A $5000 Chair

It wasn't the chair that cost $5K. It was the lack of the most basic possible written employment agreement.

"How can you honestly not remember this guy's name" - A commenter from the original post.<p>This comment makes me think about whether this story is even true. I'd say it probably isn't based on that one statement alone. How can the guy not remember the lawyer's name? He has emails exchanged and the guy supposedly stole money from him. I like to forget negative stuff, but I can assure you I would remember this guy's name.

At first, I read this and thought to myself -- "charming, but they didn't really pay $5K for the chair, so much as for their lack of proper legal documentation."<p>Then I thought on it a bit more and realized -- it <i>was</i> the chair that cost them $5K, because if they hadn't established the paper trail via the e-mail chain about giving the chair back, they wouldn't have had the hangup on 'without prejudice'.<p>Be careful with email, folks. In the end, that <i>is</i> your paper trail.

One of the lessons I've learned in my startup life (2 years) was to never deal with people who aren't competent with execution - what's the right thing to do, how to reason about it in a logical way, how to do it, how to finish it, contingency plans, etc.<p>"Try him out for the junk drawer job in the startup — CEO" is a terribly easy mistake to make, when you're still at early stage with nothing to show. I've done this for almost all the positions in my previous companies - programmers, "product" guy, all the way up to the CEO and investors look-alikes, and I regretted it every time.<p>When my CEO was still a business school student of a certain prestigious university, I thought he's well connected and would be a valuable partner later. The company did well for a time - but mostly besides him. Once he took over the reins, everything went downhill and the company never came back to its former glory - despite the CEO's claims of "funding is near", "I'm good friends with &#60;insert big name here&#62; and he'll cough up $50k without a blink" for a full 2 years. Every time I called him out for non-performance, he plays the "CTO is not a team player" card. But I believed him, for 2 years - all the way until he badmouthed his partner - me - to his friends right in front of my eyes. And for quite some time I actually thought I should keep the company breakup somewhat secret. Silly me.<p>Bad "product" guy... got him because he's a friend and he looked somewhat experienced. Ok.. now we've agreed the product would do this and that, now draw me something please? Uhh... wtf is that? He stayed for a few months, was fired, but caused the company some trouble after that.<p>Bad programmers.. went through quite a few of them, mostly contracted. Some even from big named universities with very impressive looking resumes. Again, hired them because of a sense of urgency (e.g. need to demo X to VCs soon!), so I lowered my bar to what I thought I could get. Wrong - those ended up wasting time rather than contributing.<p>At the end of the two years, I think I must have went through 2 dozens of people, co-founders included. Of the 2 dozens, only 2 of the choices were right - one programmer, one junior product guy. The others are all a waste of time.<p>If I were to do a startup again, I'd be super careful at picking who I work with. PG's advice at getting a co-founder? Yes it's definitely needed. But trying to do something investors like while sacrificing quality? That's the #1 startup mistake to make, IMHO. Don't do that.

They got rid of an asshole for a mere $5k. I've seen people pay 100x more than that in extreme cases.<p>A great bargain!

To anyone more familiar with the law: is this the type of thing that could be recovered later?<p>I think the lawyer was smart enough to ask for an amount that he'd be okay with, but kept it small enough to make paying it easy enough to not warrant the startup being distracted.<p>But say the amount was more and the amount was low enough to pay the guy off, but high enough to be concerned about. Maybe you still pay it right away because you have to in order to get your funding, but is there any case law that supports recovering this money later on because the startup was essentially held hostage by the lawyer?<p>It seems fairly reasonable that a contract made under duress could not be enforced, or could at least be brought up at a later date.

It's interesting that saying "without prejudice" is a keyword for "I'll sue you later if it's worth my while". It seems like lawyers get a lot of power purely from that fact that our legal system makes no sense and they can just warp it against you at any time.

Their real mistake was dealing with a lawyer in the first place. My dad told me years ago that you want to avoid dealing with lawyers at all costs, because most of them are vicious selfish sharks. Sure there are exceptions, but there are few, if any, occupations with as high a percentage of people like that in it.

Can someone please enlighten me on how to avoid this kind of situation? Is this because these guys didn't have any papers signed with the guy about him being a temp until they decide later?

$5000 is a gross understatement of the actual costs at play. Drafting a full release can sometimes cost thousands of dollars, and the emotional toll and time-sink of negotiating the terms of release should also be considered.<p>The author was lucky it only took one phone call and that he didn't mention the cost of drafting up the release perhaps signifies it didn't cost him too much.

I thought this was going to be a story about the Eames lounger or Le Corbusier haha. Know one too many Facebook designer friends that have them..

I think the investor's lawyer was being overly cautious. Anyway, small price to pay for peace of mind. Always get a release!

Something I have come across when dealing with frustrated investors. I have heard it said since and it still gives me butterflies :/<p>Some more background on the term: <a href="http://en.wikipedia.org/wiki/Prejudice_(legal_procedure)#Common_law" rel="nofollow">http://en.wikipedia.org/wiki/Prejudice_(legal_procedure)#Com...</a>

Interesting story with a lesson to remember. But can anyone comment on how did his or investor's attorney find that email? Is it common practice to give attorneys full access to all your company's email accounts and then have them search through for any land mines as part of due diligence? Seems a little extreme and very labor intensive. And who pays for it?

I was expecting an interesting nugget of info. Too many companies employ someone to do something vague because they like the person. It rarely works out and then someone has to deal with the fallout. As loads of others have said, that was a relatively cheap lesson. People pay hundreds of times that amount to learn things sometimes.

The "without prejudice" is phony storytelling. It sounds like they got a legal threat letter and ignored it.<p>Also, if this lawyer was good enough to get $5k for nothing, maybe they should kept him on. Or paid him a fair wage or equity for his work.

He sounds prejudiced to me :-p

Only three things are certain in life: death, taxes and lawyers behaving like a<i></i>holes.

&#62; <i>Damn. That chair just cost us five grand I remember thinking.</i><p>The chair was still only 99 bucks - what cost you only measly 5k was a lesson in "swimming with sharks" and why you do not frakk around in business matters and why a lot of things in business (sadly) work and run the way they do...<p>And chances are he understood the situation and was nothing but an opportunist and took advantage of it, so you woke those sleeping dogs - but your lesson should be: make sure such things cannot happen, make sure everyone knows and understands the terms and get things IN WRITING.