Hey friends 👋
You know the pattern. Four friends start a company, split the equity 25/25/25/25 because talking about it felt awkward, and skip founder vesting because who brings up a prenup on the first date? Fast forward to the first priced round. Two of them are gone, still holding voting stock, and your investors are about to push the dilution onto them. Messy for everyone.
This week we’re in person again, with another guest: Kit Ryan, corporate and venture attorney at Pillsbury Winthrop Shaw Pittman (Pillsbury Law to its friends, no relation to the Doughboy) and an angel investor himself. Kit walks us through the traps founders set for themselves before anyone writes a check—when Stripe Atlas is fine and when it isn’t, why your attorney makes the perfect scapegoat for hard co-founder conversations, and why pasting a term sheet into ChatGPT makes you look less sophisticated.
We also get into the d*****s promises founders make to early hires, including one well-meaning bonus clause that could have unwound an entire financing. Yikes. Then Kit gives us a crash course in board control from pre-seed through Series A, and why every VC relationship starts with the ending already written.
For frivolous thoughts: Slow Horses is back, Cameron reveals the cavalry origins of dressage, and Kit is training with a 200-pound sandbag for reasons that make total sense once he explains them.
Want more Kit? He’s joining us on Zoom for Incorporation & Equity, a workshop on entity choice, vesting and cliffs, IP assignment, and how to have the co-founder equity conversation before it turns into a standoff. He’s also introducing Pillsbury Propel, a free library of incorporation packages and hiring docs built for early-stage companies. Bring your questions (and your handshake-deal cap table). Thursday, October 22 at noon PST. Save your seat here.
As always, thanks for listening.
—Cameron and JDM
Timestamps
* 00:00 - Introduction
* 02:15 - Meet Kit Ryan
* 05:30 - Vesting, IP, and the co-founder prenup
* 12:45 - Sophisticated founders vs. ChatGPT term sheets
* 25:00 - Board control and investor rights
* 40:00 - Frivolous Thoughts
