The Founders' Agreement Chronicles: How It Defined My Startup's Destiny

Alexandra Gladyshevskaya

CEO and co-founder of SPOKK Insurance

Alexandra Gladyshevskaya, the CEO and co-founder of SPOKK Insurance, an insurance startup on a mission to protect digital natives from the risks they have in their lives, and a former Deputy to the General Manager of the Ukrainian office of American International Group, one of the world’s biggest insurance companies.

It could all have ended before it even began.

In 2018 in Kyiv, my friend, an IT specialist, my dad, and I decided to revolutionize the insurance industry. We came up with a business idea that we believed could change everything.

After a few coffee and wine meetings, we were already registering a legal entity and dividing the shares. Later, another colleague from the insurance industry joined us.

Everything was happening so fast that we could hardly keep up. We were driven by emotions, dreams, and coincidences. We no longer controlled the ship and became mere spectators at some point.

We made presentations one after another, changed approaches, transformed the idea, and met “respected” people. I was constantly pitching, and the microphone and stage became familiar to me.

At one of these events, we were called a “startup” for the first time and invited to an accelerator. How do you imagine startup founders? In my mind, images of Zuckerberg, Steve Jobs, and, Oh Lord, even Elon Musk flashed by. The doors to a wonderful and crazy world opened before me and the team. Well, at least that’s what we thought. But as experience and the next four years showed, this romance was deceptive.

Never, listen, never think that it’s something romantic. Exciting? Yes. Romantic? No. Most of the time, it feels like a movie plot where he goes on a date, she never shows up, then it starts raining, he sits on a bench hoping she will come after all, and the next scene shows flowers in a trash bin.

Amidst this whirlwind of events, our enthusiasm, and the “fortunate” coincidences, we decided, without much thought, to participate in an accelerator. At that time, we had nothing — no tested idea, no product, no investments.

The program consisted of two parts. First, the sandbox, where we were taught the basics of creating a startup. We learned about “cusdev,” “pitch deck,” “term sheet,” “CAC,” “LTV,” and many other fancy terms.

A Tale of Success or Catastrophe?

After successfully completing the sandbox, we were promised to move on to the next stage — a two-month trip to the accelerator program in New York and an investment of $10,000. We worked incredibly hard because when someone promises you two months in New York right from the start, you find an extra reserve of strength and motivation that could save the world from climate change, hunger, and an approaching asteroid. And we achieved our goal.

We advanced to the second part of the program. Now, I found myself in line at the U.S. embassy, obtaining the coveted blue paper with the word “Approved” written on it. I googled “what to wear in New York to avoid looking like a tourist” and talked to everyone I knew who had been to the USA (whether to learn from their experiences or to boast that I, too, would become a member of the “I’ve been to the USA” club).

The organizers invited us to a meeting at a restaurant, where they presented the term sheet. In the document, I saw “investments of $10,000” and “valuation of $700,000.” I didn’t see anything else, to be honest. I just thought that we were almost millionaires. This is the perfect moment for a million laughing emojis.

One of the conditions was that we had to open a company in Delaware, USA. Easy! Just a moment, we’ll open it right away!

An Unexpected Twist

April 15, 2019, 4 am, Kyiv, Boryspil Airport. I board the plane with a feeling that this will be a flight not to New York but to the International Space Station. Hey, all of you around me, can’t you see how successful, young, and even a bit beautiful I am?!

Everything was going smoothly: the visa, company registration, and accommodation were paid for by the organizers. The CTO is arriving in a week, and upon our arrival, an investment agreement and $10,000 await us. Counting on these investments, I carry $600 with me. Yes, you read that correctly. $600 to New York. We settled into what is trendy co-living, and it felt more like a summer camp than creating a startup that would revolutionize the insurance industry.

And then the “buts” begin. We couldn’t get the investment agreement for a long time. The organizers were not in a hurry, and we thought it was normal because it’s a serious document that an army of international company lawyers may be working on. But the agreement was still missing.

During this wait, one of my acquaintances, the owner of an IT company from Kharkiv, suggests meeting for coffee somewhere in Manhattan. During the conversation, he mentions an American lawyer who plans to open an accelerator in Ukraine, gives me his contact, and says that we must definitely get in touch with him because such a person may be needed. On the same day, we receive the investment agreement.

Euphoria strikes again. And then we start reading. Questions about the terms arise one after another. Along with other startups, we dig into the practices of American law, conduct “investigations,” and consult with more experienced colleagues.At the same time, I contact the person whose contact was given to me by my acquaintance from Kharkiv.
In our correspondence, we discuss startup life and, incidentally, I mention the contract we plan to sign and that we have many questions about the conditions. It’s worth mentioning that the organizers themselves provide vague answers to these questions.

The lawyer suggests that we send him the contract, so he can also take a professional look at it. And then came the phone call.

- Alex, if you sign this, no one will ever invest in you again. These terms are ridiculous. You’ll lose control over the company. Don’t do that!

We talked and debated every questionable point in the terms for a long time. Everything was bad. Very bad. We would indeed lose control over the company if we signed it. And now it was our turn to come up with a response.

We had to make a decision — to remain without investments or sign a contract that would push us into toxic relationships. It was a difficult decision, so we postponed it for as long as we could.

And then Microsoft enters the game. But not in the way you might expect. No, we didn’t randomly meet Bill Gates on 5th Avenue, and we weren’t invited to a dinner and golf party. We were merely invited to a startup event held at the company’s office at the intersection of 8th Avenue and 41st Street. There, during the event, sitting on a red chair, I receive a message that changes everything: “Sasha, if you don’t sign the contract today, you have to vacate the accommodation tomorrow.”

Several scenes flashed through my mind one after another: police arresting me, me in a police station, trying to explain how everything unfolded, but the police didn’t care, they were sleep-deprived and drinking coffee, then they stamp “deportation” on my passport, and I’m on a U.S. military plane in handcuffs, heading back to Kyiv. With an incredible force of will, I dismiss all these thoughts from my mind, show the message to our CTO, and leave the room.

I stand by the enormous windows of a skyscraper in the heart of Manhattan, gazing at the New York Times office, and the people below. My palms are sweaty, my stomach churns with nausea, and I think that within a day, I’ll be sleeping out there, next to that homeless person in the blue sweater under the red blanket.

Can you see him? And I think about those last $100 in my pocket. It won’t be enough for a ticket to Kyiv, and I won’t be able to afford accommodation for the remaining one and a half months until my flight back home. I wonder, do cockroaches crawl over you when you sleep near the subway? And I begin to understand those financiers who jumped out of Wall Street office windows in 2008.

When A Guardian Angel Appears

I need to do something. Come on, gather yourself, you wimp! And I call my new lawyer friend and tell him about the ultimatum we’ve been given, asking how to handle the situation properly to avoid any trouble with the police. To which I receive only one question in response:

- Alex, how much money do you need to stay in America until your flight to Kyiv, for the remaining one and a half months?

- Probably around $2,000. That would cover moving to Hartford, Connecticut, renting some small place there, and building my insurance network.

- I’ll call you back.

I hang up and continue gazing down from the 20th floor of the Microsoft office. And pompously think, “How symbolic it is that here, at the top of the world, I lost everything in an instant.” And then another phone call:

- Alex, I’ll give you $2,000.

- What? How is that possible? What are the conditions?

- None. You’ll repay it when you become a millionaire.

I’m still standing on the 20th floor of the Microsoft office. Now I don’t know what to think at all. There are no thoughts. It feels like I’ve been pulled out of a burning building. And only then comes the thought that those financiers on Wall Street probably just didn’t have any friends.

My Fail №1

The next day at 6 am, we left our accommodation in Brooklyn for the bus station, and from there, to Hartford. I met my new friend and guardian angel a few days later at a Starbucks on 5th Avenue in New York when he handed me the money. It was raining, I ran there all wet, and I was even late. That’s when I first saw the person who saved our dreams, ambitions, and maybe even the insurance market. I dropped the envelope with the money from my hands. It opened, and the $100 bills scattered on the Starbucks floor like confetti. I’m inclined to call it “My Fail №1.”

This story isn’t meant to be a moral lesson. It’s just a story.

Just remember one thing — don’t fall for blackmail and read the terms of the agreement.

*The photo shows the view from the windows of that same Microsoft Office at that exact moment, and me, lost in thoughts about the homeless people of New York and how I’m just one step away from joining them.

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