Many startup employees do not recognize the sheer litany of ways that a founder can screw you over without you even knowing. Founder trust is one of the most important things to look at when you’re joining a startup.
From cutting you out of M&A, screwing your retention pool, overdiluting your equity, firing you before your cliff, not having attractive options exercise plans, poor 409a price management, not telling you about QSBS / early exercise, blocking you from participating in secondary, obscuring company performance and many more.
Many many decisions that are made in rooms you are not in as an employee where the only thing that matters is: “does the founder have your back?” Great startups with untrustworthy founders lead to poor outcomes and often good startups with trustworthy founders lead to great outcomes.
Pick wisely.
Deedy
@deedydas
Heres a real anecdote [not a portfolio company]:
A founder friend of mine had an amazing offer to sell the business to a great acquirer. The business wasn’t going anywhere so this offer was a relief and it wasn’t even an acquihire: they wanted that tech. They would have made high 8 figures and could retire. But the offer terms screwed over the cap table, gave peanuts to the employees, would fire most of staff but would pay out the management team healthily (this is common).
These were all dealbreakers to this founder. But corp dev teams can negotiate hard. This is their job. They employ fear tactics: “your business isn’t going anywhere”, “this could be life changing money for you”, “you actually took the risk here”. And that’s when character is so important. The founder said absolutely not and stood their ground. They wanted all their employees hired unconditionally and paid out with accelerated vesting and proportionate retention pool. Eventually, the acquirer bent to those demands but it was a very stressful few months. All this while, the employees had no idea what was going on (you can’t really tell your team while it’s uncertain) but the outcome of their blood sweat tears for 4yrs rested in the founders hands.
This is why founder trust and character is so crucial.
A founder friend of mine had an amazing offer to sell the business to a great acquirer. The business wasn’t going anywhere so this offer was a relief and it wasn’t even an acquihire: they wanted that tech. They would have made high 8 figures and could retire. But the offer terms screwed over the cap table, gave peanuts to the employees, would fire most of staff but would pay out the management team healthily (this is common).
These were all dealbreakers to this founder. But corp dev teams can negotiate hard. This is their job. They employ fear tactics: “your business isn’t going anywhere”, “this could be life changing money for you”, “you actually took the risk here”. And that’s when character is so important. The founder said absolutely not and stood their ground. They wanted all their employees hired unconditionally and paid out with accelerated vesting and proportionate retention pool. Eventually, the acquirer bent to those demands but it was a very stressful few months. All this while, the employees had no idea what was going on (you can’t really tell your team while it’s uncertain) but the outcome of their blood sweat tears for 4yrs rested in the founders hands.
This is why founder trust and character is so crucial.
4:03 PM UTC · Sep 4, 2026 · 26.8K Views
3737755
Deedy
@deedydas
So I also recommend:
a) do thorough founder references
b) hire a lawyer to push for certain clauses in your employment agreement if you can
c) trust your gut on the founder’s character
a) do thorough founder references
b) hire a lawyer to push for certain clauses in your employment agreement if you can
c) trust your gut on the founder’s character
4:05 PM UTC · Sep 4, 2026 · 20.2K Views
10315136
Deedy
@deedydas
there are so many examples of this that go underdiscussed because of power dynamics
- no employee feels empowered to speak up against their founder for fear of retaliation
- no investor will ever tattle on a founders bad behavior for fear of reputational damage in the community
- for M&A specifically: a lot of money is on the line, secured by non disclosures, for the parties in the room and acquirers have no incentive
- there’s often never a clean headline for journalists to cover these. It all sounds like “founder X did a bunch of complex legal things that prevented rich people who owe them for their success from getting slightly richer, boo hoo”
- no employee feels empowered to speak up against their founder for fear of retaliation
- no investor will ever tattle on a founders bad behavior for fear of reputational damage in the community
- for M&A specifically: a lot of money is on the line, secured by non disclosures, for the parties in the room and acquirers have no incentive
- there’s often never a clean headline for journalists to cover these. It all sounds like “founder X did a bunch of complex legal things that prevented rich people who owe them for their success from getting slightly richer, boo hoo”
4:57 PM UTC · Sep 4, 2026 · 14.6K Views
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