
Weekend startups prove challenging - drm237
http://blog.seattlepi.nwsource.com/venture/archives/134989.asp
======
roberte3
The problem was in the solicitation of people to participate in a share
issuing entity that wasn't registered with the government after they paid
money to participate. (basically selling shares).

The law is setup to prevent people from buying/selling shares of hypothetical
inc. without talking to the government first.

Also with the raw number of people who had shares(120+) that more quickly
draws the governments ire than two people trying to found a company together
and it fails. Advertising for a company co-founder doesn't fall into this
problem space.

------
carpal
Atlanta's startup weekend company is apparently in the clear. Not sure what
the difference is between the two.

In Atlanta's, the actual startup was an C-corp owned in part by Startup
Weekend, LLC, in part by Atlanta Startup Weekend LLC, and the rest by the
"core team" that existed after the weekend. People who participated in the
weekend were given shares in Atlanta Startup Weekend, LLC, and not the C-corp.
I think this was done to avoid any complications with the SEC, since LLCs are
governed far less strictly.

~~~
PStamatiou
agreed, <http://Skribit.com> is in the clear, which is great news.

<http://twitter.com/lance/statuses/776956955>

------
johnrob
What on earth is the point of such a thing? Seems more like a world record
stunt, like a group of people making a mile long burrito, than a serious
endeavor.

~~~
astrec
It's an opportunity for Burrito lovers to connect and indulge their passion
whilst creating a remarkable (and delicious) Burrito. Some of them may even go
on to create other even tastier Burritos.

------
alex_c
That is interesting. Does that mean that advertising for a co-founder runs
into the same problems? Or advertising for 2, or for 99 co-founders?

~~~
shawndrost
You may be breaking the same law, but you're probably breaking half a dozen
other laws at the same time (zoning, etc) and this one seems no more likely to
affect you.

I suspect that corporate lawyers are mistakenly worried about irrelevant laws
being broken, but I don't know if that's the case here: 100-person startups
formed over a weekend face unique legal challenges.

~~~
icky
IANAL, but IIRC, once you have over a certain number of shareholders (and it's
somewhere in that neighborhood), you are effectively a public company. Which
means you get screwed by SarbOx.

(And you've already had your "IPO", so there goes even more money).

------
ten-seven
Challenging? The problem is getting the entire entity legally registered. It
takes more than a weekend, apparently.

That said, the barriers to starting a business in the US are not unreasonable.
Having read "The World is Flat (2.0)" and recalling the hurdles encountered in
other parts of the world, The US is pretty good, but not the best, and far
from the worst. No place in the world, though, allows it to be done in a
weekend.

~~~
llimllib
> It takes more than a weekend, apparently.

It sounds from this writeup that the structure they wanted to have, which is
frustatingly vague, is actually illegal. Not just difficult.

------
marcus
A healthier and more legal approach is to auction the resulting IP to an
individual or a small group out of the participating people and divide the
proceeds among the rest of the participants.

You can't afford to maintain 100 employees in a startup, and it is foolish to
have 100 equal stock holders in a startup, every decision will take months.
But if you auction the IP, the person or group with the most faith and ability
to further the startup will buy it from the rest of the participants and the
rest will have had fun and gotten some financial restitution for their work.

------
jjburka
Wow I went to one of these , if this is true its a good thing nothing ever
came from it. It was a fun experience though

