Well despite the fact that this is very stressful, I would start with the maxim that one should employ Hanlon's Razor[0] and not ascribe to malice what can adequately be explained by stupidity.
It's quite possible, nee probable, that they are just disorganized and genuinely thought you already knew, or that it didn't matter, or otherwise were clueless or inexperienced enough to not really understand what had happened.
I think it would be a mistake to get into it with them on a war footing. Early stage companies like this make mistakes of this kind all the time, and it's not necessarily a sign that the whole ship is doomed. If they have the ability to get revenue and investment and pay salaries and whatnot it's possible that there's a positive outcome in the future.
I would schedule an initial consultation with a lawyer who deals with these kinds of things. Get a referral and schedule an hour or so to go over it with them. They'll probably charge you a few hundred bucks, or even waive it if you have a close friend or existing client of theirs refer you.
Sit down with a lawyer, bring the docs, and explain what happened and get some sense of the implications. Then approach the founders with the attitude that it must be an administrative mistake or misunderstanding. If they are evasive or otherwise shady that should become clear quickly. If they are genuinely concerned and want to help fix the problem then great. But personally I wouldn't blow up your relationship with everyone until you have a better idea which of those two scenarios is more descriptive.
OP should consider this a good lesson (and one that I learned going through an acquisition); unless you're a founder, you cannot control "the deal".
Unless you're in the room when the chips are (re)divvied up, you have to trust someone else to advocate for you. And after tolling away for a few years, trading your life for the promise of a better future through being acquired, ultimately you end up in a shitty position.
Don't be diluted in thinking the founders will "take care of everyone".
Your only leverage in the end is to walk away (and try and blow up the deal or company, if you're that critical). And if you do walk and they don't stop you and counter offer, you probably weren't going to get anything anyway.
> Don't be diluted in thinking the founders will "take care of everyone".
The normal phrase is "...deluded in thinking...", but in this case, "diluted" is probably appropriate.
I am amused.
Staying on topic...
If you've got any significant stake in the company, you do have an interest in any deals being made. Sometimes it is the case that the current shares will be diluted so that the new investment can be accepted. It depends on how much was reserved at the start.
So you may have been holding stock that was worth 5% of the company, but after the investment it could now be less. It really depends on how the deal was structured (how much for how much basically).
You may not (as a non-founder) have a say in the terms of the deal, but you need to be kept informed.
I've seen cases where the founders will dilute themselves, but not the smaller holders, to try to be fair to them, but that doesn't always happen.
Maybe its time to read up on your corporations by-laws, which may spell out how and when they have to notify you of these sorts of changes.
>Not only does it create bad blood, which could only be bad for you in the long run, it may also leave you open to a lawsuit.
Don't buy this fud. There's nothing illegal about walking away from a shitty deal. Whatever your motives just plainly state "this deal no longer makes sense for me".
If you're a great engineer, then have some self respect, and walk away from a shitty deal. Go somewhere else where they respect the people that build value.
And if you aren't a great engineer, you weren't going to get anything anyways, so go somewhere that will raise your game and better positions you for the future.
>People who always get their revenge tend to have no friends and lots of burned bridges
There's a big difference between being bitter on a daily basis vs coming to terms with your past three years that are basically only going to net you an extra 100K (which you could easily get hustling in a few months consulting in SV).
Think deliberately about what you're toiling away for. An extra 20K? An extra 100K? REALLY? All the extra weekends for years is worth that? Get mad at yourself. Demand more. And if they deny you, walk, and position yourself better next time.
Walking away from a deal is one thing - deliberate harm is something else.
At one point I was at a company that had built a web product for another company. The external party decided they weren't going to pay their bill, and at the time we'd been covering the cost of hosting several of their servers for months. Obviously our first reaction was that we'd just turn them off but our lawyers told us in no uncertain terms that we couldn't. It would be obstruction of business and we would definitely be found to be in the wrong. (This was in the uk)
Was the external party eventually forced to pay the bill for hosting their service during the time it was being disputed since you couldn't just turn it off?
They tricked us into signing up to some sort of gentleman's agreement where they folded the company and re-launched as a charity (or something weird like that). Basically, they said, if you chase us for the money, you'll take us down, then you won't get any money. If you let us do this our way you'll get your money if it all works out. So they fairly well held us to ransom.
I don't recall how it all worked out in the end but we definitely got some (all?) of the money - I recall my boss telling me we'd received a payment a good year or two later!
I was pretty amazed at how few rights and options we had in the situation. We had the lawyers talking us through our options at every step and they said there wasn't a lot else we could do.
That was one of a catalogue of mischievous plays I witnessed there. We were a company that were very honest and ethically sound so it was always sort of shocking to see others acting dishonestly.
The whole situation ended up being somewhat overshadowed by the accountant nicking £50k from the company savings!
I've definitely learnt to make sure you're covered as much as possible in business. Always get everything in writing and be aware that sometimes people don't act in good faith. At my current startup, my co-founder and I have a fairly all guns blazing approach to people not paying their invoices on time (we start chasing before it's even late).
First, I was against doing intentional harm. I absolutely think s/he should walk away, but making enemies doesn't solve any problems and certainly could create some.
Second, you seem not to understand the difference between "breaking the law" and "getting sued". Intentionally screwing over a company can be both legal and lead to a lawsuit that you end up losing.
1) You are critical to the company's success yet..
2) They don't want to compensate you to your liking..
3) So you walk. Yes, this is meant to intentionally hurt the company with the only lever that you have (your skill set and institutional knowledge).
You working for this company costs you opportunities elsewhere.
You're convincing yourself to stay because it "doesn't solve any problems and certainly could create some." Your vague fears are holding you back.
But if we get rid of these vague fears, here's what we know is certain:
1) You're critical to the success of the company.
2) But you're not going to be compensated to your liking
3) And you're costing yourself other opportunities by sticking around.
Quit being scared, look them straight in the eye, and say "I am walking unless I get X,Y,Z." If they say no, then kindly resign and don't look back. Bring on the lawsuit (highly doubtful).
There is no way you're going to end up getting sued for leaving, intentionally or not, regardless of your intentions if employment is at-will (and most likely it is).
yes, it's expected that you'll never do or say anything bad about past jobs(/companies/environments/people).
But other side of this status quo is enabling all the assholes to be assholes and just helping them to continue behaving/acting like they do.
This type of withholding of information prevents others from making informed choices.
"Don't burn your bridges" implies that these are bridges worth preserving--sometimes they aren't, and you're doing others a favor by letting them know.
I meant this in the context of you're a critical engineer, and by leaving, you leave the company handicapped. You're critical to their success, but yet you don't feel like they're looking out for you. Walk.
Is there even a reason the co-founders would do this with malicious intent? Is there possibly any financial gain they could realize out of not telling the other co-founder? Could it be an attempt to make him leave (he only owns 3%) before fully vested?
No, "nee" is a French import meaning "born" used to introduce someone's birth name when it differs from their current name (and, sometimes, by analogy, to introduce the original name of a product, etc., when it differs from the current name.)
"nay" was the word that was almost certainly intended in GP.
It's quite possible, nee probable, that they are just disorganized and genuinely thought you already knew, or that it didn't matter, or otherwise were clueless or inexperienced enough to not really understand what had happened.
I think it would be a mistake to get into it with them on a war footing. Early stage companies like this make mistakes of this kind all the time, and it's not necessarily a sign that the whole ship is doomed. If they have the ability to get revenue and investment and pay salaries and whatnot it's possible that there's a positive outcome in the future.
I would schedule an initial consultation with a lawyer who deals with these kinds of things. Get a referral and schedule an hour or so to go over it with them. They'll probably charge you a few hundred bucks, or even waive it if you have a close friend or existing client of theirs refer you.
Sit down with a lawyer, bring the docs, and explain what happened and get some sense of the implications. Then approach the founders with the attitude that it must be an administrative mistake or misunderstanding. If they are evasive or otherwise shady that should become clear quickly. If they are genuinely concerned and want to help fix the problem then great. But personally I wouldn't blow up your relationship with everyone until you have a better idea which of those two scenarios is more descriptive.
[0] http://en.wikipedia.org/wiki/Hanlon's_razor