He was not a founder. When the infogami team didn't work out, Aaron, Steve, & Alexis "merged" inforgami w/ reddit, creating a new company - not a bug. They all got an equal share of equity in this new company. I think that's what several people find aggravating. Aaron got a huge amount of reddit's equity, but only put in a few month's worth of work into the site.
The lesson - always vest your equity. Not only for new hires, but also set up vesting schedules for the founders. This ensures everyone can make a fair exit, with no hard feelings.
EDIT: To clarify, by "not a founder" - I was answering the question, "was he a founder of reddit?" He did, of course, co-found not a bug. Here's their website, for the curious: http://notabug.com/ - I believe it's now defunct.
EDIT 2: There's also a pretty good thread on reddit that explains the background: http://reddit.com/info/1octb/comments/c1odac (for those of you who don't know, spez is Steve's alias).
'... I think that's what several people find aggravating. Aaron got a huge amount of reddit's equity, but only put in a few month's worth of work into the site. ...'
equity, worth and time working are all mixed up if you are a founder. The original idea, the re-write, the bug fixing and all the crappy small things right up to the final sale mean at any one time each founder out-contributed one another at some stage. It's the final result that counts the most. If he wasn't pulling his weight I'm pretty sure the others would have kicked up a stink and given him the boot.
'... always vest your equity. Not only for new hires, but also set up vesting schedules for the founders. This ensures everyone can make a fair exit, with no hard feelings. ...'
This I would agree with. Things don't always go to plan though and people may not like their new role, being told what to do, when. You know the drill. To me the biggest mistake by Naste` is assuming just because you buy a company out that all founders are equally as flexible.
The biggest impression I get with Aaron is people look at him, they see a kid and skip the ability, intelligence, achievement and ideas bit.
"Heh" I joked. "I bet the first time my boss finds out where I am is when he sees my photo on the front page of his own website (Wired)"
I cracked up reading this line because of the irony of it.
It's the final result that counts the most. If he wasn't pulling his weight I'm pretty sure the others would have kicked up a stink and given him the boot.
I actually talked with Steve about this exact topic a few months ago. The point he made was, in general, if you give a partner all the equity up front, kicking him out later doesn't make sense. Even if he's extremely unproductive, your only choice is to try to work things out.
Otherwise, he's just walking away with a huge chunk of the company.
'... The point he made was, in general, if you give a partner all the equity up front, kicking him out later doesn't make sense. Even if he's extremely unproductive, your only choice is to try to work things out. ...'
The "Ki" scenario. Remember in Startup.com (http://en.wikipedia.org/wiki/Startup.com) where a founder put an estimated 4 months + 20K then didn't quit his job. After negotiation he walked with 200K+ USD but this time paid for by his co-founders. There must be a better way.
Maybe increasing to total equity as progress is made, because you can bet with a group of four there is always going to be a chance of one founder for some reason or another bailing. But the way it's panned all, are paid. Maybe not as much as they theoretically could have. But money in hand (and a job), now is worthy objective.
'... Paul wanted to give Aaron Swartz, another YC founder, a birthday gift in November. More than anything else, Aaron wanted co-founder so Paul suggested the 'merger'. Merger is probably a bit hyperbolic for what actually happened, Aaron basically moved in with us and we made him a co-founder. ...'
They didn't push hard enough. This would have been the chance to negotiate ~ "What were some of the most flexible decisions you made?", http://tinyurl.com/39yobc
It must have seemed like a reasonable decision at the time; nobody had been nearly as badly burned by Aaron at that point as they have been since. If this reputed eccentric whiz kid hacker who wrote your web framework wants to join your startup, it doesn't occur to you that he might not produce and that therefore you should mess with the equity terms. I'd say that you shouldn't blame the people who made that reasonable of a decision for what happened since.
'... It must have seemed like a reasonable decision at the time; nobody had been nearly as badly burned by Aaron at that point as they have been since. If this reputed eccentric whiz kid hacker who wrote your web framework wants to join your startup ...'
I don't think I meant to say there would be a problem in taking on a new founder. The fact is someone joining at later time is more vulnerable and therefore you have a greater leverage. Joining later in terms of negotiating is a weakness that could have been exploited.
'... I'd say that you shouldn't blame the people who made that reasonable of a decision for what happened since. ...'
It's not blame, simply 20/20 hindsight. I say the founders in this case have done an exceptional job executing especially with this their first business. I'm just making an observation.
If you are taking him on as a cofounder, you obviously think he is very high-powered and will do lots of amazing things. Therefore, being a non-bankrupt non-scumbag, you don't particularly try to screw him on the terms of the deal.
I don't know why anyone other than the pre-acquisition investors would be aggravated by it. Is anyone posting here willing and able to quantify what he contributed and really judge whether he was "not worthy" of his share of the equity? If you haven't been paying attention to pg's essays, "time spent" is not equal to "value produced," so a vesting schedule does not fairness make.
It does sound as though he was not well-suited to corporate life. Where's the crime in that?
The lesson - always vest your equity. Not only for new hires, but also set up vesting schedules for the founders. This ensures everyone can make a fair exit, with no hard feelings.
EDIT: To clarify, by "not a founder" - I was answering the question, "was he a founder of reddit?" He did, of course, co-found not a bug. Here's their website, for the curious: http://notabug.com/ - I believe it's now defunct.
EDIT 2: There's also a pretty good thread on reddit that explains the background: http://reddit.com/info/1octb/comments/c1odac (for those of you who don't know, spez is Steve's alias).