Yes, that is correct, but this indicates change of the product direction that make me lost any trust or interest in it. Their core features were done nicely, they should have stayed and developed them, maybe introduce more file editing related functionality.
In California specifically, Labor Code Section 2870 limits an employer's claim over inventions or products created a) outside of work hours, b) without using company resources like your work laptop, and c) not related to/competitive with the company's business.
Even outside of California, it's extremely rare for companies to try to claim ownership of side projects that check all of the boxes above. Legal action is expensive and bad PR unless the employee is clearly infringing or building something competitive.
> c) not related to/competitive with the company's business.
Is a loophole big enough for a train to go through. BigTech can, and will, with a straight face, claim almost anything as "related to" something they are working on--because they work on everything. I have worked at two BigTechs and had to basically stop working on side projects because they both emphatically threatened (during onboarding) that they will aggressively claim IP ownership of moonlighting projects.
Anyone considering doing potentially commercializable side projects should do their due diligence. Even if you're right and they can't claim it, do you have the $$$ to fight their army of lawyers?
EDIT: The loophole's actual wording is:
"Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer"
Which I think we can all agree is pretty broad. Be careful out there!
> We will never run ads. We plan to make money primarily by offering pro subscriptions and a version of Wavelength for organizations.
There are so many corporations that made similar pledges only to break them when it became advantageous for them to do so. Is there any mechanism that actually would enforce it? Mechanism that wouldn't disappear with a single stroke of pen?
Such a mechanism simply doesn't exist. A company can't simply force itself to keep this promise unless you actually trust its leadership. Similar to how Substack authors sometimes start running ads on their paid newsletters.
There is: make the service paid from get go and put things like this in writing as part of the contract. Money changes hands, there’s something to risk being sued over.
Going for network effect with a free offering means there has to be investment money keeping the lights on. Those investors will want their returns.
I have great respect for your current work and assurances on the business model. But what you are asserting is only _currently_ in your gift.
If you keep controlling equity stakes in the business and don't need to raise significant outside investment it will work out as per your business model.
If you get into enterprise selling, you'll need a sales workforce and significant cost of Sales/Goods/Administration. If you want only organic growth, you'll be ok. But what will happen is that investment from, or selling to a large corporate, will turbo boost such sales; the temptation proves irresistible to many. If you are in a land-grab dynamics with other companies, growth may actually mean survival.
There is a scalability tier above the best subscription businesses, which is mass-market consumer adoption. The twitter experience demonstrates this. The ad revenue across billions outweighs a tidy subscription revenue from a small highly engaged subscription crowd. Any significant co-investor will find the lure of this irresistible. If you gain private equity investors, you will become ad based with high probability.
I welcome your contribution to the field of messaging apps and wish you well. I hope that this can inform your judgements about business models going forwards. If you think this is incorrect, please follow up with your alternative thoughts.
Hey, co-founder here - we think we've fixed this message delivery issue for Australia. Could you try again and let me know if you're still having issues? Sorry about that!
Regarding stock options expiring 3 months after leaving the company, it doesn't have to be this way and a lot of startups are moving in the direction of 10 year exercise periods.
As somebody who has personally experienced every aspect of the stock option lifecycle (which fortunately worked out for me), I would never take a job at a company [1] if they didn't have an extended exercise window. The 90 day expiration period creates a massive gap between the risk/reward of equity for founders and the risk/reward of equity for employees, when the whole point of giving equity is to align those.
1: Assuming it was the type of company that compensated people with stock options
I'm not sure about "a lot of startups", I'm personally only aware of a very few that are doing this. Word on the street that I hear is that maaaaybe your current employer might do this for employees they like, but not as a consistent policy. Many board members, founders, etc... feel they will take a retention hit if they were to implement something like this.
I personally think the status quo is insane, and I will never take another role with a options component of the package that does not have a policy like this.
Good for you all (not sarcastic!) but as someone who did a job search recently, the number of startups that offer this is much much closer to 0% than 100%.
A late edit: and you will get pushback for even asking. Apparently we're all supposed to pretend that we're never going to leave the company / we owe them our undying loyalty. I've previously taken the honest route when asked why I was leaving a job and said the ceo didn't deliver on her promises (growth, revenue), so why would I stay? That approach does not necessarily work well =P
> Apparently we're all supposed to pretend that we're never going to leave the company / we owe them our undying loyalty. I've previously taken the honest route when asked why I was leaving a job and said the ceo didn't deliver on her promises (growth, revenue), so why would I stay?
I mean, part of getting promoted and learning how to rise politically in your career is learning how to lie.
Why did you expect honesty to work? You have to learn how to play the game, say the right things that people want to hear.
Oh I know there are more than a few these days. My point was the majority of startups I'm aware of are still very hesitant to do this. From the conversations I've had its less that the founders of these firms are morally opposed to the idea, but that their VCs really don't like the idea as a global policy.
> Regarding stock options expiring 3 months after leaving the company, it doesn't have to be this way and a lot of startups are moving in the direction of 10 year exercise periods.
This requires converting all options to NSOs, and the tax implications of NSOs are not pretty. (From a tax perspective, ISOs aren't great[0], but they're much better for employees, by design).
[0] You have to pay AMT on the spread between the option price and current value at the time you exercise, whether or not the equity is liquid, so you could end up paying a large tax bill only to find that the company goes bankrupt before you have the opportunity to ever sell your equity.
The kicker here is that the option life is 10 years, even if you have left the company. So you can avoid tax by not exercising until you plan to sell. It becomes a personal choice between 1) do i want the option still, even if i quit, and 2) do i plan to have ownership in the company for a period longer than a year before i sell. Typically most people would prefer 1 over 2.
Keep in mind for someone reading this comment, this is about private companies.
The other thing to keep in mind is that stock options (especially those given to employees) tend to be much less protected than shares.
If you exercised, and another shareholder got unfair preferential treatment, you have reason to seek compensation or sue. If you haven't exercised yet, .... well ... not so much.
Also, many option contracts give you the right to buy X shares at price Y and do not make special consideration for stock splits - e.g. a 2:1 split would likely make your options worthless by halving the share price, and by halving the percentage of the company that X represents.
So, waiting to exercise until you sell is a very good strategy, except when it isn't - not very common, but you rarely get notified about these issues beforehand, especially if you are no longer involved with the company.
What are the tax implications of NSOs?
ISOs are a pretty huge gamble, basically a lotto ticket, if you leave before a liquidity event occurs or is known to be on the near horizon.
Have any startups with 10 year exercise periods had a liquidity event yet? I'm genuinely interested to see how true to the idea they were, or whether they (eg) issued a bunch of new stock to current employees that diluted vested ex-employees.
Some companies allow their employees to sell a portion of vested stocks whenever they're doing a new round. SpaceX is one of the top examples I know of. This is how they retain the top talent.
What is the general view on this? I don't have an economics background, but.. Well, the 'startup scene' isn't necessarily mature and/or tested enough for employees to be able to take a 10 year risk. In a sense, for a failing startup, stock options might as well be monopoly money.
It's not really a 10 year risk, as you keep the options that have vested whether or not you're still with the company. And if the startup fails, if you haven't exercised, you shouldn't be out any money.
