Y Combinator and Power in Silicon Valley

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2024-12-03 08:00:04

On September 10, 2010, AdGrok founder Antonio Garcia-Martinez was hanging out at co-founder Argyris Zymnis’s San Francisco apartment when he received a call from Rodger Cole. Rodger Cole was a litigator at Fenwick & West, and Fenwick & West was one of the big three Silicon Valley law firms. Getting an unexpected call from your law firm is never a good sign — this was no exception.

Cole told them they had just been sued by Adchemy, their former employer. This wasn’t entirely a surprise — when Garcia-Martinez and his co-founders Argyris and Matthew McEachen left Adchemy together to start their new company, Adchemy CEO and their former boss Murthy Nukala made it clear that he was not happy with any of them leaving. Adchemy had sent AdGrok legal warnings a few weeks before filing suit in Santa Clara County Court — these warnings were the “sort of menacing recital of employment-agreement restrictions that serves as the warning shot across the bow in corporate litigation.” The warnings led Garcia-Martinez to secure a preemptive relationship with Fenwick, and explained why it was Cole who received the paperwork.

At the time, AdGrok was tiny — all of three guys and their laptops. The startup had gone through the famous Silicon Valley startup accelerator Y Combinator, and had just presented at ‘Demo Day’ — the end-of-program event that marked graduation. Demo Day was a day-long presentation to invited investors, and it marked the start of external fundraising. To say the lawsuit complicated matters was to put it lightly. Adchemy named each of AdGrok’s co-founders personally in the suit, meaning that if they lost, the founders would be personally liable. The amounts involved in the suit effectively meant that all three co-founders would have been financially ruined.