Important Edit: Hey guys and girls, fellow entrepreneurs and members of the startup community. I am honestly shocked and grateful at the magnitude of responses so far and I understand that some of you might feel strongly after reading my story. However, I would urge you to approach the matter in a more tactful manner. The goal of this story was to enlighten people of what took place so that it would serve as a cautionary tale. A behind the scenes look at what has already occured and passed. If you have learn't something from my experience, then I am glad that my writing was of use to you. As such, in the spirit of learning, let's not sully it with pitchforks. The auxiliary parties involved - the press, Digi and not forgetting the existing employees and interns of GrabGas should be treated with grace and given their fair share of the benefit of doubt. We are only human and mistakes are a natural part of life. Let us lead with a gentler hand and not be like a swarm of locust that ravages a farm indiscriminately (Ok, quite an odd metaphor, but I hope you got what I meant).
It is quite difficult to tell an accurate story with a TLDR, but I will try my best. Personally, I'd recommend the full story, a fuller picture so that you can form your own opinions.
GrabGas started on Oct 2015. On Jan 2016, 5 months since launch, the company was in trouble. Their tech guy has not delivered anything since the one page prototype (1 day’s work) back in Oct. As a result, business cannot expand and the team is completely stuck. Their traction is a flat line at about 1 order a day and they have no revenue, funding or resources.
From the outside, the team was very good at making it seem like they were doing good and making progress, but in reality, if you could see what I saw, there was really nothing concrete. “The company” was an intern staring at a JSON text dump of order data and then picking up the phone to call drivers to arrange a delivery whenever an order comes in.
With no tech guy to build and no funding to pay for a developer, Jeson, Sean and Gabriel decided that they needed a new tech guy. This is where I come into the picture.
After meeting with Jeson (mutual friend) and the team several times, I was invited to join GrabGas as “one of the shareholders” (their words, not mine).
One would have thought that this meant that there were other shareholders (like themselves) and I was being invited to join them as equals.
I joined GrabGas late February and wrote the first line of code on 1st March 2016. Within a month, I replaced the old prototype with a swanking new website and CMS. 2 months after that I delivered the updated website, CMS, API endpoints and the Driver App. We were finally ready to be “GrabTaxi for Gas” (More automation instead of our manual process).
Things were finally turning around for the company. The tech was coming together, traction was picking up (Avg ~3-5 orders a day when I left) and we were being featured in several tech press (Vulcan Post, DNA. Most facts in the articles were lies. Not the press's fault btw.). The team was also making progress towards a partnership with Petron and we even qualified for Digi Accelerate Program (This is a big deal. With 4 months bootcamp + mentors + most importantly 100k).
And then in mid June, when the tech was mostly complete, I found out that Sean, Jeson and Gabriel had registered the company (Pte Ltd) without my name.
When I asked why isn’t my name there, they said that I was actually an early employee, that I had made an assumption that I was one of them. This is where shit hits the fan.
Had I found this out later, things would have been much much worst for me. However, it was already far too late for many things at this point in time.
I just got duped. With no black and white (I didn’t talk about equity when I joined because they just had a bad experience with a non-performing CTO, so I figured that it would be better that I show results first before talking about it. Silly me.), DIgi’s 100k coming in and the company wholly under their names, there was nothing much I could do.
I tried to negotiate with them, but they never really budged.
To keep things short, essentially when they said “join us as one of the shareholders”, what they actually meant was that they wanted me to work for them (a startup with no traction, revenue, funding or tech), as an early employee, for free (no salary) for an indeterminate period of time, all the while building their entire tech/product from scratch, and helping them to secure Petron and Digi Accelerate (3 business guys with no tech guy and no resources is not going to qualify). On top of that, I’d have to do this for the next 3 years to get my vested equity of 10%. They on the other hand will be getting non-vested equity of the company at 40%, 33% and 22% (haven't calculated in my 10%) respectively.
I must say, “Bravo! This has got to be the best offer ever!”. Of course I only found this out at the end. For the entire duration that I was with them, they conveniently “forgot” to mention such a “unique” (shit) arrangement upfront in a clear and concise manner. Instead, baiting conversations with misleading “shareholder” terms (They even said "early employee with share is also a shareholder what!". Technically true, but super misleading.).
Why did they even use the term “shareholder” at all? If I was getting hired at Facebook as an early employee, they’d say “Come join us as an early employee and here is your incentive equity package.”. On top of that, I’d still get paid a monthly salary!
Naturally, as you might have guessed by now, I have left the company, taking the tech with me (The only plus side for having no black and white. A small dent to them now that they have Digi’s 100k.). Their offers throughout the negotiation process were too bad to accept.
- 10% @ 2 years vest + RM1800 salary - 2-3% for tech alone - RM30k for tech alone (Market rate is 40k-60k)
If you ask them now, they will probably tell you that they have learnt their lesson and it was all a misunderstanding. But no, it definitely was not. The intent for the "unique" offer was there all along, and the details conveniently left out. Time and time again during negotiations, with their sweet words and smiles, I believed them, yet time and time again the actions they take was the complete opposite.
In the end, I was thoroughly used and then cast aside by the same advantage I helped them obtain. It'd probably have gone as planned if I didn't found out.
I am writing this story, not just because I want to feel less alone (I’m sorry :’( ), but because the community needs to know. This isn’t something that should be cultivated in our growing ecosystem. If someone out there can at least learn something from this experience, 1 less heartache, then I guess I’ve at least done my job.
I have published a follow up post. You can read it here
Edit: Try not to bite them via FB Messenger. The founders rarely man it. It's usually manned by innocent interns, budding aspiring entrepreneurs.
Edit: It has come to my attention that some people may not agree with me taking this whole fiasco public. I apologise if this does not sit well in your books. I won't justify or rebut your opinion, I can see a little of the angle that you are coming from. I am perhaps too "noobish" to see that this was a bad move.
If its any consolation, all I can say is that when I published this article, it was mean't as a form of closure for me. To me, this article was supposed to be the "full-stop - . " to my chapter with GrabGas. I wanted to publish it, go for lunch, hit the gym and be done with this GrabGas chapter once and for all. I did not think that it would escalate in this manner, thus probably proofing my "noobish-ness". I did not realise that I was standing in a barn full of hay. If this ticks you the wrong way, I apologise.
Betrayed. Cheated. Used. These were the feelings I had at the end of my negotiation process with members of my old team. After spending 4 months working on GrabGas together, I finally decided to call it quits as I realised that a fair deal can never be reached. The damage to trust and the disparity in character, principles and values just made it impossible to repair.
How GrabGas Started
GrabGas started on October 1st, 2015. Sean and Jeson thought about the idea when Sean was having trouble ordering gas for his house.
They decided to assemble a team to explore the idea. They started posting on Facebook and asking friends. 4 additional people decided to join them. Gabriel the banker, Samson the designer student, Miss J the marketing lady and Mr.T the tech guy. Together, the team of 6 set out to validate and launch GrabGas.
The business guys went out to validate the idea while Mr.T and Samson began work on the initial site. Within a day or two, a single page website with a form to order + a Json text dump to see the order data was up. A perfect prototype/mvp.
The Highs and Lows
As with all beginnings, the team was very enthusiastic. They went out and hustled, getting lots of contact details of drivers and dealers. They sold them the idea about an app like GrabTaxi but for gas, and that the drivers would be able to use them to easily get orders.
Drivers and dealers seemed fairly interested at the concept. To top it off, a territory manager of Petron even approached the team to talk about acquisition. At that time, all they really had was just a website that was made in a day + contact details of various drivers and dealers, so they rejected her/Petron. Despite so, it was still a good sign getting interest from Petron and the team hustled on.
Fast forward to January 2016. It has now been 5 months since launch and things have slowed down considerably. The team has only received about 175 orders so far (~ 1 a day) and problems in the team was starting to show. Miss J has not been contributing much while their tech guy, Mr.T has not delivered anything since the initial prototype.
Crippled by the lack of progress in tech, the team was completely stuck. They were too embarrassed and no longer wanted to talk to drivers because they can't deliver on their initial promise about a driver app. Drivers were either forgetting about them or getting tired of hearing their excuses.
At the same time, they did not have the resources to hire a developer to get the job done. Furthermore, they also did not want to push for more traction due to various reasons (I don't remember the reasons, but the jist is that they did not want to do anything to grow traction).
Things are looking dire as tech was not moving and business can't grow without it. The common bane of most startups.
Adding to the level of urgency, due to their good relationship with one of the Petron dealers, the territory manager of Petron continued to hear good things about GrabGas. As a result, Petron re-approached the team, this time looking to explore a partnership instead (they were still in the same state they were in when Petron approached for acquisition talks. 0 progress made.).
Stuck between a rock and a hard place, the team would basically risk this golden opportunity with Petron and be dead fish unless they do something fast.
And so Jeson, Sean and Gabriel had an emergency meeting in order to figure out what their next move would be. With no traction, no resources, no tech guy, a single page website and some contact details on a excel sheet, their options were limited.
In the end, Miss J was removed from the team and the 3 of them decided to look for a new tech guy to join the team.
How I got Involved
I knew about GrabGas early because Jeson was a common friend. I met him along with Samson at AngelHack KL back in 2014.
On 20th January 2016, out of the blue, I got a message from Jeson. He told me that GrabGas is currently looking for another developer to join in as a shareholder.
At that point, I was not aware of the situation the team was currently in. Either way, I was happy to meet up to explore possibilities.
After several meetings with Jeson and then with the rest of the team, I was all setup and ready to join them.
Our final discussion took place over dinner on 25th February at Sushi Zanmai in Paradigm Mall. I still remember vividly that Sean was telling me that they had such a great intern (Suet Keem) helping them that they even decided to give her equity.
It reminded me of an article about how a startup had a superb early employee and because of her performance and commitment, the co-founders decided to make her an honorary co-founder. At the time, I thought that this was something similar (I was mistaken).
Having been told the story of a non-performing CTO that dragged the team for months, I decided that it would be more appropriate that I show results first before talking about equity.
A handshake after dinner and I was now part of GrabGas.
The team at this point consists of:
- Sean - General Business
- Jeson - General Business
- Gabriel - General Business
- Samson - Designer
- Suet Keem - Operations
- Julian - Tech
I still remember the day I typed the first line of code for GrabGas. It was 1st March 2016. There was nothing much to work with at that time, just a vague idea about the app and some outdated design mocks.
For those of you who have worked in a development agency, this would be a familiar sight. "Clients" with no real clue on what they wanted. Just a general idea of "I want it similar to GrabTaxi lor. It can do this, this, this and that." without having thought about the process thoroughly. Anyway, all is well, having been through the thinking process in my previous startup, I understand that it is a challenging process. The devil is in the details.
Stepping in to fill the shoes of Mr.T, I brought to bear my existing experience. I gathered the requirements, outlined and understood the desired operation process and ironed out the fine details of how the web, app and business operation process would work together.
A month later, on April 4th 2016, the new version of GrabGas was launched with a new look and a fully functional CMS.
The event was celebrated as a "rebirth" for GrabGas, a new beginning. By this time, Mr.T had already been removed from the team and the Petron dealer that had good relationship with the team has also invest RM60k for 5%, giving us a post-money valuation of RM1.2 mil (The investment was to be mainly used for marketing).
Everything seems to be taking a positive turn and morale is high once again.
Over the course of the next 3 months (April - Jun), many good things started to happen. The top 3 were:
1. Press Features. As a result of Jeson's efforts who was handling marketing, the team was featured on Vulcan Post , Malaysian Wireless , Digital News Asia , The Rakyat Post and several other blogs. Overall this was good news, but reading the articles always made me feel uneasy. Almost everything that was written in them were either vast exaggerations, future plans disguised as existing features that are no-where near in the pipeline or outright blatant lies. Some examples:
From Vulcan Post:
"with nearly 500 orders so far". - At the time, there were only about 200 orders total, with more than 50% being unfulfilled.
"They have a 5-year plan...". - This would be more accurate if it was called a "5-year dream". We did not even have a roadmap for the next week.
"the company has 70 drivers on board" - We have 0 drivers on board. Unless you count calling random drivers with no affiliation with you as "on board". Even then, the number is closer to 5, maybe 10 but definitely not 70..
"an average of 350 gas delivery orders each week" - The real number is 5 a week at the time of the article. This number also does not tally with the Vulcan Post article.
From The Rakyat Post:
"thanks to a proprietary algorithm always choose the closest interested driver available" - The "algorithm" is an intern calling drivers from a list of numbers.
"accurate information such as the number of gas delivery drivers nearby the area, as well as the instant confirmation of order and status of the delivery" - Same across all articles. Features that are at least 6 months away at best.
I understand that this is part of the sales and PR process, but the degree of lies is too much. (*Edit) I did voice some objections, but it was usually dismissed as "this is how business is done.". After the first article, I let it rest, understanding that it was just business "smoke" and a necessary evil. I also lied once to a Digi exec about the number of daily orders we had (Sorry! I had to stick with the team. :S).
2. Talks of Petron Partnership. Soon after coming on board, the team and I went for a meeting with the LPG head + all territory managers of Petron to pitch about GrabGas. The meeting went really well (albeit some lies about numbers again) and that eventually led to a meeting with the CEO of Petron Malaysia where a verbal agreement on the intent of partnership was obtained. As long as the tech held up, a nationwide partnership was in sight.
3. Joining Digi Accelerate Program. The team applied and was successfully selected, beating out over 75 other applicants. Being part of the Digi Accelerate Program was extremely beneficial. Access to seasoned mentors, pitch day, commercial support from Digi, publicity and most importantly a much needed RM100k investment. As for any fact discrepancies during the pitch to our future investor, I am unaware as I was not there during the pitching session.
Edit: Months prior, Jeson representing GrabGas participated in EO GSEA Global Student Entrepreneurs Awards (Entrepreneur Organization) and qualified to represent Malaysia at the regional finals in Bangkok. A friend who was present during Malaysian qualifier told me that during the pitching session, GrabGas claimed to already have revenue, secured Petron and an important letter from KPNDKK (a letter endorsing the legality of GrabGas which Petron insisted GrabGas had before any partnership can proceed). I was pretty shocked at this revelation - to compete in a startup competition but made it through with lies. Till today, we have not gotten either Petron nor the letter and our total revenue is 0. But do take this edit with a grain of salt. It happened a couple months back and my friend could have misunderstood certain parts of the pitch (or it was worded ambiguously to mislead listeners/judges). Personally, I would not be surprised if this was completely true.
By the 31st of May 2016, 3 months since my joining, as promised, I completed all the tech needed to take GrabGas to the next level. An updated site, API endpoints and the driver app was ready. This V1.0 tech would finally allow us to be the "GrabTaxi for Gas".
The Beginning of the End
Up until now, things have been fairly rosy. In fact, to be honest, I would say that I felt proud, happy and even a little excited that things were finally coming together. I thought that perhaps this is where the team and GrabGas would start to take off.
Unfortunately, not everything ends with a happy ending as things were about to take an ugly turn (for me at least).
Somewhere in the afternoon of 15th June 2016, there was a conversation going on in the team's WhatsApp group. I don't remember exactly what we were talking about, but it was something that involved the company's Sdn Bhd registration status, and then it happened... a photo of the company's registration certificate appeared in the chat, followed by a proud exclamation "We registered the company awhile liao!".
Suddenly, it struck me...
...The company is already registered?
...But I don't remember ever signing anything...hurm...
...Whats going on?
I knew that we were planning to register a Sdn Bhd company as we were brainstorming ideas on possible company names, but it being registered already while me having not signed anything seemed odd.
For a moment, I thought that perhaps a signature of all shareholders was not required when registering a company, so I called up a friend who was previously a company secretary to double check.
Nope. Shareholder's signature is required.
Alarmed but calm, I thought that there would definitely be a good explanation from the team, so I went to meet them immediately.
Before continuing, I'd like to point out that by this time, I've already had an equity discussion with Sean (oddly only with Sean, I felt that it should have been a very formal team-wide discussion, but he was saying that equity was a sensitive matter and that it should not be revealed to everyone. Seeing that nobody else on the team seemed to flinch at that statement and not wanting to make a scene, I agreed.).
From my understanding, during that very informal discussion (somewhere in April-May, before Digi Accelerate) where we basically talked about it as we left office, I was told that out of 100% equity, 50% was set aside for investments and the remaining 50% is split among the team. Out of the the team's portion, I would be receiving 10% vested over 3 years.
...50% pre-diluted for investments? That sounds stupid. But okay...let's not make a fuss, they are handling business side after all, so let's not make life difficult for them.
...10% over 3 years? Hurm, our team now has 6 people. So 50% / 6 = 8.333%. Me getting 10% seems like I'm getting more if we had divided equally. If 100% was divided, I'd get 20%. Given the work I do, that sounds fair. The others are probably around that number too. Okay.
At this point in time, I assumed that everyone part of the "rebirth" of GrabGas was considered as a shareholder and are all equals. So I said "Ok" and then he told me that if I'd like to discuss about the number further, I am welcomed to do so. (It turns out that I misheard 15% for 50%, but more on this later.)
Ok. Coming back to the Sdn Bhd registration issue...I arrived office at about 6pm to meet with Sean and Gabriel. Jeson was away at Thailand attending the Digi Accelerator Program.
This is where things really started to look ugly.
Much to my surprise, it appears that they did in fact already registered the Sdn Bhd company. On top of that, among the 6 member team, only Sean, Jeson and Gabriel were registered as shareholders (The Petron dealer investor is also registered for 5%). The 3 of them are also the only directors of the company.
I also realised that I misheard the 50% reserved for investors, the actual value was actually 15%. That amount is current split equally among themselves.
The current registered equity split (rounded) was:
- Sean - 40%
- Jeson - 33%
- Gabriel - 22%
- Petron dealer - 5%
Trying my best to maintain my composure, I first notified them of the miscommunication about 15% for 50%. They understood and agreed to proceed.
As the questions leave my mouth and the answers came pouring in, I slowly realised the severity of the situation.
- The 6 of us, some who have been there from the beginning, was, in fact, not seen as equals, or co-founders, or as shareholders (Irrespective of the term, essentially part of the team.).
- Sean, Jeson and Gabriel considered themselves the sole owners of the company.
- On the other hand, Samson, Suet Keem and myself was actually considered as "early employees". Our share agreements were being drafted up by the company lawyer (ESOP).
Slightly fazed and disturbed, my "WTF!" meter was going off the charts, but I pressed on as calmly as I could...
I asked..."Sean, don't you think there should have been a formal discussion where everyone in the team sat down together and we discuss about the formation of the company, the shareholders and directors? Whether the term "early employee" is applicable or not, don't you think it is the right of every shareholder and the early team to have a say in the matter?
His response struck me like a hot knife through butter. "To be honest, Julian, you are not a shareholder and we do not need to consult you about our company and the decisions we make."
Shock and disbelief was rushing in my head at this point. Internally, I was asking myself...
"Early employee? What?..."
"Not shareholder? What?..."
"Don't even believe in the courtesy of discussing with the team about the formation of the company? It's not like it we are a 20 man team, we are just 6 man. Regardless of the reason...What?...
Unfortunately, due to time constrain we rescheduled to 18th June 2016, this time with Sean and Jeson (voice call while he was out shopping with his family).
"How can Samson and I be considered as early employees?" I asked.
"None of us has ever been paid in any way. I can understand if you classify Suet Keem as an early employee since she joined as a paid intern so its highly debatable (Btw, Suet Keem was never paid after she was given vested equity), but for Samson and myself, how can that be?"
With regards to Samson's story, I have written a separate section at the end of this blog post. In short, his situation is similar to mine.
I pointed out that for early stage startups, it is very common practice that equity in exchange for time, effort and skill equates to part of the team and not an "early employee with no pay". There was no solid answer for my question and it more or less ended on the note of: "Thats them and this is how we do it.".
At this point, my main goal for the negotiation was to ensure that I got a fair deal. In my opinion, given the nature of GrabGas, the state that it was in when I joined, the story I was sold and the fact that tech was rebuilt from scratch, 10% over 3 years is just not justified.
Even if they saw equity as a stand-in for salary to an early employee, not paying them a salary yet having their equity vested over 3 years is just a bad bad deal.
Starting early does not equate to more equity, it just means earlier vesting.
Time and effort for equity with no salary = Part of the team. Especially if the company hasn't achieved anything significant (eg: good traction, working product, revenue, etc).
This was not the story I was sold when I came onboard. Nobody would equate "shareholder" for "early employee". If they told me "early employee with no salary for 10% over 3 years" at the beginning, I'd flat out tell them no.
I came in as CTO to replace Mr.T, a founding member and then proceeded to rebuild their non-existent product from scratch.
The disparity in equity is just too large. 10% vested for tech while 40%, 33% and 22% respectively for the 3 of them who does overlapping work and no vesting?
Tech plays a larger role in GrabGas than what they are giving it credit for:
- Majority (All) of the company's current tangible asset
- The pillar of the company's current business and operations
- Pivotal reason in securing Petron (A shaky website is not going to lead to partnership discussions)
- Big role in being selected for Digi Accelerate
- Startup accelerator judging typically revolves around 2 main criteria, a promising market for the product/service and a team that can pull it off. For a concept like GrabGas, without a proper tech guy, a team with 3 business dudes with no funding would be extremely hard-pressed. They already had their hands tied up for 5-6 months by Mr.T.
After talking for almost 6 hours, I asked them to get back to me with a number that they think would fairly represent the value I bring to the company. I wanted to gauge how much they valued me, the tech, the work I do and the role I would play over the next 3 years. The number they come back with will give me an indicator of that.
I also asked them to consult mentors from Digi because I felt that my reasons were fair and logical, one that would likely be supported by the mentors (Eg: Time and effort with no salary = Part of Team - A common understanding in early stage startups. The conditions under which I came in and also the role of tech), thus convincing the team that my request was not unfounded.
A week later, I met with Sean and Gabriel to find out the results of their discussion. Lo and Behold, they returned with the exact same offer. No change whatsoever. Early Employee, 10% over 3 years.
I was dumbfounded...After all that talk about equity with no salary, about how tech plays a bigger role than they think, about how the Petron and Digi success was likely heavily influenced by the presence of a steady tech and tech guy, about the value of people. Nothing...not even an inch.
Even the alternative offer, where I leave the tech with them for 2-3% immediately was not any better.
When asked why they kept it at 10%, the reasons change everytime:
- "At the time, an investor was coming in with 60k for 5%, so we thought that 10% valued at 120k was fair for you."
- Going by the same logic, I said that their 480k (40%), 396k (33%) and 264k (22%) are all not equally justified. At this early stage, putting cash value to contributions is just too inaccurate. None of them has brought value to the company equating to the amount they were giving themselves. To top it all off, their equities are also not vested (They claim otherwise, but I'm sure if the terms are examined, it might as well be not vested at all).
- Furthermore, after talking to an industry veteran, 120k vested over 3 years is like getting paid 3k per month over 3 years. I am not a fresh graduate, I am a seasoned developer with 4~5 years working experience (Based in SG and now MY doing Android + Rails).
- "Because long ago when we decided to bring you in, the 3 of us agreed that you were an early employee (CTO) with 10%. So changing it would be unfair and thus we decided to stick with it."
- Unfair to who? When asked, despite knowing from the very beginning, why didn't they tell me that they were bringing me in as an employee with 10% @ 3 years, their answer was "I also didn't know why we didn't tell you at that time.". How convenient...
- I also asked why did they use the term "Shareholder" instead of "early employee + some shares for incentive", their response was "Early employee with shares is also shareholder what!". Technically true, but talk about misleading statements.....
- "We don't trust you yet."
- Btw, he doesn't mean the "Julian is a criminal" kind of trust. He just means that he doesn't see me the same way he sees Jeson and Gabriel. Anyway, the solution is simple, vesting.
- "We don't want to make the same mistake we did with Mr.T. Maybe we will give you more in the future."
- "Maybe you will give me more in the future?....." I did more work in 1 month than Mr.T did in 6. Also, that's why everyone should vest...including them.
- "We think you're not a good fit for the company."
- This was their last reasoning (Given in the final stages of the negotiations when they only wanted to buy the tech). Which is a fair reason, but does not justify the unfairness that occured before. Given their reasonings prior to this, this is definitely an afterthought.
- From Jeson's perspective. He feels that I deserve 10% because "they did a lot of hard work before I joined" and he also said "Our main goal in the future was to be a digital company, not a technology company. At that point in time, operations, biz dev, customer service and etc will be more important than tech. So that's why I think 10% for tech is fair.".
- I don't know about you, but that's like saying "In 5 years after I graduate, my university degree will be useless (in getting a job). So I will attend university but I don't have to pay for it.".
To be honest, I would readily agree that 10% for an early employee is a lot of equity. But the fact is that I am not an early employee. I did not draw salary, paid for various expenses from my own pocket (server, sms, etc) and it was not the story I was sold. No precedent for an employer-employee relationship was ever established.
Late Edit: Uh-oh! I know this looks bad, but I just remembered that I did fill in 1 document with GrabGas. I can't exactly remember when this occured but I think its close to the Sdn Bhd registration period (Ok, I checked chat logs, it was in May). While preparing to sign with Digi, Gabriel was repeatedly pestering everyone to fill in a piece of word document entitled "Grabgas Employee Information Form". It was a 1 page document (no T&C, no fine print) that required basic info - the kind that you'd fill in a typical survey form (Name, IC, address, birthdate, gender, email, phone) as well as some info about next-of-kin emergency contact.
So why did this not throw any red flags when I was asked to fill it in?
First of all, I had no reason to be suspicious of any malice. Things were still going great at that time. Second, Gabriel was asking everyone to fill it in. Everyone. Third, it was called an "Employee Information Form", given the impending incorporation of the company, I felt that it was only natural that everyone's info is taken down for formality, paperwork and filing purposes. For the sake of convenience, I also thought that Gabriel could even reuse the details during the company registration process, since he was the pointman with the company's lawyer. Fourth, one's status as a shareholder is dictated on the company's registration document. On the other hand, your post in the company (CTO in my case) is dictated by a set of employment documents. It is 2 separate documents (with the latter being slightly easier to produce too!). The way I saw this document was that it was merely for information gathering purposes and a informal prelude to an employment contract (which is where my post as CTO is recognised officially). And fifth, for obvious reasons, it is not a contract.
If they presented their real offer, very few (none) people would have accepted it. Not many would accept an arrangement to work for a startup that had nothing, solo build their entire tech from scratch while working for an indeterminate period without salary as an early employee and an equity package of 10% over 3 years. It just makes no sense.
During negotiations, when we were talking about this, they are aware that I would not have accepted to join them if they said "Join us as an early employee + no salary + 10% @ 3 years". So why they chose not to talk about it is only something I can only speculate on. I just think that it was so convenient that they "forgot" while leading with the term "shareholder".
In the end, after hours of bantering, their offer was revised from 10% @ 3 years vesting to 10% @ 2 years vesting + maybe some salary. I tried to compromise with an offer for 10% @ 1 year vesting + salary, but that too was rejected.
The straw that broke the camel's back
I was fairly distraught after that. Mostly for being extremely dumbfounded that they came back with the same offer and refused to budge regardless of what I say. "Is that what they really think about my work, the tech and the value I bring?"
Unable to make sense of what just happened, I began to doubt myself, "maybe it was my thinking that was flawed?". Looking for answers, I set out to talk to friends, family, other entrepreneurs and industry veterans.
As I began to talk to people and explain to them the story, not a single person ever said that the offer was fair.
- "It looks like they are using you."
- "You should probably just leave."
- "10% is bad. I think somewhere around 20% sounds just about right."
- "If anything, 10% should be payment for work done so far. Not vested over 3 years. If they want you to stay, they should either pay market rate or pay a lower rate but add in additional vested equity."
- "If no salary, then now. Makes no sense to wait. Part of the team now."
The most common theme however was that almost everyone mentioned the following in one form or another: "It looks like they don't value you or tech. Do you really want to work with such people? It's going to be very difficult moving forward if this is how they see you.". It was surprising that different people even used the same exact words.
Not wanting to confine myself to people within my network, I decided that the most objective advice would come from the mentors from Digi, the people who know the business and the team. I never had the opportunity to speak to the mentors before this, so I decided to ask the team to link me up with them so that I consult their advice as well.
Edit: Another reason I wanted to talk to the mentors is because when the negotiations began, I asked the team to talk to the mentors at Digi (because I felt that they are likely to agree with my reasonings). When they came back offering the exact same offer and I asked them about what did the mentors said, the response I got gave me the impression that they did talk to the mentors and even Digi X CEO and that they were somewhat siding with GrabGas's logic. Slightly baffled, I wanted to be able to speak to the mentors to find out if they really were consulted about the matter, what they were told about it and what their advice really was. Better to get it from the source than through a proxy that has a known record for being twisty with words.
For this case, I'll let the chat do the talking.
This is when all hell broke loose.
"reasons we are uncomfortable to reveal....What?"
"Personal matter? GrabGas's resource? Am I not part of the company? The CTO could leave with all of GrabGas's tech and this is called a personal matter?"
No amount of logic, reasoning, excuse can justify what was just said. Up until this point, we were still operating with the understanding that as long as the negotiations are still going on, nothing is changed, I am still with GrabGas and the team can still use the tech I built. But this? This is something else altogether...
All along, I was trying to make things work. Questioning my own logic and values, I was searching and hoping that someone might have nuggets of wisdom that would help me come to terms on why 10% @ 2/3 years was fair, some perspective that would let me agree with Sean, Jeson and Gabriel. But alas, with this revelation, everything went out the window. Nothing could justify the shit he just pulled.
Shortly after that exchange, I ended (temporary) negotiation and was ready to walk away with the tech. However, after speaking with a mentor from MAD Incubator, Andrew, he made me realised that perhaps I was too consumed by emotions. I let the breach of trust and friendship cloud my judgement, instead, I should see this whole fiasco for what it is, a business relationship, a business deal.
Recognising the wisdom in his words, I reached back out to GrabGas and re-opened negotiations. At this point in time, I had no intentions of re-joining the team. I only wanted to treat it as a business deal to see what could be worked out.
In our previous "final" negotiations, GrabGas offered RM25k for the tech. I rejected it of course. I felt that it was not fair value and that the market rate for what I've built is between 40k - 60k.
So I counter offered with 40k + 2% equity. I made such an offer because it gave GrabGas the flexibility to either preserve cash by reducing the cash component but increasing equity or vice versa.
Negotiations carried on for another couple of weeks. In the end, no deal was reached. The best offer GrabGas was willing to give was RM30k, half the market value of the product. When asked why do they not want to counter-balance the remaining amount with equity, their reasons was because they asked Digi for advice and Digi told them "If you can solve the problem with money, then solve it with money.". Oh, the irony!
Edit: I do not know who exactly in Digi told them that. I heard that phrase from them when I asked them why they did not want to counter-balance with equity. There is a good chance that the person giving the advice is oblivious to the true nature of the problem he was advising on.
So finally, with that, the long heart-wrenching roller-coaster negotiations with GrabGas ended.
I left, taking the web, driver app, and everything else with my name on it along with me.
Edit: Just to be clear. My last negotiations with GrabGas was on 5th August 2016. It ended mutually because neither party's deal appealed to the other and there was no sense in dragging it any longer. It just took awhile for me to recollect myself and write this post.
I no longer want to have anything to do with them. I wont pass judgement on whether they are "evil" people or not. However, one thing I do know is that the values they carry and the manner of their thinking is so wrong that I don't want any of it in my life.
Some of you might be wondering, why didn't I take the RM30k deal? I could have at least gotten something instead of nothing. Without a job, that money would serve as a great buffer.
Edit: I think its important to note that I did not join GrabGas fulltime on the onset. I was still working "freelance" with a remote arrangement with a company in Singapore. I left the "freelance" arrangement in the middle of negotiation process with GrabGas. The reasons for leaving was not solely due to GrabGas but a combination of factors.
Well, I don't see it that way. I've already been cheated 4 months of my time and effort by this same group of people. There was no way I was going to let them profit off my blood, sweat and tears, a product I built with the passion as if it were my own only to let them have the it at 50% discount.
These are the kind of situations that will always favour the people that screwed you over. You can leave and take your work with you, but the "house" and everything else that comes with it still belongs to them because the company is registered under their names. It's not just the tech, but the non-tangible things like time and opportunity cost. Now that they are out of the ditch and have a bunch of big friends and money, they will run you over like an animal crossing the street.
They wanted to achieve success, but were unwilling to pay the true price for it. Resorting instead to trickery and "magic shows". Horrid deals dressed up in million dollar packaging and shameless fact twisting to the press and pitches. The reality was a startup with a website, ~100 unique visits and 1-5 orders a day and 0 revenue.
Anyway, enough of that. In the end, I have only myself to blame.
In retrospect, I was too nice, too trusting because it was a friend. I gave the benefit of doubt and forgone black and white (biggest mistake!) because I had faith in people and friendships. I kept the server up longer than I should.
All my missteps and misjudgements, despite the signs, led to this day. My services taken full advantage off and then cast down with the same advantage I helped them obtained.
But I guess such is life and here I sit, with the tech in hand, wondering what my next move will be.
This experience has not been pleasant at all for me. If you've made it here, thank you for reading.
I know that it was long winded and full of drama. My hope is that it will serve as a cautionary tale, or at the very least, small talk for a coffee meet-up (Sudo Brew anyone? :P).
As for my take-aways from this experience:
1. Be extra careful when doing business with friends. I'm sure we've all heard, "Don't do business with friends.". I never quite agreed to this statement. I never thought it would ever be applicable to me. What else could be better than doing business with friends?!
I picked my friends properly and strongly believed that people will always reciprocate good will and watch each other's back. But, it turns out I was wrong. The world is not a fairly tale.
I won't advocate you to "Not do business with your friends.", but I would recommend that if you ever do business with them, be sure of their character. And if you think you're sure, be doubley sure. That lead's me to point 2.
2. Black and White. Always. It doesn't matter who you are dealing with. Your family, your relative, your best friend from kindergarten or your buddy from way back. In fact, the closer you are to the person, the more important this becomes. Outline roles, compensation and arrangements as clearly as possible and make sure that everyone is clear and agreeable to it.
This in fact, could be the one thing that saves your friendship in all those dark days we all have to walk.
3. Trust Actions. Always take sweet words and smiles with a pinch of salt. Those are easily faked, my old team was extremely good with this. An ill intentioned sales person will butter you up so good even though he knows the stuff he is selling doesn't benefit you/is bad for you.
Do not underestimate people's persuasive skills. I used to take pride in being able to spot liars but this incident was like a slap to my (naive) face. I should have trusted my deeper instincts the moment I felt the dissonance between words and actions which my logical mind could not explain.
The worst kinds of people are the one who will smile and say sweet things in your face but when you expose your back to them, they do the complete opposite.
It may be cliche, but "Action speaks
louder truer than words."
4. Don't expect other people to think from your position and give you what you want. Everybody is selfish in their own way. Most of the time, they will only see it from their perspective. If you don't fight for what you want, if you don't clarify what you want, then don't expect the other person to automagically give you what you want.
5. Don't be too nice. This is abit general, but there are times when you need to "apply pressure". I've always tried to be the "nice guy", taking on small "costs" in favour of keeping people happy and avoid making a scene. After all, it's just a small price to pay to maintain the "harmony". But nope, this is another fairly tale thinking my dear Mr. Julian.
And finally, I understand that not everyone would read my story the same way, if you have any suggestions on what I should have done or any opinions or questions about the matter, feel free to let me know.
In the mean time, I've had enough drama for awhile. Time to take a break.
To those of you who have made it here, Thank You for reading my story.
I have published a follow up post. You can read it here
A small tale for Samson the Designer
Why was Samson not a co-founder despite being on the team since Day 1?
After some of poking and prodding, I was told by Sean that Samson's initial engagement with the team was similar to Suet Keem. He was supposed to be paid RM20 per design when he joined the team. And thus that was how they justify that Samson was an "early employee".
Not agreeing to their lines of reasoning, I argued that somewhere along the journey, the team (The old one) actually considered Samson as a co-founder (because on the walls of the office hangs a majong sheet of paper that shows the early discussion on equity splitting among the old team. On it, Samson was to be allotted 10% of the company). You can't just "upgrade" him one day and then "demote" him in another willy nilly. In his defence, Sean said that whatever is written on that paper is old and does not count.
Going further, I asked if they (Sean and Jeson) have ever paid Samson the agreed RM20 for any of his designs and their answer was equally shocking.
Sean + Jeson: "No we have not. But, everytime we go out for company trips and all, we paid for his food and stuffs. So technically we paid him already.".
The logic in this reasoning hurts my head everytime i think about it. I didn't know that taking a freelancer out for dinner constitutes payment for their services.
In their defence, they said that they asked Samson about this arrangement and he agreed to it. I don't want to be too "kepo" here, but to those of you who knows Samson, you can likely agree with me when I say that theres a high chance Samson doesn't know when he is being taken advantage of.
So what is Samson's equity? 2-3% over 3 years with 0 cent in salary paid so far.
For those of you trying to reach me, you can contact me at [email protected] It might take awhile for me to respond