I am going to have to go against the grain on this one. Yes you are owed money that is rightfully yours. But you wanted to be part of a startup with all the associated glory and rewards. That means you also assumed some risk and realized you might have to be flexible based on the circumstances handed to the startup. Remember, Amazon almost went under.
The founders are not jerks. They spent what they had on you and treated you well. Now they have nothing but your loyalty and goodwill. They probably want to pay you (maybe even before they pay themselves!) but they can't. Yes they are trying to keep plastic smiles so every one doesn't jump ship and you can live to fight another day. Perhaps, at this point they should be more honest, but I imagine they are afraid to see the dream vaporized.
Obviously, if you worked there for some time you at least kind of believe in what you are doing. Now is an opportunity to gain more control/equity and maybe even help steer the company to profitability. On the other hand if you are sure it is going nowhere, even if everyone tightened their belts and rolled up their sleeves then it is time to let go and write it off.
Yes you are entitled to the money. But you are probably not going to get it. You are only going to destroy relationships. Be up front with the founders. Either leverage your position to change your circumstances or walk away in good faith.
"But you wanted to be part of a startup with all the associated glory and rewards. That means you also assumed some risk..."
I disagree with that. This person is an employee not a founder. Therefore the risk they assume should be different. At worst, it should be that of losing their job at short notice. The flexibility you also refer to should not extend to working for long periods with no idea when you'll get paid.
Although we can only hear one side of the story here, I feel the founders were negligent in their duties to their employees. They should have made the company's situation clearer to the staff and gone over the options.
Like others in the thread, I doubt the OP will get all the money he is rightfully owed. However, simply walking away in 'good faith' seems weak (esp when that faith has already been abused).
You could say that I assumed the general risk of dealing with people, but amirmc is correct that I did not assume any formal business risk. I.e., I did not receive stock options or any other compensation that is normally given to risk-bearing stakeholders.
Thanks for your comment trizk. I think you capture what I mostly feel in my gut. I really do feel like the CEO really believes in the company to a fault. His gift and curse seems to be that of a hyper-visionary; what he sees in the company doesn't jive with my reality of the company. He has expressed remorse for the situation, but at this point he's lost my trust; I now read his remorse as mere bluffing. Not that I believe he was out to maliciously defraud, I just see this as the outcome of poor judgment and incompetence.
You are right, I did assume risk in joining the startup. That was not apparent to me at the time because it was not really communicated, but now I know. Looking back, I see a lot of "I should have known" moments. The lesson is that one should not look to the leaders of the company to look out for their interest.
It's likely the founder is a visionary without a pragmatic streak. Conferences and iPhones is what you give your developers when you're too optimistic about future business.
The founder is unlikely to be aware of his poor judgement. I know this, because I've made the same mistake. Tempering vision wih pragmatism is hard, especially if you achieve early success.
If your founder doesn't admit fault and put in a solid plan to turn the business around, leave.
I went through the poster's exact situation in 2002 after my first company slowly died following 9/11.
I think the assumptions you are making about the Founders are not well grounded. How do you know they are not jerks? Here's how I see it. Employee wages are fixed costs and easy to predict. If you know ahead of time (extremely likely) that you can't make wages, you MUST immediately notify your employees and put them on unpaid leave. You can't just implicitly ask them to work for uncertain future compensation based on not-booked revenue. It's incompetent and unethical. There's no excuse for that. As the poster has said, he was a straight salaried employee, not a founder in any way expected to have variable income. That would be different, but that's not the case. Go get more funding if needed, but don't exploit your employee's loyalty.
I'm glad that the poster quit because that's the right thing to do, and the sooner the better. If this ever happens to me again, I'm gone when the first check doesn't show up.
In the end, my employer went into bankruptcy, which is probably the best in this situation. I got a lawyer and made sure my back wages priority claim was registered. Yes, it's true that employee back wages are high priority and get paid earlier than many other outstanding debts, BUT, this doesn't just happen automatically. I only got paid (a fraction of what I was owed) BECAUSE I got myself active in the legal process. All the other employees who just moved on and didn't get involved didn't get anything. You need to stand up for what you are owed and work in the legal system to get (a fraction of) it.
FYI this didn't entirely destroy the relationship in the long run. I still talk with one of the founding partners on good enough terms. There's nothing wrong with asking to get paid what you were promised. That's not burning a bridge. In the big picture, honestly this is a bridge that you probably need to burn and that's OK in this case, but you're relationship surviving depends more on how they handle it. If you walk away quietly like a chump, how does that make you appear to them for your future relationship?
The founders are not jerks. They spent what they had on you and treated you well. Now they have nothing but your loyalty and goodwill. They probably want to pay you (maybe even before they pay themselves!) but they can't. Yes they are trying to keep plastic smiles so every one doesn't jump ship and you can live to fight another day. Perhaps, at this point they should be more honest, but I imagine they are afraid to see the dream vaporized.
Obviously, if you worked there for some time you at least kind of believe in what you are doing. Now is an opportunity to gain more control/equity and maybe even help steer the company to profitability. On the other hand if you are sure it is going nowhere, even if everyone tightened their belts and rolled up their sleeves then it is time to let go and write it off.
Yes you are entitled to the money. But you are probably not going to get it. You are only going to destroy relationships. Be up front with the founders. Either leverage your position to change your circumstances or walk away in good faith.