A strange new battle over valuable startup equity took another step forward late this afternoon.
Jeremy Guillory, a Bay Area mechanical engineer, has filed a cross-complaint against 2.5-year-old Cruise Automation and its longtime CEO, Kyle Vogt. At issue: Guillory says that the self-driving car company — which developed an autopilot system for existing cars and is being acquired by General Motors for reportedly north of $1 billion — is cheating him out of his rightful 50 percent ownership stake in the business, which he says he helped form. (In legalese, Guillory is accusing Vogt and Cruise of promissory estoppel, conversion, unjust enrichment and accounting.)
You knew this counter-claim was coming yesterday, when the president of Y Combinator, Sam Altman, tried to get ahead of things publicly in a blog post.
As you may have read then, Altman, who has known Vogt for years and whose accelerator program provided Cruise its first check, acknowledged that Gillory “collaborated with Kyle for a very short period early on in the life of Cruise.”
Some time in the weeks since GM announced it was buying the company in mid March, Guillory requested a percentage of Vogt’s equity in the company, even though, according to Altman, “Kyle and Jeremy parted ways” after roughly one month of working together. “This event happened more than two years ago, and well before the company had achieved much of anything.”
The matter was private at first, with Vogt making what Altman described as an “extremely generous offer to settle this claim,” presumably to keep it from derailing Cruise’s acquisition. When Guillory didn’t accepted Vogt’s offer by a deadline last Friday, Vogt hired the law firm Orrick, Herrington & Sutcliffe to sue Guillory for so-called declaratory relief.
Guillory’s new cross-complaint seems to confirm Altman’s account from yesterday (which itself echoes Vogt’s suit).
The filing acknowledges that Guillory and Vogt first met in mid October 2013 and began working on Cruise. By October 21, 2013, they had submitted an application to Y Combinator, whose deadline that year was October 31. By November 7, 2013, after the duo had been accepted into the accelerator, Vogt told Guillory that he no longer wanted to work together.
Guillory’s attorneys note that on that print application to YC, Guillory and Vogt list themselves as co-founders and 50 percent shareholders of Cruise.
That seems to be the only documentation Guillory has to support his claim, along with this one-minute video, which Guillory and Vogt also submitted as part of their application. Whether it’s enough could determine whether or not Guillory is entitled to up to hundreds of millions of dollars.
In Vogt’s earlier suit against Guillory, it states that “after Mr. Vogt had already founded Cruise,” he and Guillory “exchanged various emails and correspondences where they discussed a potential collaboration in working to develop Cruise.”
Vogt’s complaint says that, “Despite these early conversations, by mid-November 2013, it became clear that Mr. Vogt and Mr. Guillory had personalities and visions that were not compatible and the two decided not to pursue any collaboration on Cruise. After this decision, Jeremy never participated in or contributed to any Cruise business.”
Indeed, it says, on November 19, Vogt interviewed alone with Y Combinator’s partners. It says Guillory did not pay for any equity interest in Cruise; receive any stock options in Cruise; write code for any technology being developed by Cruise; or draft, file, or create any patents for the tech that was being developed by Cruise.
Guillory lists himself on his LinkedIn page as having spent the last four years consulting on various projects, including designing the first open source hexacopter frame. In previous years, according to his profile, he has assisted numerous accelerator programs with fundraising and deal evaluation.
He has not responded to requests for comment.
In the meantime, investors are rushing to Vogt’s defense.
In addition to Altman, early Cruise investor Eric Paley of Founder Collective told us yesterday via email that: “While I’m not at liberty to speak for the company on the details of the lawsuit, Mr. Guillory’s claim is completely frivolous. Kyle Vogt is a person of exceptional integrity. I’ve known Kyle since he was a college student, when he was an MIT undergrad interning at my startup. In the eight years since, he’s been a model citizen of the startup world and truly one of the best entrepreneurs of the last decade — founding two billion-dollar companies.”
Vogt had previously co-founded the social video platform Twitch, which sold to Amazon for $1.1 billion in August 2014.
Continued Paley, “We were proud to be one of the first investors in Cruise and to back Kyle’s vision. I first discussed Cruise with Kyle when he was on the starting line and never met Jeremy Guillory or even heard his name. Our investment decision was made entirely on the basis of Kyle’s personal credibility, his track record as a technologist, and his vision for the future. I can’t comment on the specifics of the case, but I’d proudly back Kyle again.”