placeholder2018
PARKED
I really need some advice on my current work situation, which is unfortunately a very long story, so I apologize and ask you bear with me. Everyone in my life is either too close to the problem (with the risk of having a special interest), or not knowledgeable enough in this arena to give very credible advice.
I’ve been dealing with an abusive partner/boss in a startup for years, which I have sacrificed a lot to get into, for a very real but distance promise of a big payout, and I think that is slipping away now...
Today:
I work for a tech startup, with one other person, our CEO, who is a serial entrepreneur. Our company is somewhat tight on cash (I estimate our runway at 7 months), and we are really just chasing after a large licensing deals for our technology. After 2 years of chasing 3 customers, one has recently committed and paid significant money in Quality Assurance testing of our tech (novel safety product) and is very close to signing the next phase of the commercialization partnership – production planning. During this phase a large down-payment of royalties would come in and a design licensing and royalties contract would be finalized. The client was hoping to hit market ASAP, targeting March 1, 2018 only two months ago. Just today I found out they will not be moving forward into this next phase until all the testing is complete, which is in 60 days. Some complications in the Quality Assurance testing has shaken their confidence and they want to see it through to the end which takes 60 days, instead of taking our previous results as assurance to move forward. I am confident our tech can pass all tests, and it is just a matter of tweaking some parameters to reach the optimal tradeoffs. When I told the CEO of this 60 day delay in the next phase and our next paycheck from the client, he got very quiet (which is unusual) and he said this is very unfortunate and he has to really think about if this is worth his time, and that maybe I should start looking for a fall back job sooner rather than later. I told him it also isn’t worth my time for much longer, and we need to meet to discuss the reality of the situation soon (implying he needs to compensate me better). He said there isn’t much to discuss, and we have very little money left (he has always hid the money from me). As usual, he acted very frustrated and cut the call.
My CEO:
~60 years old, very experienced in a different industry, having started 6 companies, and taken one public (he netted ~$10M). But all this was completely unrelated industries to our current tech and startup. He made most of his money about ten years ago – and has invested most of it in a nice house. Since then his last few companies have failed and he hasn’t even had a salary in a few years. He has told me personally he is not very liquid and is trying to sell his house and downsize, and lives a very frugal lifestyle (always taking public transit or his beat up 20 year old truck, etc).
His personality is very conservative or old school – aggressive, discriminatory, and unorganized… always talking about “taking care of our own” and “doing what’s right”… which seem to always work out in his best interest above all. He is also extremely volatile, critical, impatient, sensitive – and dishonest. He is always playing an angle, and his story changes daily. He is also very spiteful and is extremely sensitive to criticism and “disrespect”. He is very hypocritical and never takes ownership or blame for anything. But to his credit he is very ambitious and hardworking (though not very efficient). He currently is involved with three companies (two others aside from mine) and he constantly spreads himself too thin with very little organization or planning. Basically he just stumbles through everything, dominating every conversation and expecting to be considered right all the time, because he has all the “experience”. I want to leave politics out of this, but the best way I could describe him is very much like Trump in his behavior and thinking.
The first company, our current company, was really just a whim of his, something he branched out to try well outside his background. For about 3 years now, he really only controls the bank account and gets final say on monetary matters, and he spends an average of 4 hours a week on it, conservatively.
Meanwhile, his second company is his main time commitment, which is actually in his industry, and he is CTO, buying into it 3 years ago. This company was founded by another guy who is the CEO 8 years ago, and they have finally come to the cusp of securing Series A Venture Capital funding, after getting some serious traction in sales in 2017 (>400k). The due diligence step will likely be finalized within a month, and then they will get the funds and hit the ground running. This has been a saving grace for my CEO because he has spent 3 years without pay, managing 5 engineers, and essentially running the company because the CEO/founder is very inexperienced and in most people’s opinion unfit to be a CEO. If they use this Series A funding properly, I am confident they would be >$100M company in <5 years.
His third company is new and just a parasite to his second company. He wants to make some products to sell through the second company, and has convinced the CEO of the second company that this is a good idea. Up until now, this third company has no other employees but myself, who does some side work for it – for minimal pay, and merely again the verbal promise that I will get a cut of the profits. However, this company has no funding and so I am suspicious that the money comes from our company.
I.e. He is extremely selfish and a cheat, and definitely wouldn’t put embezzlement or tax fraud past him.
Our Startup:
Started 3 years ago, with my grad school supervisor (SUP) and the CEO, around several technologies developed in my SUP’s research lab and patented by the university. The CEO being an alumnus has a relationship with the Tech Transfer Office (TTO) of the university, and has licensed all the tech for a damn good deal (a small stake in our startup). My SUP being very inexperienced in business, gave the CEO full control and trust, and was not even listed as a co-founder of the company by the CEO upon incorporation (of course this was hidden until much later). I came into the picture about 6 months after its founding, with a couple of my own technologies, and trusted the CEO because he was introduced to me via my SUP. During and after grad school I was the sole worker of the startup, working well over 40 hours a week, and bringing in all our funding ($160k to date). I did all the R&D, and marketing or business development. Really everything but the finances. After graduation, I was given an OK title and a minimal salary – which are fine and expected for a startup. But the big piece I was promised was an equity stake comparable to everyone else’s, at 20%, but this was only verbal. 9 months after I graduated and working for the CEO, there still wasn’t any paperwork for the shareholders (myself and my SUP)- my CEO’s excuses being he’s busy and the document was going to be a large expense as a lawyer needed to write it up.
My supervisor (SUP) being very passive finally snapped and confronted the CEO, but was dismissed – the CEO said “this is not a democracy, it is a dictatorship”. My SUP called me, his voice quivering, and detailed the exchange. My SUP then went to the TTO of the university demanding that they kick the CEO out of the company/revoke the patents from him, or make him be transparent and do right by all the shareholders. This started a high-level inquiry and process by the university, involving the Vice Provost, and the university’s inside council. In confidence, the university’s administration heard out my distraught SUP and my own frustrations about the amount of exploitation and abuse we’ve endured and our reasonable demands for a more transparent and legally binding arrangement with our CEO and company. The university said comforting things, including the Vice Provost shaking his head and very sternly saying “we need to take this CEO guy out”. But at the end of the day, when they spoke to our CEO, he threatened legal action if they tried to kick him out “unjustly”. The university then consulted their inside council and decided on a spineless course of action. The patent licensing agreement my CEO had with the university had requirements for him to give all shareholders a legal contract when the agreements first started, which he was way overdue for and in clear breach of. The university said that they will give him 60 days to fulfill this now, and if he doesn’t deliver, then they have legal grounds to terminate him. Or so they said. My SUP dug into his position and demanded democratic control over the company and refused to sign the meager document my CEO produced eventually. I was given a copy and was reluctantly prepared to sign it, but the limbo with my SUP stalled things. My SUP seemed to expect me to side with him and walk from the company, in an effort to force the CEO to agree to our terms, but I did not do that because I couldn’t afford to lose my job, and saw some mentorship value in my CEO still. But this was a very hard and conflicted decision for me. My SUP and I had a falling out due to this - although he recognized that my hands were tied, we haven’t spoken for 8 months.
My CEO never found out I sided with my SUP and tried to oust him. Eventually I got the CEO’s version of the story; the university was very much on his side approaching him as old friends, saying they were trying to wrangle a crazy academic, my SUP, and its no big deal and will be resolved one way or another. Since my SUP wouldn’t sign, the university seemed to lay off my CEO, and the contracts went into limbo and we forgot about them for a while and just continued chasing our clients and doing R&D. Since then we returned all the patents and tech we had to the university – except this one safety technology with which we have engaged our current client.
Right before this past Christmas, upon some progress with our client, I rehashed the issue and demanded things get signed ASAP, before I proceed to help us more forward with these clients. My CEO acted like he thought we signed everything already and slowly started to get the paperwork back together. But he had to revise it because my SUP has decided to step out completely and so must be removed from the documents. This excuse has carried on for a month now and we still haven’t signed anything. In addition to this, he told me that the university is demanding that our company pay all the patenting filing fees, which were another term in the licensing agreement from the university thats past due now. I think this is between 10-20k, which is a big chunk of our remaining cashflow. He petitioned for them to extend this deadline, saying that we are on the brink of signing a large contract with our clients (he said this before hearing of the 60 day delay). Today when I asked him when he’d get the contract, he said it may be a few weeks because he is busy with the second company stuff.
Knowing all the money that’s come in and out, I put our runway at about 7 months… but the CEO never let’s on what the balance is, and always acts as though we are running on empty. I suspect this is because he wants to pocket some of it for himself, or he is using it in his third company.
Lastly, this licensing deal client have been solely dealing with me, and in this and many things, I have managed to isolate our CEO from most of operations of our business… our business contacts and our IP, he doesn’t even have access to our website - all to maximize my leverage. I’d hope he is not too arrogant to realize the company lives and dies with me.
Our Tech:
Our tech is one of the only options (maybe the only) for a new product feature that is being mandated by safety regulations, in a mature physical consumer product. There have been countless accidents with these consumer products, and there is a real need for this technology as it can literally save lives.
This tech was developed and licensed from a university, which I was in grad school at, and helped develop the tech – I am the main if not only person who fully understands it since I saw it through to completion. My CEO is an alumnus of the university who scouts for young people, and he partnered with my SUP to form a company around this tech among a few others. As I completed grad school and transitioned to working for him full time, most of these technologies proved hard to commercialize, and only one (another idea of mine) brought in funding in the form of research grants (the only funding for the company, 160k).
Although I am young and have relatively little experience, I am considered the subject matter expert on this specific tech - giving the summary of this standard development study and recommendation to the annual national regulatory committee in right before I graduated, as the representative from the university. My name is one of a few on the patent, with the others being professors. The CEO knows almost nothing about the tech and calls me the “world expert” often.
Our Licensing Deal:
This tech is seen as a liability reducing feature for our clients who sell to consumers through various retail chains. It is seen as an added cost to them, on a relatively low margin, high volume product, but may very well be worth its cost – as previous companies in this space have gone bankrupt from lawsuits in this space, which was the initial motivation for our universities study and the regulatory standard’s development. This standard and the industries responsibility to address this safety concern is very delayed and under harsh scrutiny by many people as accidents continue to happen – and so there is a sense of urgency to get something on the market ASAP, to preserve their reputation to the public.
Unfortunately, we have been in talks with this client for over two years, with several turn overs at their company causing us to restart, and now the final change in the past two months seeming to have a commitment to actually finally getting this down. The company is public and extremely siloed, so they aren’t very organized or united it seems, though they are profitable and stable.
This presents us with a huge opportunity to license the patent and consult on the manufacturing of it, but really stay out of the process and simply collect a large royalty from our clients (my cut would be a lot more than I could make as a salaried full-time employee in a big firm). What’s more, there is a great opportunity for us to contribute something with a real tangible benefit to society.
Me:
After working a few years in a typical engineering career, doing routine boring work back home, I decided I couldn’t do it anymore and uprooted my whole life to move across the country to further develop a technology I had developed via a grad program, with the sole intention of getting into a startup and entrepreneurial path. I realized that this lifestyle really aligned with my values and personality, as I thrived on innovating, being creative, autonomous, and worked fine under pressure and uncertainty. I also can sell people well and have won pitch contests, garner trust easily, and am generally pretty agreeable. I am not a fan of selling snake oil or being overly “ambitious” though.
I am now in my late twenties, and after having spent three years on this crazy adventure I am getting tired of the uncertainty and need to find some security both financially, and personally. As such I am growing restless in this startup and foreign city and have been planning to make a big change once our licensing deals were signed and we had hit market, ideally before the end of this year.
Also, I my living cost is not very high, but I have minimal savings and can’t afford to be unemployed for more than a couple months… so if our company dies, I will be in bad shape.
My Concerns:
I don’t trust my CEO to give me my fair share of the company’s revenue.
Best case scenario being we weather the storm and reach market and sign a licensing deal, and royalties come in. I would be surprised if I could leave and still consistently get my checks in the mail, and what’s more, get my full equity stake of 20% of the royalties. I’ve asked him to sign something in the past to the effect of guaranteeing this, but his answer is always “there is no such thing as a guarantee in business” and “you should be more patient” and he gets very irate (honestly this is his main tactic, he just starts waling like a baby, and expects people to be scared off by it, and frankly he is so unpleasant, it works).
The worst-case scenario that has popped up is what I am really concerned about. The worst case being that he doesn’t wait for the licensing deals to come around and wants to just terminate the company and focus on his winning horse, the second company. I don’t think he will keep paying me until we run out of cash. Instead I think he will either want to let me go earlier and pocket a big chunk of it, or, let go of me and use the remaining balance to pay off the university for the outstanding royalty fees, so he can atleast keep the patent.
So here is where it gets interesting… In any event, I am skeptical I will really get the big payday that has been dangling over my head for years now, and I need to change that. My thoughts so far are below:
-My CEO adds no value and I can secure the licensing deal without him, as long as I maintain my client’s confidence during a transition of the IP’s ownership, which is feasible since we have good rapport.
-I need the CEO to give the patent back to the university so I can take it. I think the university would do this now even though they didn’t before, because the CEO is even more so in breach of his licensing agreement with them (delinquent shareholder agreements, and now past due patent filing fees). This gives them clear legal rights to terminate their agreement. I would be also be willing to give the university a better deal on the patent royalties than my CEO, further incentivizing them to push forward with this.
-I think the university also knows that without me, this technology won’t commercialize, and they won’t make any money, so if I threaten to walk, they’d be pressured into cutting ties with him and giving me the patent in my own company.
-Despite what our licensing clients think, no one will be willing to defend this patent in the event of patent infringement, if there isn’t a licensing deal. I have heard it directly from the university that they won’t invest the resources to litigate, and I have heard it directly from my CEO as well that he won’t unless we start making some serious royalties. Therefore, if I walk away from our company, they won’t get the licensing deal, and as such no one will be defending this patent, so I will be free to use it even without an official patent license. I’d obviously have to frame this carefully, as a trade secret I’m offering rather than a patented design without fear of getting sued by the university or my CEO if they ever found out.
-I need to approach the university in a manner that will maximize the chances of them cooperating with me and not telling on me to the CEO. But how?
-Is it better to approach my CEO and just tell him I’m done and we should dissolve the company instead? Try to end things seemingly amicably with him, and then go to the university after and ask for the patent?
-I need to be prepared to be fired and must become independent from my current CEO ASAP, by finding another role, ideally part-time.
Honestly, I am at my wit’s end here and would be eternally grateful for any real insight here, thank you.
I’ve been dealing with an abusive partner/boss in a startup for years, which I have sacrificed a lot to get into, for a very real but distance promise of a big payout, and I think that is slipping away now...
Today:
I work for a tech startup, with one other person, our CEO, who is a serial entrepreneur. Our company is somewhat tight on cash (I estimate our runway at 7 months), and we are really just chasing after a large licensing deals for our technology. After 2 years of chasing 3 customers, one has recently committed and paid significant money in Quality Assurance testing of our tech (novel safety product) and is very close to signing the next phase of the commercialization partnership – production planning. During this phase a large down-payment of royalties would come in and a design licensing and royalties contract would be finalized. The client was hoping to hit market ASAP, targeting March 1, 2018 only two months ago. Just today I found out they will not be moving forward into this next phase until all the testing is complete, which is in 60 days. Some complications in the Quality Assurance testing has shaken their confidence and they want to see it through to the end which takes 60 days, instead of taking our previous results as assurance to move forward. I am confident our tech can pass all tests, and it is just a matter of tweaking some parameters to reach the optimal tradeoffs. When I told the CEO of this 60 day delay in the next phase and our next paycheck from the client, he got very quiet (which is unusual) and he said this is very unfortunate and he has to really think about if this is worth his time, and that maybe I should start looking for a fall back job sooner rather than later. I told him it also isn’t worth my time for much longer, and we need to meet to discuss the reality of the situation soon (implying he needs to compensate me better). He said there isn’t much to discuss, and we have very little money left (he has always hid the money from me). As usual, he acted very frustrated and cut the call.
My CEO:
~60 years old, very experienced in a different industry, having started 6 companies, and taken one public (he netted ~$10M). But all this was completely unrelated industries to our current tech and startup. He made most of his money about ten years ago – and has invested most of it in a nice house. Since then his last few companies have failed and he hasn’t even had a salary in a few years. He has told me personally he is not very liquid and is trying to sell his house and downsize, and lives a very frugal lifestyle (always taking public transit or his beat up 20 year old truck, etc).
His personality is very conservative or old school – aggressive, discriminatory, and unorganized… always talking about “taking care of our own” and “doing what’s right”… which seem to always work out in his best interest above all. He is also extremely volatile, critical, impatient, sensitive – and dishonest. He is always playing an angle, and his story changes daily. He is also very spiteful and is extremely sensitive to criticism and “disrespect”. He is very hypocritical and never takes ownership or blame for anything. But to his credit he is very ambitious and hardworking (though not very efficient). He currently is involved with three companies (two others aside from mine) and he constantly spreads himself too thin with very little organization or planning. Basically he just stumbles through everything, dominating every conversation and expecting to be considered right all the time, because he has all the “experience”. I want to leave politics out of this, but the best way I could describe him is very much like Trump in his behavior and thinking.
The first company, our current company, was really just a whim of his, something he branched out to try well outside his background. For about 3 years now, he really only controls the bank account and gets final say on monetary matters, and he spends an average of 4 hours a week on it, conservatively.
Meanwhile, his second company is his main time commitment, which is actually in his industry, and he is CTO, buying into it 3 years ago. This company was founded by another guy who is the CEO 8 years ago, and they have finally come to the cusp of securing Series A Venture Capital funding, after getting some serious traction in sales in 2017 (>400k). The due diligence step will likely be finalized within a month, and then they will get the funds and hit the ground running. This has been a saving grace for my CEO because he has spent 3 years without pay, managing 5 engineers, and essentially running the company because the CEO/founder is very inexperienced and in most people’s opinion unfit to be a CEO. If they use this Series A funding properly, I am confident they would be >$100M company in <5 years.
His third company is new and just a parasite to his second company. He wants to make some products to sell through the second company, and has convinced the CEO of the second company that this is a good idea. Up until now, this third company has no other employees but myself, who does some side work for it – for minimal pay, and merely again the verbal promise that I will get a cut of the profits. However, this company has no funding and so I am suspicious that the money comes from our company.
I.e. He is extremely selfish and a cheat, and definitely wouldn’t put embezzlement or tax fraud past him.
Our Startup:
Started 3 years ago, with my grad school supervisor (SUP) and the CEO, around several technologies developed in my SUP’s research lab and patented by the university. The CEO being an alumnus has a relationship with the Tech Transfer Office (TTO) of the university, and has licensed all the tech for a damn good deal (a small stake in our startup). My SUP being very inexperienced in business, gave the CEO full control and trust, and was not even listed as a co-founder of the company by the CEO upon incorporation (of course this was hidden until much later). I came into the picture about 6 months after its founding, with a couple of my own technologies, and trusted the CEO because he was introduced to me via my SUP. During and after grad school I was the sole worker of the startup, working well over 40 hours a week, and bringing in all our funding ($160k to date). I did all the R&D, and marketing or business development. Really everything but the finances. After graduation, I was given an OK title and a minimal salary – which are fine and expected for a startup. But the big piece I was promised was an equity stake comparable to everyone else’s, at 20%, but this was only verbal. 9 months after I graduated and working for the CEO, there still wasn’t any paperwork for the shareholders (myself and my SUP)- my CEO’s excuses being he’s busy and the document was going to be a large expense as a lawyer needed to write it up.
My supervisor (SUP) being very passive finally snapped and confronted the CEO, but was dismissed – the CEO said “this is not a democracy, it is a dictatorship”. My SUP called me, his voice quivering, and detailed the exchange. My SUP then went to the TTO of the university demanding that they kick the CEO out of the company/revoke the patents from him, or make him be transparent and do right by all the shareholders. This started a high-level inquiry and process by the university, involving the Vice Provost, and the university’s inside council. In confidence, the university’s administration heard out my distraught SUP and my own frustrations about the amount of exploitation and abuse we’ve endured and our reasonable demands for a more transparent and legally binding arrangement with our CEO and company. The university said comforting things, including the Vice Provost shaking his head and very sternly saying “we need to take this CEO guy out”. But at the end of the day, when they spoke to our CEO, he threatened legal action if they tried to kick him out “unjustly”. The university then consulted their inside council and decided on a spineless course of action. The patent licensing agreement my CEO had with the university had requirements for him to give all shareholders a legal contract when the agreements first started, which he was way overdue for and in clear breach of. The university said that they will give him 60 days to fulfill this now, and if he doesn’t deliver, then they have legal grounds to terminate him. Or so they said. My SUP dug into his position and demanded democratic control over the company and refused to sign the meager document my CEO produced eventually. I was given a copy and was reluctantly prepared to sign it, but the limbo with my SUP stalled things. My SUP seemed to expect me to side with him and walk from the company, in an effort to force the CEO to agree to our terms, but I did not do that because I couldn’t afford to lose my job, and saw some mentorship value in my CEO still. But this was a very hard and conflicted decision for me. My SUP and I had a falling out due to this - although he recognized that my hands were tied, we haven’t spoken for 8 months.
My CEO never found out I sided with my SUP and tried to oust him. Eventually I got the CEO’s version of the story; the university was very much on his side approaching him as old friends, saying they were trying to wrangle a crazy academic, my SUP, and its no big deal and will be resolved one way or another. Since my SUP wouldn’t sign, the university seemed to lay off my CEO, and the contracts went into limbo and we forgot about them for a while and just continued chasing our clients and doing R&D. Since then we returned all the patents and tech we had to the university – except this one safety technology with which we have engaged our current client.
Right before this past Christmas, upon some progress with our client, I rehashed the issue and demanded things get signed ASAP, before I proceed to help us more forward with these clients. My CEO acted like he thought we signed everything already and slowly started to get the paperwork back together. But he had to revise it because my SUP has decided to step out completely and so must be removed from the documents. This excuse has carried on for a month now and we still haven’t signed anything. In addition to this, he told me that the university is demanding that our company pay all the patenting filing fees, which were another term in the licensing agreement from the university thats past due now. I think this is between 10-20k, which is a big chunk of our remaining cashflow. He petitioned for them to extend this deadline, saying that we are on the brink of signing a large contract with our clients (he said this before hearing of the 60 day delay). Today when I asked him when he’d get the contract, he said it may be a few weeks because he is busy with the second company stuff.
Knowing all the money that’s come in and out, I put our runway at about 7 months… but the CEO never let’s on what the balance is, and always acts as though we are running on empty. I suspect this is because he wants to pocket some of it for himself, or he is using it in his third company.
Lastly, this licensing deal client have been solely dealing with me, and in this and many things, I have managed to isolate our CEO from most of operations of our business… our business contacts and our IP, he doesn’t even have access to our website - all to maximize my leverage. I’d hope he is not too arrogant to realize the company lives and dies with me.
Our Tech:
Our tech is one of the only options (maybe the only) for a new product feature that is being mandated by safety regulations, in a mature physical consumer product. There have been countless accidents with these consumer products, and there is a real need for this technology as it can literally save lives.
This tech was developed and licensed from a university, which I was in grad school at, and helped develop the tech – I am the main if not only person who fully understands it since I saw it through to completion. My CEO is an alumnus of the university who scouts for young people, and he partnered with my SUP to form a company around this tech among a few others. As I completed grad school and transitioned to working for him full time, most of these technologies proved hard to commercialize, and only one (another idea of mine) brought in funding in the form of research grants (the only funding for the company, 160k).
Although I am young and have relatively little experience, I am considered the subject matter expert on this specific tech - giving the summary of this standard development study and recommendation to the annual national regulatory committee in right before I graduated, as the representative from the university. My name is one of a few on the patent, with the others being professors. The CEO knows almost nothing about the tech and calls me the “world expert” often.
Our Licensing Deal:
This tech is seen as a liability reducing feature for our clients who sell to consumers through various retail chains. It is seen as an added cost to them, on a relatively low margin, high volume product, but may very well be worth its cost – as previous companies in this space have gone bankrupt from lawsuits in this space, which was the initial motivation for our universities study and the regulatory standard’s development. This standard and the industries responsibility to address this safety concern is very delayed and under harsh scrutiny by many people as accidents continue to happen – and so there is a sense of urgency to get something on the market ASAP, to preserve their reputation to the public.
Unfortunately, we have been in talks with this client for over two years, with several turn overs at their company causing us to restart, and now the final change in the past two months seeming to have a commitment to actually finally getting this down. The company is public and extremely siloed, so they aren’t very organized or united it seems, though they are profitable and stable.
This presents us with a huge opportunity to license the patent and consult on the manufacturing of it, but really stay out of the process and simply collect a large royalty from our clients (my cut would be a lot more than I could make as a salaried full-time employee in a big firm). What’s more, there is a great opportunity for us to contribute something with a real tangible benefit to society.
Me:
After working a few years in a typical engineering career, doing routine boring work back home, I decided I couldn’t do it anymore and uprooted my whole life to move across the country to further develop a technology I had developed via a grad program, with the sole intention of getting into a startup and entrepreneurial path. I realized that this lifestyle really aligned with my values and personality, as I thrived on innovating, being creative, autonomous, and worked fine under pressure and uncertainty. I also can sell people well and have won pitch contests, garner trust easily, and am generally pretty agreeable. I am not a fan of selling snake oil or being overly “ambitious” though.
I am now in my late twenties, and after having spent three years on this crazy adventure I am getting tired of the uncertainty and need to find some security both financially, and personally. As such I am growing restless in this startup and foreign city and have been planning to make a big change once our licensing deals were signed and we had hit market, ideally before the end of this year.
Also, I my living cost is not very high, but I have minimal savings and can’t afford to be unemployed for more than a couple months… so if our company dies, I will be in bad shape.
My Concerns:
I don’t trust my CEO to give me my fair share of the company’s revenue.
Best case scenario being we weather the storm and reach market and sign a licensing deal, and royalties come in. I would be surprised if I could leave and still consistently get my checks in the mail, and what’s more, get my full equity stake of 20% of the royalties. I’ve asked him to sign something in the past to the effect of guaranteeing this, but his answer is always “there is no such thing as a guarantee in business” and “you should be more patient” and he gets very irate (honestly this is his main tactic, he just starts waling like a baby, and expects people to be scared off by it, and frankly he is so unpleasant, it works).
The worst-case scenario that has popped up is what I am really concerned about. The worst case being that he doesn’t wait for the licensing deals to come around and wants to just terminate the company and focus on his winning horse, the second company. I don’t think he will keep paying me until we run out of cash. Instead I think he will either want to let me go earlier and pocket a big chunk of it, or, let go of me and use the remaining balance to pay off the university for the outstanding royalty fees, so he can atleast keep the patent.
So here is where it gets interesting… In any event, I am skeptical I will really get the big payday that has been dangling over my head for years now, and I need to change that. My thoughts so far are below:
-My CEO adds no value and I can secure the licensing deal without him, as long as I maintain my client’s confidence during a transition of the IP’s ownership, which is feasible since we have good rapport.
-I need the CEO to give the patent back to the university so I can take it. I think the university would do this now even though they didn’t before, because the CEO is even more so in breach of his licensing agreement with them (delinquent shareholder agreements, and now past due patent filing fees). This gives them clear legal rights to terminate their agreement. I would be also be willing to give the university a better deal on the patent royalties than my CEO, further incentivizing them to push forward with this.
-I think the university also knows that without me, this technology won’t commercialize, and they won’t make any money, so if I threaten to walk, they’d be pressured into cutting ties with him and giving me the patent in my own company.
-Despite what our licensing clients think, no one will be willing to defend this patent in the event of patent infringement, if there isn’t a licensing deal. I have heard it directly from the university that they won’t invest the resources to litigate, and I have heard it directly from my CEO as well that he won’t unless we start making some serious royalties. Therefore, if I walk away from our company, they won’t get the licensing deal, and as such no one will be defending this patent, so I will be free to use it even without an official patent license. I’d obviously have to frame this carefully, as a trade secret I’m offering rather than a patented design without fear of getting sued by the university or my CEO if they ever found out.
-I need to approach the university in a manner that will maximize the chances of them cooperating with me and not telling on me to the CEO. But how?
-Is it better to approach my CEO and just tell him I’m done and we should dissolve the company instead? Try to end things seemingly amicably with him, and then go to the university after and ask for the patent?
-I need to be prepared to be fired and must become independent from my current CEO ASAP, by finding another role, ideally part-time.
Honestly, I am at my wit’s end here and would be eternally grateful for any real insight here, thank you.
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