Jon: So here's my big vision. We are going to be the first to install Internet on Mars. Okay. Ready? Okay.
Peter: Great. Let's do it.
Jon: Big vision. Big vision.
Peter: Big vision. I think Elon Musk is going to be in there.
Jon: I've always thought it would be hilarious. So it's far cheaper to go to Mars one way, not have to worry about building the colony. And if you made it if you made enough money that like your last, like year of life, you fly to Mars. Beat, beat. Elon, be the first person on Mars. Of course you get to die there.
Jon: But then, like, still, Elon said, Yeah. Because you don't have to worry about all the other technical stuff.
Peter: You just crash into the planet, crash.
Jon: And you just have to go like ten.
Jon: The flag. Done. And make sure you can stream it back to Earth. But that would be epic. That would be. Especially if there was his. If he was going that same time. You just pass them through all the courses. How do you get back? How do you survive for next?
Peter: He wants to die there. Yeah. You wouldn't be.
Jon: There. That would need to be there for one day.
Peter: You just got to get there first.
Jon: Which is a hundred times easier. You say so? I think so. I definitely think so. Okay. So fired by ABC.
Jon: So this was a post we saw on LinkedIn from Travis Ashby. He is the founder of Work Life. So we've got the link here. But here's his complaint. And so let's talk about this. Is is this a reality? Is this truth? Obviously, there's two sides to every story, so we don't know what's happening on the other side. But he said, you know, he has a friend that's a CMO that recently got fired weeks before his vesting cliff.
Jon: I don't know what weeks mean. I'm assuming perhaps within a month. And they said that VCs replaced him with a hotshot from S.F. Jerks. And his point was, why not let them invest their one year's worth of hard work if they're that close? And then especially if that hard work is what led them to get funded in the first place.
Jon: So it was good enough to get them to through the door, but then they just start replacing people. And he says he's seen this with the CMO, with the CEO. What are your thoughts, Peter?
Peter: Well, one, there's always like two sides of a story, right? So we don't know the other side. We don't know if like the CMO was like, you know, shacking it up with, you know, the assistant that.
Peter: To get canned or whatever.
Jon: The CEO could have sold the CMO out and said, Hey, this was a good CMO, but we need a great CMO.
Peter: Yeah, totally. Could be the case, right? The VCs could have been like, Hey, the CMO is great and he did an amazing job getting him or she did an amazing job, whichever was to this point. But to get the company to the next level, we really need you know, these hotshots to come in. I think the real thing that like ticked a lot of people off is that they were one month shy of their cliff.
Jon: We think it's one month. They're just six weeks.
Peter: Weeks. Okay. Well, either way, weeks away from their cliff and they got canned. And so it looks like all these greedy voices are just trying to, like, save some delusion. I think the reality is that and I could be wrong, but I wouldn't surprise me if, like, the voice that, like, didn't even, like, enter into the calculus of the VCs.
Peter: Right. The ownership percentage of giving this this individual an extra, you know, one year, you know, a quarter of their equity is like so small that in the grand scheme of things that like they didn't even calculator.
Jon: They also may have gotten a payout or an offer, an option.
Peter: That they might have and we just don't know about it. I mean I don't think though they would have been complaining to Travis about this if that were the case right now. Honestly I think I kind of blase place the blame not on the VCs. I place the blame on the CEO, the founder, assuming the founder is still the CEO because like I don't know there's a there's this other this other story.
Peter: I think it was the guy at the company that did word with friends way back in the day and they got acquired by Zynga. And like, it's like the guy is like a legend because what he did is that, you know, six months prior to that, something like that, he had the company has gone through a tough time and he had to lay off a bunch of people, like a bunch of developers, all kinds of stuff.
Peter: And so when the company got acquired, he went back and hired all of those people back for like a day or something like that, so that all of their options would vest so that they could get like that full like, you know, pay out on the acquisition. And I don't know, I just like to this day I remember that that was like a decade ago that it happened, talked.
Jon: About this story several times.
Peter: Talked of it because it's so like powerful and like to me, though, like that was the entrepreneur that did that right. And I think in this case, like, I think if I was the CMO, I would be most betrayed not by the VCs but by the entrepreneur for not like standing up and defending.
Jon: Do you think the do you think the CEO felt like he or she had that power?
Peter: What? well, maybe. Maybe not. Right. I think a lot of entrepreneurs, unfortunately, cede a lot of control over to VCs that they don't necessarily need to do.
Jon: I think they're sort of they're so afraid to. They need to win at almost any cost.
Peter: They need to win. But I think there's also like, hey, I've got like I don't I haven't fundraised a bunch. Right. Like the what? The VC is telling me that must be the way it's supposed to be done, right? And I don't want to screw up the deal I've got. And, you know, like, they get really nervous. Like, I see this all the time as a co-investment firm or, you know, we go in and the entrepreneur is like, I love you guys, but like the VC is telling me that I can't bring in somebody else and I'm like this bull crap.
Peter: Like, Go tell him. Go tell them. See that they can they can just, you know, carve back a little bit of their their stake. They'll be okay kind of thing, right.
Jon: they can put in 10 million, seven, 11 million, no problem.
Peter: Or not even that they can put in like ten and a half or ten and three quarters, Right? It's not going to move the needle for them. but I think a lot of entrepreneurs get nervous about it, right? And I don't really fault them, but I also don't think that they need to. I think strong entrepreneurs are able to push back and it's kind of like, I don't know, like.
Peter: Like that. The stronger the personality, right, the more that the VCs are likely to want to work with that person. It's like they're ability to sell that vision. Right. It's like. It's like that, that saying that whoever. Whoever values the relationship more, right, is in, like, a worse negotiating position or whoever cares less in a relationship, has more leverage.
Peter: Right. And if you are the entrepreneur and you're meeting these VCs and you're, like, projecting or believing that you are the the, you know, the the less important one in the relationship, then you're giving up a ton of control that you may not necessarily have to give up. I don't know. But, you know, maybe that's not something that I should say as a VC.
Jon: Think you make a very good point. I think the the CEO perhaps, again, we don't know what happened. There's always two sides, more than two sides. But the CEO, you're saying, should stand up in these in these moments?
Peter: I think so. Like good CEOs. And look, I think I think to the extent they don't I don't know. I, I mean, the problem with this article is we don't know who that was. Right. But if so.
Jon: Here's another question.
Peter: But maybe. Maybe we should write. Maybe. Maybe we should be like, Hey, you CEO. Like, by the way, this is the kind of CEO that you're going to go work for. Right. Maybe.
Jon: So. Let's say the person did a good job, but not a great job, but definitely not a bad job. They weren't sleeping. The secretary. They weren't being dishonest. Yeah. At what point do you say you get your equity or don't? Because weeks away could have been, hey, they're just halfway through the year, you know. You know, like a you know, like what point would you draw the line?
Peter: I don't know. I think if you're only like six months through the year there, through your vesting, what if your what are your.
Jon: Ten months to the cliff? You're ten months at the company.
Peter: The you got two months left.
Jon: Yeah. Would you give would you let them vest that.
Peter: I don't know. That's a good question. It's their first cliff.
Jon: I'm assuming it's the first cliff. I don't know you. Well, no. So typically you just have one cliff, and then you have vesting periods or his vesting cliff. I'm assuming it's the first cliff, but I don't know. That could totally change it. Have you been there for three years? I would generally just accelerate it. If you're more than, you know, less than, what, 10 to 20% of the way there?
Peter: 25. Yeah. I don't know. I mean, that's tricky. I might accelerate it. I may also just give them a good severance package.
Jon: I just say, did you take equity in reduction for salary? What would have been your market rate? Salary. Here you go.
Peter: Yeah, I think I would do something that I felt was fair and that they felt was fair.
Jon: Okay. And again, without us being in the trenches, we don't know. But as a summary, you're saying, I would.
Peter: Be surprised if they didn't get like what the CEO thought was a fair severance package.
Jon: I'm guessing that too.
Peter: And to the extent that they didn't, then I would be pissed. Right. But I don't know. I don't know what their ownership percentage was or any of those things. But my guess is, is that that.
Jon: The moral of the story is VCs are evil.
Jon: They're here to play chess with your with your team.
Peter: They are here to take your company and run it into the ground.
Jon: And lose the vision.
Peter: And get it addicted to cash so it can never get off cocaine, get off of them.
Jon: So I don't know. But class people are saying it's classless, classless, unethical. I think there's also a lot that we don't know generally. Generally, what I would do is if they're about to the cliff and we felt like they weren't worth the equity we're giving them, we would say, how much would we have paid them, what that delta would have been, and then cover it up.
Jon: So like I always get frustrated with like, let's say you're a founder, you're not working for a salary for ten, 11 months in the can you right at the last moment.
Peter: That would be that'd be a jerk move for sure.
Jon: For sure. But in that case, I feel like when I've seen that happen very rarely, I feel like in those cases they should have said, Well, what would you have paid that person? And maybe the company just doesn't have the cash. But then don't pull that. Don't pull that move.
Peter: Yeah, yeah, I agree. Look, I think in a in a better world, like somebody should have been asking the questions. I mean, you should've been looking at this stuff, right, and realized that, hey, at the end of the day, people talk. You want to be able to hire more great people, right? They're going to go talk to the people that got canned.
Peter: Right. And if you get a reputation as an entrepreneur for doing this kind of stuff, no one's going to want to work for you. Nobody. Good. Right. So because they just can't trust you, and. I don't know. I just don't feel like life is too short to be a jerk. And then you have to live with yourself as being, like, a jerk.
Peter: And, I don't know, maybe some people get, like, get off on it because they're like, look at me. I'm so powerful. And because at the end of the day, they're so insecure inside that like, they need that sort of things to feel good about themselves. But I don't know, for me, like give them, they give them that.
Peter: Like, you know, like what would have been like probably like a quarter percent of the or. Yeah, quarter of 1%. Yeah. I don't, I don't know the company realistically, right. I mean it's like such a small, small amount in the big scheme of things and that's being generous probably. Right. I don't know. And then you would have you know, they still would be probably ticked that they got axed after, you know, 11 months and replaced by somebody else.
Peter: But then they're not feeling like you were super and just and that you were going out tickets to screw them because you were greedy. Right. So I don't know. All right. But, you know, shame on the VCs for not like, you know, doing the right thing here, too.
Jon: Maybe we should do some investigative journalism and.
Peter: Really find out who really is will out them all.
Jon: What's the real story? Yeah, I think that's definitely regardless of what that is, if you're the entrepreneur, that's a tough, tough spot to be in.
Peter: Yeah, but I think, you know, if you're the CMO, like, yeah, this sucks and you could be like grumpy and bitter about it, but you know, and this is probably like a really privileged thing to say, but I just let it go. Go to your next thing. Build something bigger. Use as fuel to drive you to bigger successes.
Peter: Don't don't wallow in it for sure. Life's too short.
Jon: All right, guys. Let us know your comments. What should. What should have happened here? What would you have done? Leave the video below or go to venture capitalist FM and, you know, reach out to us on our other channels that you can find the links there.
Peter: Thanks for joining.
Jon: All right. Thanks, guys. See you soon.
