RPG Codex Interview: Chris Avellone on Pillars Cut Content, Game Development Hierarchies and More

[Azarkon]

No – after raising some questions about company finances and other issues, Feargus de-ownered me (which I didn’t have a choice in)

It is incredible.
Can you elaborate on this? How was it even legally possible?

Edit: by "incredible" I don't mean that I don't believe. Only that I am flabbergasted.

Not only is it legal, but it is common in small business disputes, for the majority share holder to remove minority share holders from the company.

The only legal issue would've been taking away his shares - that is not usually legal without abuse.

I figured the other partners diluted him (a la how Mark Zuckerberg forced out his roomy in The Social Network). They just create new shares and divide them among themselves, leaving MCA out. So maybe Chris had 5 shares out of a hundred, they could make it so he has 5 shares out of 10 million, making his position effectively worthless without technically taking anything away from him. But it sounds even simpler than that.

Doing this to dilute the value of his shares would open Obsidian up to law suits, as they'd have to prove there was no conflict of interest when it was done, and it'd also require them to buy the new shares as otherwise their own share of the company is also reduced. The best way to remove a minority share holder from a company is to simply have a share holder agreement, signed at the company's creation, that allows them to buy out his shares at a previously agreed upon price. I don't know whether that applies in this case. Failing the existence of such an agreement, they could try to merge with a new company to do a freeze out. But I don't think that happened.

 

[skacky]

Holy crap Chris Avellone, that latest post makes my blood boil. You handled that like a champ.

 

[Puteo]

You didn't think it was relevant to mention the fact that Feargus took away your co-ownership and robbed you of your royalties when you were describing the sordid details of how you left Obsidian?

Are there any other human right violations Obsidian commited we should be aware of?

Do you think he just accidentally left these details out? That the greatest videogame writer of all time just so happens to slip in a new bombshell bigger than the last every time it seems like the action is over and the drama is dying down?

Oh no, this is 100% planned. Maybe not the timing of it, but he's probably got his plot beats all planned out for maximum impact. I imagine we're going to get another boss fight soon.

Just sit back and enjoy Mr. Avellone's wild ride

 

[Mebrilia the Viera Queen]

Hey Chris "Endure in enduring grow strong"

 

[Ninjerk]

Hi Chris Avellone,

It's 9am, a nice spring day, and you invited someone from OBS upper management home for a beer and to discuss about deleting your OBS forum account. Then, someone knocks on your door. It's monsieur Hervé Caen, he wants to chat with you about a draft he has for Descent to Undermountain 2.

But! You got a bit distracted the day before with some unrelated stuff and it turns out you only have one beer left. Who would you give it to?

I'm pretty sure if he invited "someone" from OBS upper management he'd start by playing them Huey Lewis and the news.

 

[Hamster]

Feargus's buddies in the Russian Mob

Actually they are Chris Avellone's buddies in the Russian Mob now.

https://www.pcgamer.com/obsidian-is-no-longer-working-on-armored-warfare/

Armored Warfare, a free-to-play tank combat game developed by Obsidian, will no longer be handled by the famed RPG studio. Instead, the game's Russian publisher My.com is taking over.

Noted RPGmeister Chris Avellone has teamed with a new studio named Owlcat Games

Owlcat Games are a small studio within free-to-play publisher My.com.

 

[Irata]

Owner/founder are just laymen words people use. What really matters is how a partnership or LLC or etc agreement is structured. You can call a group a people "founders" for example, but likely only the portion who put in capital to form the business are Majority Partners.

https://business-law.freeadvice.com/business-law/corporations/expel-minor-partner-from-business.htm

Right, but if he's being labeled a partner then he can be individually sued over the companies debts. He'd then have to sue the other members on his own. Why would he allow that and get no benefits?

 

[abnaxus]

Crooked Feargus.

 

[Maculo]

Doing this to dilute the value of his shares would open Obsidian up to law suits, as they'd have to prove there was no conflict of interest when it was done. The best way to remove a minority share holder from a company is to simply have a share holder agreement, signed at the company's creation, that allows them to buy out his shares at a previously agreed upon price. I don't know whether that applies in this case. Failing the existence of such an agreement, they could try to merge with a new company to do a freeze out. But I don't think that happened.

A shareholder agreement is possible, but Avellone never mentioned shares or forced buybacks of stock. Furthermore, I would be curious how a buyback would leave him with no compensation for it.

He made it sound like a revocable right at the discretion of a stakeholder.

Owner/founder are just laymen words people use. What really matters is how a partnership or LLC or etc agreement is structured. You can call a group a people "founders" for example, but likely only the portion who put in capital to form the business are Majority Partners.

https://business-law.freeadvice.com/business-law/corporations/expel-minor-partner-from-business.htm

Right, but if he's being labeled a partner then he is liable for the companies debts. Why would he allow that and get no benefits?

As far as I know Obsidian (i.e., Obsidian Entertainment, Inc.) is a corporation and not a partnership entity.

 

[Azarkon]

Owner/founder are just laymen words people use. What really matters is how a partnership or LLC or etc agreement is structured. You can call a group a people "founders" for example, but likely only the portion who put in capital to form the business are Majority Partners.

https://business-law.freeadvice.com/business-law/corporations/expel-minor-partner-from-business.htm

Right, but if he's being labeled a partner then he is liable for the companies debts. Why would he allow that and get no benefits?

The question is how many shares he had in the company; and what were done to those. Profit sharing is legally required for all share holders, so not paying him any fraction from the company's profits would generally be illegal, but it'd depend on the share holder agreement. Now, in case owner is just being used as a title, and he didn't actually have ANY shares, then technically ... Feargus could do whatever he wanted with the company and Chris would have zero say.

 

[Mustawd]

Furthermore, I would be curious how a buyback would leave him with no compensation for it.

The agreement could specify the share price, which might be peanuts due to it being an outdated price or just because fuck you.

 

[Parabalus]

The more I read Chris' posts the more I wonder why "Obsidian Upper Management" didn't just hire a hitman - guess they really enjoy twisting the knife. And the money.

 

[Infinitron]

The agreement could specify the share price, which might be peanuts due to it being an outdated price or just because fuck you.

As I said earlier:

Possible scenario: Young man Chris Avellone co-founds Obsidian in 2003 as a minor shareholder. Doesn't look too closely at the fine print. Expects a handsome payday (millions?) when he leaves in 2015, but doesn't get the kind of sum he expected. Disputes the contract, ends up getting nothing.

Or some variation of that.

 

[aratuk]

EDIT: Ninja’d by Avellone. But his explanation is something… outside my experience. Taking away ownership without compensation… Couldn’t Feargus then just “de-owner” everyone but himself? Or everyone but himself and two other owners, to make a majority?

I'm stunned at what happened if he was an actual partner. I just can't believe that "owner" isn't being used as a synonym for founder. Was he liable for the company's debts? Even in a limited capacity? If so and he had no equity then he should sue his lawyer. I'm not trying to be a dick, but someone screwed him over big time, and knew they were screwing him, if he was an actual co-owner. I'm not even sure it would be legal.

Owner/founder are just laymen words people use. What really matters is how a partnership or LLC or etc agreement is structured. You can call a group a people "founders" for example, but likely only the portion who put in capital to form the business are Majority Partners.

https://business-law.freeadvice.com/business-law/corporations/expel-minor-partner-from-business.htm

Some businesses contain an agreement that allows the majority owners to force the minority shareholders to sell at a predetermined price or a price determined by a mechanism within the agreement. These types of agreements can be written into the shareholder agreement and are enforceable.

Yes, but “owner” would denote an equity stake, whether majority or minority, while “founder” wouldn’t necessarily mean anything. Avellone has been using the word “owner”.

Is it possible that the mechanism for valuation could determine that the price is zero (or less than zero), if it operates on a valuation of assets offset by debts?

 

[Maculo]

Furthermore, I would be curious how a buyback would leave him with no compensation for it.

The agreement could specify the share price, which might be peanuts due to it being an outdated price or just because fuck you.

True, but he did not mention shares, buyback, or compensation, which makes me think it was more an employee agreement that provided for a revocable right to profits/losses instead of shares.

 

[Mustawd]

Yes, but “owner” would denote an equity stake, whether majority or minority, while “founder” wouldn’t necessarily mean anything. Avellone has been using the word “owner”.

No it does not, technically. There are such things as salaried partners in accounting firms for example. They have an inflated salary and may share limited in the profits, but have no equity or voting rights.

 

[Mustawd]

Furthermore, I would be curious how a buyback would leave him with no compensation for it.

The agreement could specify the share price, which might be peanuts due to it being an outdated price or just because fuck you.

Are you serious? That is exactly opposite of what a share means.

What are you talking about?

 

[agris]

Furthermore, I would be curious how a buyback would leave him with no compensation for it.

The agreement could specify the share price, which might be peanuts due to it being an outdated price or just because fuck you.

You can do all kinds of fuckery with this type of contract. If the private share issuing power lies with the majority of owners, they can issue new shares to themselves such that Chris's (or whoever the suppressive person is) total number of shares isn't worth squat. You're taking a paper value, of which Chris's is worth something, and increasing the majority's number of shares by, say, 3 orders of magnitude. The minority partner will have then lost 3 orders of magnitude of worth. it's 3/10 vs 3/10000.

 

[Maculo]

Furthermore, I would be curious how a buyback would leave him with no compensation for it.

The agreement could specify the share price, which might be peanuts due to it being an outdated price or just because fuck you.

Are you serious? That is exactly opposite of what a share means.

For a corporation the "share" would be stock. There can multiple restrictions on stocks, such as buyback value. Furthermore there can be different classes of stock. For example, Class A stock could receive 10 votes per share, whereas Class B only receives 1 vote per share.

 

[Mustawd]

Furthermore, I would be curious how a buyback would leave him with no compensation for it.

The agreement could specify the share price, which might be peanuts due to it being an outdated price or just because fuck you.

You can do all kinds of fuckery with this type of contract. If the private share issuing power lies with the majority of owners, they can issue new shares to themselves such that Chris's (or whoever the suppressive person is) total number of shares isn't worth squat. You're taking a paper value, of which Chris's is worth something, and increasing the majority's number of shares by, say, 3 orders of magnitude. The minority partner will have then lost 3 orders of magnitude of worth. it's 3/10 vs 3/10000.

Right. Some states do have laws for LLCs, for example, that prevent this. But fuck if I know what OE is. LLC? LLP? :itisamystery:

Pre-emptive Rights
Companies sometimes attempt to dilute a member’s interest by issuing new certificates. Problems can arise if the company issues new membership certificates and a minority member wants to buy stock from that new issuance, but the majority members do not want to sell it to her. To avoid potentially unfair results, some states provide that the minority member has a right to buy her proportional share of a new certificate issuance, regardless of whether the LLC’s articles or operating agreement expressly give this right. This right is often referred to as “pre-emptive rights.” In other states, a minority member has pre-emptive rights only if the LLC’s articles or operating agreement expressly say so.

 

[Azarkon]

Furthermore, I would be curious how a buyback would leave him with no compensation for it.

The agreement could specify the share price, which might be peanuts due to it being an outdated price or just because fuck you.

You can do all kinds of fuckery with this type of contract. If the private share issuing power lies with the majority of owners, they can issue new shares to themselves such that Chris's (or whoever the suppressive person is) total number of shares isn't worth squat. You're taking a paper value, of which Chris's is worth something, and increasing the majority's number of shares by, say, 3 orders of magnitude. The minority partner will have then lost 3 orders of magnitude of worth. it's 3/10 vs 3/10000.

When you issue new shares in a corporation, you can't just issue them to yourself. You have to pay money for them based on their value. Otherwise nobody would ever accept minority share in a company because it'd be worthless.

 

[SpurdoSparde]

It would be easier getting MCA's lawyer to start posting in this thread than guessing the circumstances of this de-ownering, although probably less fun.

 

[aratuk]

Yes, but “owner” would denote an equity stake, whether majority or minority, while “founder” wouldn’t necessarily mean anything. Avellone has been using the word “owner”.

No it does not, technically. There are such things as salaried partners in accounting firms for example. They have an inflated salary and may share limited in the profits, but have no equity or voting rights.

“Partner” is yet another, different word, that no one has used here…

But whatever.

 

[HanoverF]

Codex before: What is an RPG?

Codex now: What is an Owner?

 

[IHaveHugeNick]

I have no idea how courts banning people from professions because of criminal activities would be relevant to the question of legality of lifelong non-compete deals.

It isn't. Let me help once again to bring the issue on track.

The argument here is that Chris was *threatened* with a "non-compete/NDA". Now, that is not just silly in the context of story writer/ game designer, it is also quite unethical considering we are talking about Chris Fracking Avellone.

Don't be silly, how was he threatened? If co-owner leaves the company, ownership needs to be sorted out, one way or another. The problem is, if you quit your job while neck deep in debt and in a middle of family health emergency, you're going to end up in a weaker position in regards to other partners, even if they play the most softball negotiations imaginable.

Even Chris himself acknowledges that a) his personal situation was affecting his ability to fight back and b) that under different circumstances what happened might have been considered "just business".

Now, he's too modest to say it, but I can certainly say that as far as us fans are concerned, Obsidian=Chris Avellone plus bunch of other people I don't give much of a shit about. It was his work that made Obsidian a household name and it was his work that kept them afloat all these years, and the thought he could just get the boot with not a single dollar is mind boggling.

But at the same time, a lot of the other stuff he complains about is rather in "1st world problems" category. If I had a company with a high profile departure on this level, I would absolutely try to block his ass from joining a competition, that's just common sense. The same goes from banning him on forums. It's like, well yeah, if you're going to be talking shit then nope, do it in the bowels of the internet on RPG Codex where no one will see it.

My takeaway from all this, is that they should treat Chris much more respectfully when he decided to leave, but apart from that, the show must go on and if he tries to start shit, and leaking the rather inconvenient details about Tyranny development certainly counts as trying to start shit, Obsidian are well within their right to defend themselves by any means necessary.