Wow, if an employer said that to me, I'd start sending out CVs/resumes that night. Last thing you want as an employee is to worry that your employer is going to sue you at some point down the line if you leave...

I'd go work for some other large company initially, so that if I ever did want to start a startup I am somewhat insulated from that insanity.

My co-founder Mark Godfrey did go work full-time for another company before we started Shred Video. He didn't start working full-time on Shred Video until May 2015. Smule filed the lawsuit against us without ever seeing any of our work product, beyond an investor pitch video an investor we'd pitched. All Smith heard was a description of something we intended to build, decided he didn't like that we were doing it, and sued us without even speaking to us.

His quote make it appear as if the lawsuit is in bad faith. If Shred wins, they may have a case for malicious prosecution.

Yes, I completely agree. Thing is, we'd have to go through the full legal process before we could pursue that. Smule filed the lawsuit months before we even had a product or got into YC, they probably thought we wouldn't make it this far, let alone another two years.

If you had nothing yet, couldn't you just disband the company and start a new one?