The startup community is abuzz over the GrabGas fiasco last week, where (Chief Tech Officer) CTO Julian Ee quit the startup and took the tech with him after a big disagreement. As founders and entrepreneurs, we watch such developments closely as it does affect the community and ecosystem as a whole.
In his blog, Julian said he was approached to be the CTO for GrabGas where he would be a shareholder in the company. However, he found out later that the founders Sean, Jeson and Gabriel had already registered a company without him. Upon finding out, they allegedly backtracked on their words and said he was “an early employee” and offered 10 percent equity vested over 3 years. Of course, Julian didn’t accept it and negotiations broke down with him taking the technology which he had built.
After 5 days, the website remains down and there hasn’t been any word from the founders of GrabGas. Despite all these, there are 3 valuable lessons to learn from this whole incident.[bctt tweet=”If your technology fails, your startup fails so you have to do everything you can to get the right person and keep them happy.” username=””]
1. Have a Proper Shareholder Agreement In Place
When the business idea is formed, everybody gets excited and can’t wait to begin work. Julian was probably like that as well and he didn’t read too much into the whole situation, thinking he would get an equitable form of treatment. Perhaps the founders of GrabGas had no idea what they were doing and meant something different when they said Julian would be a shareholder as well. Whatever the case is, a shareholder agreement would have spelt out everything in black and white.
It doesn’t matter if the other parties are your relatives, friends or strangers. A shareholder agreement is essential prior to starting a business. With a shareholder agreement, terms like shareholdings, company incorporation, responsibilities of directors and shareholders, what happens if a shareholder wants to pay out etc. would all be written out.
The amount of disagreements that could have arisen would be substantially reduced. Julian would know exactly how many shares he will get and the founders will have protection in terms of all the intellectual property that have been built in the company.
2. Tech is Essential to Every Startup
Thinking that tech is not essential is probably also one of the reasons why the founders treated Julian the way they did. If this is a lesson to any startup founder, don’t estimate the importance of tech. Either you are the one who knows how to architect and code the technology or you make sure that your CTO is part of your founding team. If your technology fails, your startup fails so you have to do everything you can to get the right person and keep them happy.
3. Be Ethical In Treating Your Employees
If you mean to hire somebody, be upfront about the full arrangement. Don’t dangle equity like a carrot and then backtrack on your words. Such things will come back to bite you one day, as in the case of GrabGas. The loss in credibility with your customers, investors, public perception will not be worth it. Will Digi take action against them? Who knows but there has been a great amount of negative interactions on their Facebook Page.
So is GrabGas done for good? It depends on how long the negative impact lasts and at the end of the day, if they still survive long enough, their customers probably won’t care too much about what happened here. While this incident is not enough to sink them, it seems to have set them back substantially.
Perhaps if they start doing the 3 points above right, they may eventually right the course of the business.
For the full story, read A tale of lies and deceit. My experience on how GrabGas screwed me over.