Rhutik Shankarrao Giradkar 🇮🇳

I Ended Up With Just 0.15% of My Own Startup Beginning It was the year 2013, I was working as a part-time CTO in several software startups in a startup incubator. On one of the “Friday beer” evenings I was approached by a huge old man, in just a few seconds he broke the ice, touched my shoulder, and behaved like we were old friends. It turned out he knew who I was. It all looked random to me, but it wasn’t. Years later he revealed: “I moved into this incubator because I wanted to hire you.” CoFounder He was about to start a hardware startup, a marketing/vending machine that looked like it was made by Apple. Until that offer, I spent years building software, that was easy and boring, So his idea around hardware felt so compelling, that I had no doubt and joined him as a CTO and CoFounder. I got 15% of the company. Rich Man He was a rich man, with a huge house in the best luxury area of the city, with a big exit in the past. He kept saying: “I can’t do this without you..”. He was a master of psychology, and I'd do anything for him, he was my mentor, almost my father. It was very inspiring, I did my best job ever over the the few years. I worked days and nights, some days I worked 20 hours, slept on the office couch, and continued. We had lots of orders, and I was putting the software and hardware together, driving it to the clients, and installing it. I was obsessed, My girlfriend left me because we didn’t see each other at all. Living A Dream Things were going really well, We met @jack (founder of Twitter and Square) in SF and presented our machine, partnered up with his company that was doing the payment stands, to use it for our machine. Lots of the doors were open, We raised money from investors and got into the best b2b accelerator in the world in Silicon Valley. Departure While things were going really well, I had a burnout. Since my girlfriend left me I felt very demoralized and lonely. After working 100 hours a week for 3 years straying and having zero days off (no kidding, literally I worked 1000 days in a row) I realized that I could not work here. Also, I realized I wanted to be my own boss. While being CTO meant a high level of authority, in this particular case I felt like I didn't own my life at all, the cofounder was so good at manipulating my brain that I was like a puppet. I decided to leave. I spent a year on hiring more people and finding a new guy to replace me as CTO. The replacement went very well, so eventually I left. Poor Founder Risk I moved on with my new startup but a few months later I got an email from the board. They were planning a new funding round as it looked like to me. So first I was happy about that, it meant my shares would be worth more. But it turned out they were planning an internal down-round, where all investors had to put money in. I was the only shareholder who wasn't rich. For all the investors it was relatively little money, but for me, it was more than I could afford. Since I owned 15% and couldn’t participate in the round, my 15% was diluted to 0.15%. Why? It turns out that in a VC-funded startup, it’s very easy to lose all almost your equity if the startup decides to have an internal round and issue new shares. It may have 100 shares, I own 15 and others own 85. Then it may issue 1000 shares, where each costs 10k. So I’d have to put 150k to stay with my 15%. (the numbers aren’t real, just for an example). So this was the end of the story for me. The moral: owning Equity in a startup doesn’t protect you at all unless you’re rich or you're important to the startup. P.S. I posted this on Reddit, and 99% of the commentators went completely off track and didn't get the point of this story. Here is the best comment from Reddit that will help: 👇