

Ask HN: Share of business for "business guys" in new venture - account123

Hi HN,<p>I'm posting this from a throwaway account for reasons that will become
obvious.<p>A friend of mine is has developed a new type of interactive display
for bars and other venues. He's also developing applications to run on
top of it and is hoping to get it into lots of bars. The revenue will
probably come from a combination of payments from the venues and maybe
a slice of advertising revenue for ads that will be displayed on it
(in quite a new and novel way).<p>He's currently in contact with a couple of guys who want to go into
business with him. They say they have extensive contacts in the
entertainment industry both here and internationally. They're offering
to run the business and sales side of things and let my friend focus
on the product (technology and design).<p>What they're proposing is to split the new company 40/60 (with my
friend having the larger part). It's unclear at the moment if they
will be putting any money into it, but they have talked about a few
avenues to raise money. As far as I can see the company will need some
money to get the first units made, but probably not a huge amount.<p>My friend is very inexperienced in the business side of things and
probably does need a lot of help with running things and getting
sales. But it still sounds to me like maybe he's not getting such a
good deal and possibly setting himself up to get screwed over a bit.
What do you guys think, is this kind of setup sometimes a good deal?<p>All advice welcome, thanks HN!
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run4yourlives
If they are true sales guys, they won't be offended with having their take
away being results based.

Risk and reward after all. Your friend has already created the product and
taken the risk, the sales guys now need to shoulder that risk.

My opinion: work out something that forgoes ownership until results are
evident. Perhaps a profit sharing plan, or even a patent on the device that he
could retain ownership to for a set period of time.

I'm not sure of the legality of this, so your friend should talk to a lawyer,
but that's what my take would be.

~~~
minalecs
I think you could try vested equity, and work out some payment plan thats
comes with sales. If they don't work out fire them.

