recursivenature

This sounds like the scene in The Office where Michael Scott says "I Declare Bankruptcy".

Just because you declare it, doesn't make it so.

In general, in LLCs, there are rules around amendments to the operating agreements for the company. It is likely very cut and dry as to whether passing the amendment is allowed under the operating agreement. Courts generally frown upon amendments that are specifically passed to disenfranchise other investors.

The question is - is it worth it to you to go after them, in court or via counsel, to reverse the amendment and manage the business? If not, it may be better to work through a buyout and call it a day. They be more receptive to this than having you sue them and end up losing.

(EX - Forget the amendment, bad actor pays you each $100k for your shares and you are out.)

(Disclaimer - Not a lawyer, you should get one, not legal advice.)

All of the comments here about engineering being too focused on frameworks/languages/etc can be absolutely true, but I could say similar things about any functional area in every business because each area is driven by their specific incentive structure.

For example, <Functional Area> is difficult to talk to because:

-Sales - All they are focused on is driving sales and numbers against the multipliers and metrics the head of sales has set for the time period they believe they will be around. They have no sense for the long term.

-Marketing - Only focused on the top of the funnel and give little thought to whether those customers will ever convert or be retained without proper guardrails in place.

-Finance/Legal - Only focused on risk minimization, not necessarily on the cost of the risk minimization.

All that said, regarding Engineering, there is a feedback loop that I've seen that can make these conversations more difficult than need be.

Non-Tech Perspective - Tech people are difficult to work with because they are more likely to say "no" to new ideas.

Tech Perspective - Tech people are hesitant to say yes to ideas that are not fully fleshed out because as soon as they say yes to a component of an idea, they will be held accountable for the implementation of the entire idea at the originally discussed timeline.

I've seen this "bait and switch" happen enough times that I now specifically begin the conversation with "Let's discuss how long this specific version of the idea might take" or "What are your thoughts on this component in terms of difficulty" with the addendum that "If the scope on this new idea changes, I won't hold you accountable for your original estimate, we're just brainstorming".

You can also start the conversation with "I'd just like to brainstorm and understand your perspective on new ideas, we are not talking about prioritization or implementation." The challenge is you actually have to mean it, and not backtrack, which is all about building trust. I also believe this loop happens unintentionally without malice, but it is done implicitly in a way that can rub engineering the wrong way.

The Verge had a write up on this years ago that answers your question [1].

I only remember it because I had the same reaction you did!

The short version is - different royalty rates + algorithm preferences.

While it may seem immaterial to each user, the ability to lower the royalty cost on billions of plays is likely material to Spotify's margins, which are already caught between the cost of the platform and the strongly defended royalty structure on most music.

[1] https://www.theverge.com/2015/9/8/9260675/spotify-cover-song...

Completely understand the comments around valuation of a recurring revenue business and ongoing maintenance. Those are all true and accurate.

I've also been thinking about this from an ecosystem standpoint that it is now very difficult to develop a software product that is not SaaS.

If everyone else is SaaS, and you are not, your business will be:

- Valued lower than equivalent revenue SaaS businesses, because revenue is lumpy and comparatively unpredictable

- Have greater difficulty raising capital, because investors aren't used to valuing non-SaaS businesses any more

- Have greater difficulty hiring engineers, as they know the next job they have will likely be SaaS related

- Slower sales cycle due to higher upfront price required (IE - Doesn't automatically fit on an employee card for land and expand)

- Higher customer acquisition costs, as most customers, other than those on HN, are used to the subscription model and prices, and would encounter sticker shock at the high prices required to make a one time purchase work

Hopefully this comment is helpful to fellow entrepreneurs as well.

Learnings From Working With Lawyers

- You Need to Manage Your Lawyer, Not The Other Way Around

Your lawyer often will not understand the priority of a business issue or the impact that a delay in resolution can have on the business. It is your responsibility to explain that to them AND have them get it done. With multiple clients, you are, in reality competing for your lawyer’s time. Just because you are paying them well does not mean they will get it done on your schedule. Don't expect that.

- Tell Them Everything, No Matter the Situation

The more your lawyer knows about the business situation, the context, your concerns, your goals, the more a good lawyer can determine the best solution. There are typically many available solutions for a given problem, or many ways to negotiate a contract, the more your lawyer understands the sensitivities of the issue at hand, the better the ultimate outcome. And if your response to this is, I don't trust my lawyer, you need to find a new lawyer.

- Don't Be Afraid to Make Suggestions or Modifications

While they are experts in the law, they again are not necessarily experts in the situation. You have every right to redline your own lawyer's contracts with typos, word choices, or comment if something doesn't approach the business problem the right way. Just like in any requirements gathering process, you need to own the output from a business standpoint.

Suggestions for Lawyers

- Deliver What You Promised, When You Promised

What everyone is looking for when hiring a service provider of any kind is certainty that the job will get done. If you said you would send it first thing in the morning, send it at 9am PT or earlier, not 12pm PT. If you said you would follow up with questions before moving to the next round of negotiations, do it without needing to be asked twice. If you have run into a challenge, disclose it as soon as possible versus waiting until the next meeting. The sheer number of times I have had to remind lawyers that they owe me something or they are late on a deliverable is far too high for a high paid profession.

- Better Delineate What is "Market" and What is Negotiable

Most of the time in contracts there are certain things that are not negotiable or have to be in there for a certain reason. Don't lead your client down the road of negotiating on those types of items. It wastes everyone’s time and while it may help your billable hours in the short term, you will burn trust in the long term. Founders rely on you to understand what is negotiable / market / fair. Be that voice, especially when a founder is trying to negotiate something that will ultimately make them look foolish for negotiating on it.

- Invoice Timely and Accurately

While it seems basic, invoice items timely along with a brief description. Don't assume that founders will remember why you spent 12 hours negotiating an "NDA". As you build a relationship of trust, this can be more high level. But the number of times I've gotten duplicate invoices, or invoices with descriptions that are wrong or that seem out of bounds is far too high.

First start with what you want, because there are multiple variables at play in an acquisition:

- Cash Comp - What you are actually paid every 2/4 weeks.

- Sign On Bonus / Retention Bonus - Paid lump sum (or over time) for joining the acquirer.

- Benefits - 401K / HSA / Health / Medical / Dental, individual or dependents.

- Equity - Assuming your equity will be bought out (cash) or rolled into new equity or both.

- Equity Vesting Schedule (AKA Golden Handcuffs) - On what terms does it vest? What are the strike prices for options?

- Non-Compete - May be part of the acquisition for a period of time.

- Termination - Golden parachute or termination without cause and you lose your equity?

Next, figure out what they can give you on each of these compensation areas. This is the negotiation part.

- Maybe they are in a cash crunch and they can give you really generous stock grants?

- Maybe they are out of options in the pool and need to refresh it, so they'd rather give you cash.

Objective of negotiating is finding a solution that works for both parties. You will have a much better time if you focus on what works for them, and toy around with your preferences.

Every negotiation that starts with "Take them for all they are worth" sets the wrong tone.

In a similar role and have peers in a similar role, a lot to unpack here:

No Micromanagement ≠ No Guidance or Collaboration

There is unfortunately a perception in startup engineering orgs that any meeting is a waste of time and that 100% of time should be spent coding. My personal KPI for eng teams is 85-90% of IC time is coding, 10-15% of the time is spent on standups or spontaneous collaboration sessions to figure out exactly what we are trying to build.

It is unclear how you are running the team (Agile / Waterfall / Agilefall / some other flavor) but it doesn't really matter. At the end of the day, your job as the team lead / CTO is to empower your team to get things done. Guidance around what and how to build it is not the same as micromanagement.

Micromanagement

- Asking an engineering every 30 mins where a given feature or task is at.

- Mandating that you review every line of code prior to pushing to production

Guidance and Technical Leadership

- Holding (optional) office hours at 11am everyday for engineers to hop on with any questions or discussion points

- Asking an IC to work on the solution to a problem for 4 hours then check in with what they have

Lack of Awareness of IC Work ≠ A Problem

You mentioned that you trust 3/4 of the team already - do you feel the need to track those individuals throughout the day or week? If one of them disappears for hours at a time, are you concerned, or do you believe they are working and will check in if they have issues?

Managers that have the concern of "what is someone doing all day" either do not trust that person to complete the tasks assigned to them and ask for help when needed (lack of trust) or believe that they are abusing their remote position and doing less work than they could be doing (bad actor). You may have very legitimate reasons for believing either of these things.

If you don't trust them, what can you do to build that trust? If they are a bad actor, what can you do to confirm that they are a bad actor vs misinterpreting your goals and objectives for them?

The best way I have found is via a 1/1 every two weeks, with the following questions:

- Do you feel as though what is being asked of you is clear?

- Are you currently doing the work you want to be doing?

- What is harder than it should be?

The answers to these questions will likely confirm or deny your level of trust and whether the IC is a bad actor. Then you can figure out the appropriate next step.

Productivity Software ≠ Effectiveness

I would not recommend productivity tracking software or any "monitoring" software. This is your role - to make sure the team spends time on what is worth spending time on. Software will not be able to tell you whether the direction you are heading is the right direction, that is a judgement call.

There is an old communist joke "We pretend to work, they pretend to pay us". The analog here is, "We pretend to log JIRA hours/tickets, they pretend we are productive". You need to decide what level of effectiveness is appropriate for your team and drive towards that, whether that is new features, platform stability, security, etc. Not whether the team is superficially productive.

Team Size

-15 people is way too many people for anyone to effectively manage. You should be looking at 1/2 direct reports to help you manage those folks, but before you do that, you need to be able to tell them what to look for and how to manage the team. So while it may be overwhelming in the short term, I would recommend figuring out your system first, before hiring others to help you run it.

Not to refer you to another book, but The Power of Habit [1] might be helpful here. While you should read the book, the basic summary of operationalizing any habit is Cue + Routine + Reward.

In your case, there is the Cue (You read a book on the topic) and the Reward (building a new product), but it appears you are missing a way to integrate it into your Routine.

Just understanding that framework was helpful for me, because I started to understand how to operationalize what I was learning. It also made it clear to me that, if I don't integrate it into my routines, I will never use that knowledge.

I either need to change my habits so the integration of the knowledge makes contextual sense or be at peace with not using that knowledge. You can't have both essentially.

Using your examples, instead of an extensive knowledgebase or series of 1-pagers, try to match what you are learning to the Cues that naturally come up. If you want to get meta, try doing a retrospective each week on what you learned from your reading and where you spent your time, and determine where you can apply what you have learned to the cues you currently have.

Some examples: Most people have a goal to sleep more and more consistently. For me, I trigger the lights in my room to automatically dim at a certain time. That is my (Cue) to start my wind down activities (Routine) to get in bed at a reasonable time (Reward).

Most people have a goal to exercise more and more consistently. For me, I have a calendar event (Cue) that reminds me to work out on specific days with specific activities (Routine) to exercise more (Reward).

My point being while knowledge is great for its own sake (I love it too), if you are trying to operationalize it, you need to attach it directly at the moment you are going to use it (Cue). Not in some Word doc that has a large amount of friction attached to your utilization of that resource.

Not my quote but I think it applies "If you show me someone's calendar, I'll show you their priorities". That might be a great place to start - are there activities you are already doing where you can apply your knowledge?

[1] https://charlesduhigg.com/the-power-of-habit/

Absolutely. Tiger did this by blitzscaling their way through diligence via Bain consultants [1] which was great for founders because they got money faster with fewer strings. Who would say no? So Tiger can say, look we are funding more founders faster than anyone else, great right?

It's even more fractal if Softbank was actually the "Nasdaq Whale" that bought call options on tech positions in such volume that it may have required option sellers to hedge by buying stock, perpetuating a cycle of rising tech stock prices. [2]

Echos of the Hunt Brothers and their attempt to corner the silver market [3].

[1] https://www.businessinsider.com/tiger-global-venture-capital...

[2] https://www.cnbc.com/2020/09/04/softbank-reportedly-the-nasd...

[3] https://en.wikipedia.org/wiki/Silver_Thursday

The issue is that the later and later stage you get in investing in "startups" the economics change drastically.

IMO the biggest issue with Softbank's or Tiger's model is that they fundamentally did not understand who would buy their investments at a higher price and the amount of money required to do so.

Their entire thesis is built around the idea that public markets are the greater fool here and will pay more than they did. That worked when interest rates were lower and the discounting of earnings was in favor for tech. When that imploded, and tech stocks correspondingly imploded, the greater fool left the game.

Tiger and Softbank were attempting to corner or buy the market to a degree by investing such great amounts that no competitor could compete or win. Unfortunately, they miscalculated the eventual value of winning the market and had already put up such great amounts that there is effectively no way to recover short of another bubble.

Early or earlier stage investing is less susceptible to this math issue because, if you invest in 10 startups and 9 fail, but your fund size is only $100M, it is still possible to recover because the 1 success could legitimately be worth >$100M.

If you are Softbank, and you invest in 10 companies, and maybe 5 fail, but you have put in $200M into each company, at valuations that are in the billions, it gets much harder for the remaining 5 to return the $1B you lost because their valuations are so high already.

Venture is a calculated bet on what the investor after you will pay for a given business AND the loss rate at the stage you are investing at. Both of these variables vary by stage, Tiger and Softbank took this to the Nth degree w/o realizing there was nobody after them.

FAANG RSUs relate to venture, and by extension startups, for two reasons:

(A) - They make it harder for startups to hire the "best" talent because it is locked up behind a vesting schedule at a FAANG.

(B) - It makes it harder to hire other non-FAANG folks because the comp baseline is so high. Why work at a startup for X w/illiquid options when I could work at FAANG and make X*2 + RSUS that are fairly liquid. Even if those compensation expectations are unrealistic outside of FAANG, they are still there.

This also increases the amount of money startups need to raise by default just to get baseline talent -> leading to over-raising and overvaluation -> leading to benchmarks that are unrealistic -> leading to unnecessary flameouts -> leading to aqui-hires by FAANG.

Problem: IMO the current problem is largely with SaaS providers, not necessarily with SSO solution providers / provisioners. Saas Vendors often don't support SSO / Provisioning, at all, or if they do, on more expensive plans. Almost like auto-trim levels, SSO/Provisioning are lumped in with "Enterprise" security features, you've gotta pay for a larger package to get just the security features. I think this will likely change over the years as SaaS vendors realize security is worth providing to all customers independent of what they pay because it reduces Total Customer Cost over time / reduces churn.

Solutions on Creating/Provisioning: TBH there aren't great solutions that I have found to this problem other than the following, I'm interested in other ideas here as well:

SSO/Provisioning - Solutions I've looked at (Okta (Medium+), ServiceNow (Enterprise)) and used (OneLogin, Google "SSO", Rippling) in the past year, are all fairly easy to use and once you understand the mechanics, easy enough to hook up to your source of truth and provision user accounts. An additional challenge is that they don't all support the same level of provisioning (IE - It sets the account up, but doesn't set up or provide an ability to setup the permissions project access in an automated way). I've found this really hard to understand until you actually try to implement.

1Password - If the above fail (IE SaaS provider doesn't support it or you just don't want to pay for the premium trim SaaS plan) (Zoom - Looking at you here), we've used 1Password with fairly good success. You can write up a best practice or list of the accounts that you need to manually provision, and as long as you have access to their email in advance, you can sign up accounts to their email, create their password in 1Password, and store in their personal vault. This requires you to obviously trust the person setting the accounts up, but we've done this and it saves a ton of time and energy onboarding employees because you can do it ahead of their onboarding.

Solutions on Deleting/De-Provisioning: SSO - Obviously the best way. 1Password - This can work because you can "lock" the 1Password account which removes the employees ability to access their 1Password account, but retains your ability as an admin to see / handle their accounts. Where this breaks is if the employee changes the password on their own, and doesn't store it in 1Password, either maliciously or unintentionally, then you better hope the SaaS vendor has an admin view.

Hope this helps, there is absolutely a gap right now that you have identified, and I agree with.

Couple of important points I haven't seen mentioned yet.

1 - You should already have an option exercise form that you can fill out to actually exercise these options / notify the company you want to do so. It is important that you fill this out and have it in writing, email/certified mail/whatever, that you sent this in with a request to exercise because of 2.

2 - Depending on your employment agreement and your role, you should find out exactly what your Post-Termination Exercise Window is. This is the time period in which you have, after a certain condition, the ability to exercise your options. If you do not exercise them within this period, in most cases, the options will revert back to the company and you will not have the ability to exercise them in the future. This can often be as short as 30-90 days. While I would try to assume positive intent, you need to make sure they are not trying to wind the clock down against you.

3 - You should also be aware of the cost to exercise the options and the number of options that you have vested at the time you leave. In your grant, there will typically be several components, most importantly the strike price, the number of options and the vesting schedule (typically 4 years with a 1 year cliff). While there is much to work through with your lawyer, in general, Strike Price ($1.00) * # Options Vested (5,000/10,000) = Cost to Exercise ($5,000)

4 - Keep in mind that once exercised, if the shares turn out worthless, you can't get the funds back. The shares can end up worthless for any number of reasons including Investor Preferences, Debt Overhang, or a sale price that is too low. Overall, do your own risk/reward calculation here to make sure its worth the price of admission.

5 - I'd echo the points here in that they may never have had an employee exercise their options previously. Believe it or not, most employees do not exercise when they leave a company, and you may have been the first to do so here.

6 - Finally, document all of this thoroughly. If for whatever reason they are attempting to run out the clock on your Post-Termination Exercise Window, ensuring that you have documented you WANT to exercise them and the company didn't execute on your desire is critical in eventually getting the options.

(IANAL and you should find counsel to work through the specifics with you, this is not legal advice and there are unintended tax consequences that may occur if you don't consult a tax professional - Options are complicated!)