One founder wanted to negotiate out of having to pay $10K in lawyer fees. Said just because it was always done that way doesn't mean we had to do it that way this time. Turns out that person wanted to rewrite the book of convention on every decision he made. I can't tell you that's why his company failed but it sure didn't help. Another person didn't want preferred shareholders to have any preferred rights. He never should have taken investor money and probably won't again. My favorite was the guy who wanted a relocation bonus….to move his boat to the bay area.
The investor who spends hours browbeating you to avoid a tiny reduction in the option pool will also be tying up board meetings for an hour to talk about an assumption on line 18 of the revenue model submitted for discussion. (...) Does he wait until the day of close and then call you and tell you that he found out you have a competitor and is going to lower the valuation by 30% now that you are in a lockup? This person is always going to be trying to find and exploit any leverage they have over common.
In other words, if they're frustrating to deal with during the negotiations phase, they'll probably get even worse after it's over (and they no longer have any reason to try and seduce you). So don't ignore those early signs.
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