funds. He's a generally nice guy but a ruthless business person, especially if someone torpedoes his company.

On that note, he has gone without pay much longer than me. It's not like he's been taking paychecks this whole time. But he's also a millionaire and I'm barely getting by after my entire savings went away from all the missing pay checks.

[angersock]

So, first, you aren't the one torpedoing the company. That was done by whoever failed to hire a CTO or people to maintain the business on the tech side.

Second, the CEO's situation is not your situation. They have money and legal responsibility for the business, you don't. They have a more favorable equity situation and voting power, you don't. You have to look out for yourself.

[endswapper]

Yes.

The non-compete is less of an issue than you may think. Your new company may even be willing to defend it for you if you are valuable enough to them and you are upfront about it. It happened to me (not in software/engineering). Plus, your current company needs to have the money and be willing to spend it to enforce the non-compete.

Your current salary is unimpressive. The $60K and the options sound worthless. The biggest mistake seems like letting it get to this point.

My recommendation would be to find that next job to support your mortgage and whatever else, and get out as soon as possible.

[throwawayAug16]

That is a worry of mine, that 7 years at this company looks bad on a resume.

Also, I was not trying to impress anyone with my salary. I am aware it is probably at least 50% below market. I was hoping the company would make due on it's offer to give me a raise and I could negotiate from a stronger position.

[JSeymourATL]

> That is a worry of mine, that 7 years at this company looks bad on a resume.

7 years looks solid & respectable in a space where there's 100% churn every 24 months. You've got a great story to tell.

Relative to negotiating your departure and future compensation, Stuart Diamond offers excellent advice> http://www.goodreads.com/book/show/8095067-getting-more

[endswapper]

I don't think the 7 years looks bad. There are all sorts of reasons, you're a team player, you trusted management, you liked your team, you were doing satisfying work...And on and on. It's up to you to present and defend any criticism, but I think you have more than enough ammunition.

I know you weren't trying to impress anyone, but if it were enough, it might justify holding on longer. I think you have been more than patient.

I would abandon any hope that the company has your interests in mind. I don't know the company or its circumstances, but if they are breaking promises and not paying you they clearly don't have them in mind.

Getting that other job is about the only leverage you have. Maybe it's the smack in the head they need, and they pay you the back pay, give you the raise, etc. However, I doubt it.

[chatmasta]

What is your exercise window on the options? Are they ISO or RSU?

If you have ISO options with a 90 day exercise window, you'll need to pay the AMT tax on the difference between current valuation and strike price. If you joined as employee #3 and valuation of options is now $1m, that could be a substantial tax bill. If the company never exits you will have paid a bunch of tax money for shares you'll never be able to liquidate.

Also consider that if you feel you're so important to the company that leaving might cause it to fail, then your leaving will decrease the possibility of any exit and effectively devalue your options.

If you have a 90 day exercise window, perhaps you can negotiate it to 10 years, in exchange for reducing the back pay you are owed. That $60k is leverage you can use in any negotiation, whether for options terms, severance package, or non-compete agreement.

[throwawayAug16]

The tax burden on the options would be well more than I can afford. And like you mentioned, my leaving would have a very negative impact on valuation.

My window is 2 years. So at least there is that. Although (not sure if I mentioned that), a bulk of my options came within the last year and I have a 1 year cliff with four years total vesting. So at best 30% of my total options are vested.

[chatmasta]

How many more options would you get if you stayed the remainder of the year? Perhaps that could be worth it.

And perhaps another thing you could negotiate for is vesting acceleration.

[throwawayAug16]

Back of napkin math... staying an extra year would be slightly less than 50% more (the second 25% of my largest grant would hit and I'd have half of it).

This is part of what makes the decision so hard. And it's worth noting the valuation of the company is not terrible. If I had this valuation after 4 years I'd be ecstatic. Problem is it's been 7 and I have a lot of sunk cost.

[alex-]

It sounds like you are not happy. If that is the case, why not explore what opportunities you have for a better position (whatever better means to you)? If you find something that you are confident is better for you - then you should pursue it, after all you have decided it is better for you.

You might find in the exploration that you actually don't want to move on yet. Maybe you will miss the people, flexibility or sense of ownership. Maybe the kind of role you are seeking would require a move you don't want to make etc.

Alternatively maybe you find your perfect gig (great people/problems/pay/etc).

[throwawayAug16]

That is probably what I will end up doing.

[alain94040]

Looks like it was fun while it lasted. You got valuable skills, a mix of challenges, from technical to management. It would be completely fine for you to move on and join another company.

The key thing is: do you believe this company has a chance to succeed? It sure doesn't sounds like it. If so, then why do you stay? Loyalty is nice, but after trying for 7 years, it's ok to move on.

Don't worry about the non-compete, unless you really go work for a direct competitor. Don't take clients away, don't take business away.

[throwawayAug16]

To clarify: I give it a decent (but still less than 50%) chance of having a reasonable liquidity event. But I give it no chance of having that event before I sink another year or two of opportunity costs into it. It's a decision I weight constantly. And yes, I know I'm probably buying into the Sunk Cost Fallacy.

[throw_away_777]

I would leave in your situation in a heart-beat. If leaving is not a credible option the company won't pay you a fair market rate and won't treat you with respect. I am not a lawyer, but if the company comes after you with a non-compete it seems reasonable that you could sue them for your back pay. Assuming your non-compete is for a year or so this is almost a wash in terms of salary especially when factoring how much more money you'll make over the long run with a higher salary.

The fact that you are even asking this question means you probably know the answer already - you have the most information about your situation so ultimately you should treat all advice here with a grain of salt.

[paulcole]

> It would take > 3 senior people to replace me.

Everybody thinks this and it's rarely (if ever) true.

> my non-compete pretty much covers every industry you can think of.

They can't afford to pay you but they can afford to sue you?

> The company owes me more than $60k back pay.

You are never going to see this money.

> I know for certain 3/5 of the remaining devs would definitely leave if I left

You don't know this for certain and even if it is true, not your problem.

[throwawayAug16]

Your first point is a fair one. Although in this situation I think it falls under the "rarely" category, for a few reasons:

- I do architecture, middle-tier, front-end, backend, DBA, devops, and engineering management. I have only met a few people my entire life at my level with all of those skill sets.

- I work an ungodly number of hours and a single new hire is unlikely to be willing to do the same.

- I have a significant amount of proprietary knowledge that while not unusually is very unusual to find in a single person.

I can't say for certain it would take three people but I can say for certain it is either multiple people or one extremely rare person who is going to have a lot of demands and take a long time to find.

And I say this as someone who does hiring. I have interviewed literally hundreds of people.

Per your second point, as I answered previously. I'm not entirely sure the CEO and/or investors wouldn't fund the suite personally. I can't go into detail here on why I feel that way. And even a small chance at a suite is not something I'm willing to risk.

Per your third point, it was more. They have actually paid me back some so I'm optimistic about the rest.

Per your forth point, either its true or they lied and I can't see why they would lie. The team team trusts me and they confide in me. More so they they do with the CEO or even HR. It may not be my problem if they leave but it doesn't bode well for the company.

Edit: as an aside we have had a job listing out for someone to take over just part of my job. We haven't even had anyone apply... and no, I didn't sabotage the listing. HR wrote it.

[paulcole]

> I can't see why they would lie.

To encourage a workaholic coworker with an overinflated ego to leave so they could replace him with someone they like better?

Not saying this is the case, but from what you've said, the possibility is certainly there. Also, how do you know what they are/aren't saying to HR?

[throwawayAug16]

I had a longer reply but I deleted it because I was here for advice not to defend myself and I would get nothing but terrible useless advice if I lied.

The possibility of your explanation being legitimate is certainly not there. It only makes sense in a world where someone following me out the door is a good thing. And seeing as I have a lot of stock options it is most definitely not a good thing. It is motivation to stay not leave.

I'm sorry you are so jaded you think someone can't be good at their job.

I'm also sorry you apparently live in a world where complaints to HR go unacknowledged. Because at our company they get addressed head on, not buried.

I'll rest easy at night knowing that 7 out of 10 of the developers who left have kept in touch after and thanked me for my mentorship. Something they had no obligation to do. Because if you treat your team right, as I do, and you consistently have their back and mentor them as I do, you don't need to guess if they are telling the truth.

[dirkdk]

Sounds like you loved working at the company and got a lot of responsibility. However in our field there needs to be progress, and it sounds your company is more in zombie mode. Have a heart to heart with your CEO and ask where he sees the company 5 years from now. The market is really good now and if you are just doing soso you will not survive a down turn.

[qaq]

"My non-compete an invention clause are very strict and I live in a state where they are legal. We do consulting to pay the bills (the lean startup way) so my non-compete pretty much covers every industry you can think of." Show it to a lawyer if it is very broad it most likely would be tossed out in court.

[samfisher83]

Well if you haven't been paid wouldn't that be breech in contract in which case I don't know how the contract would be enforceable.

[throwawayAug16]

The cases where I wasn't paid, my employer has a written agreement that I am temporarily taking a salary decrease in exchange for a deferred bonus with no date or time limit on the bonus so it's not quite that clear cut.

I'm not a lawyer though, I'm sure if I want to get dirty I could find a way to bend it to my will but I'm not eager to get in the mud, I just want to build great software and get paid a fair salary for it.

[wslh]

Is the company working on an investment round or the future outcome depends only on revenue?

[throwawayAug16]

The company is break even, no sign of an investment round at the moment. I don't think the CEO has any desire to fund raise.

We've had multiple seed rounds (about $5MM total) but haven't had one in over four years.

Edit: break even with all the software engineers being underpaid by at least 15% and myself being underpaid by 50%.

[wslh]

Well, it is a bet. You can define a time window where you accept the current working terms expecting enough profits/an exit/whatever that give the team better salaries and incentives. You can estimate if this outcome is possible, it is just a dream, or a lottery prize. It would be good to communicate partially or completely your position since it will be irrational to continue in this situation for the long term.

I think beyond this time window you should leave.

[qaq]

Your CEO is not reading HN?

[throwawayAug16]

No, he doesn't.

But even if he did. I've been careful not to include any answers that don't have plausible deniability and I have changed a few key numbers in such a way that it doesn't change the question significantly.

Edit: even if he did, I think with a few minor exceptions if he read this it gives me more leverage not less.

[stevenwiles]

You obviously don't think very highly of your boss. Anyone who knows you should be able to immediately tell who you are just by writing style and pretension alone.

[throwawayAug16]

Not true, I don't think that is obvious at all. In fact, I think very highly of my boss. If I didn't, I would have left years ago. It's one of the things that makes the idea of leaving so difficult.

Second, that is a very specific soft skill that not everyone has. You might have that skill, I don't think everyone does. If I saw my boss' writing I'm very sure I would not recognize it.

Edit: adjectives I've used to describe him in this tread... nice guy, generous, ruthless business person. With the exception of that last one they are positive, and depending on who you talk to, ruthless is a positive word in business.

[qaq]

What % of revenue is generated via consulting?

[throwawayAug16]

Near 100%. The non-consulting amount is not statistically significant. Why?

[qaq]

From the outside it looks like the owner is using "startup" as a cover to run a consulting shop with significantly underpaid stuff. In any potential liquidity event given the revenue structure and company age it's likely that it pretty much will be valued as a consulting shop with 6 consultants.

[throwawayAug16]

We do have products that are made in-house but none that generate even enough profits to cover a single salary.

It didn't start that way. The consultancy came much later as a temporary alternative to shutting down. Unfortunately (fortunately?) it's been successful enough that it shows no sign of being temporary.

[qaq]

Sounds like you would be much more successful as a consulting shop then :)