

Ask YC:  making contract for new co-founder?? - zkinion

Hello YC,<p>Recently in the past, I have ended up in some pretty bad relationships, getting ideas and hard work stolen by people who would try to turn me into their lowly paid employee with no equity.  I have dug myself out of some horrible pits and made great progress in my startup.  I found a guy that shares my goals and seems pretty honest.  Our skills compensate each other very well.<p>However, I'm still paranoid because of getting burned so bad.  I've wasted well over two years because of bad relationships.  I want to at least get some kind of basic contract down.  What have you guys done on your pre-money arrangements with other co-founders?  I'm going to call my normal lawyer tomorrow, but he mostly does criminal defense stuff, so I want other options.<p>I've honestly burned through most of my savings that I had from a successful business years ago, with these previous startups and a terrible lawsuit.  I can only spend maybe a few hundred dollars at most.<p>Both of us have some software built and a decent amount of time spent on seperate stuff.  There are no patents.  The company is an LLC registered in Nevada a few months ago.<p>Please help me with any advice you can give.  I can't bear to get screwed over again.  I'll probably end up going postal if I do.  :)<p>Thank you for your advice,<p>-Zak
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gruseom
_I can't bear to get screwed over again._

I think your only true protection against getting burned again is to deeply
face what it is in yourself that created those painful situations in the first
place. No contract in the world will protect you from creating an equivalent
situation again, if you haven't learned what you need to learn from the
previous ones.

Your use of phrases like "getting screwed over", "getting ideas and hard work
stolen", and so on, suggest that you believe that it was because other people
did bad stuff to you that things ended up the way they did. I'm willing to
believe that other people did bad things. Nevertheless it was your own choices
that put you there in the first place. As a wise person once explained, it was
never really the other person you were trusting; first and foremost you were
trusting your own bad judgment, and that's what really betrayed you.

I'm not saying you shouldn't put things in writing or draw up a contract. By
all means do. One way to protect against the risk of a relationship going bad
is to have shares vest at a certain rate per month. I think our arrangement is
1/48 per month (so, over four years), with a 1-year minimum, and a portion of
up-front vesting for work already done.

But that pales in important to the deeper issue: if you don't want to get
screwed again, then stop ascribing your painful experiences to other people.
This doesn't mean you have to absolve or forgive _them_ , it means you have to
be truly honest with yourself about what _you_ did and thought that was wrong.
That's been my experience anyway... the only solution that works is
fundamental growth.

~~~
lionhearted
Hey Gruesom, I'm upvoting you because you've got some good points in your
comment and I've seen quite a few comments from you I really like. But...

"I think your only true protection against getting burned again is to deeply
face what it is in yourself that created those painful situations in the first
place."

That's... not really true. The rest of your advice is sound and good, but
there are bad people in the world that do bad things. There's also normal
people, and between normal people, there's friction. Almost everyone I know
who is successful in business has been burned a couple times, and you just
need to learn from it. Certainly the original poster did some things wrong via
contracts, relationships, etc, but it's also quite possible that he was just
dealing with some rat bastards. There's a lot of them in the world, and
unfortunately, you usually start by working with them. Established people
typically only work with people with a great track record, so when you don't
have one, you're usually working with someone else who doesn't have one. So
you've got a 1 in whatever chance that a random person is a donkey chance that
you're working with a donkey.

~~~
gruseom
_it's also quite possible that he was just dealing with some rat bastards_

Certainly, and I hope I didn't imply otherwise. But then a person in that
situation needs to better discern who's a rat bastard. It still comes down to
taking responsibility for what you need to learn. It sounds like we agree on
that.

I think maybe what you're objecting to is a sense that I was blaming the
victim. I admit there's a fine line between saying "it was the victim's fault"
and saying "if the victim wishes to cease being a victim he must take
responsibility for what he himself did". Possibly it's too fine a line to come
across well in a brief post. It can be hard to tell whether someone is writing
from a caring state or a judgmental one (whereas in person, you'd pick that up
easily from nonverbal cues).

------
staunch
You can (and certainly should) do everything to protect yourself and you still
might get screwed. Going into business with someone is giving them your trust.
If you can't do that then you can't have a partner.

------
anamax
> I'm going to call my normal lawyer tomorrow, but he mostly does criminal
> defense stuff

Get another lawyer.

------
lionhearted
I'll highly recommend this book:

[http://www.amazon.com/E-Myth-Revisited-Small-Businesses-
Abou...](http://www.amazon.com/E-Myth-Revisited-Small-Businesses-
About/dp/0887307280)

It talks about setting up clear roles and expectations from the beginning.
Contracts typically aren't worth the paper they're printed on - where you're
at in life right now, you're not going to go to court if you fall out with
someone. Contracts protect you a bit if you're further along, but a contract
isn't worth a damn thing without a good relationship and clear expectations.
The most important thing a contract can do is to lay out clearly, in writing,
what you both expect to do and have roles set up. But so many of your
assumptions will likely be wrong that you might have to redraw some elements
of it over time. It happens - but getting down who does what, when, where, and
how they're measured is huge. A basic operating agreement goes a long way.
Check out E-Myth, it reads fast. Probably my favorite book on small business
ever.

------
triplefox
One way to test your partner's trust is to deliberately instigate a money
fight. It probably will happen later if not now, and now's when there's little
at stake. Figure out a few "hard lines in the sand" that an unscrupulous
person would really dislike, hold those positions as far as you think you can
go without destroying your relationship, then come clean once you've
determined the person you are truly dealing with. People will always reveal
themselves when pushed to the edge.

~~~
gruseom
If anyone tried such a gimmick with me, it would damage my trust and respect
for them permanently. I certainly wouldn't want to be partners with someone
who would do that.

