

Fundable comes to an ugly end - daremon
http://fundable.com/

======
reidman
Pretty one-sided, but I suppose a domain name can only belong to one side of
any argument.

For the uninitiated, Fundable was a site where you could input a dollar amount
and accept donations towards that 'goal'. If the goal wasn't reached within a
certain time period, the money was returned to the individual donors. If the
goal was reached, the money was released to whoever initiated the campaign,
minus a hefty 7% commission fee.

As far as I could tell (I used it back in 2007 but quickly jumped ship when I
realized how rickety it was) it was pretty much a giant Paypal API with bad UX
and even worse customer service.

~~~
Confusion
Do I understand correctly that <https://tipit.to/> might be a (cheaper)
alternative?

(Disclaimer: I am in no way affiliated to this site, apart from liking a Java
project the owner works on)

~~~
reidman
I don't think so -- Fundable was targeted toward much larger transactions
($5k+ campaigns weren't rare, iirc) and specifically set up to 'self destruct'
if the goal wasn't met.

So for example, if you had a small neighborhood looking to fund the purchase
of a $5,000 water well and they only raised $4,000, everyone who donated was
_supposed_ to get their money back.

(Also, TipIT doesn't seem to suck.)

------
megaduck
As my cofounder and I are currently finalizing our own incorporation, I look
at Fundable's sad situation and think, "Wow. What if that were us? Is there
any way we can avoid ever having that kind of situation with a clever bit of
legalese?"

Unfortunately, I suspect the answer is "no". As soon as you give one partner
the ability to eject the other (for _whatever_ reason), you open the door for
all sorts of abuse. Besides which, if a partner wants to cause chaos and
destruction, you're in for supreme nastiness, regardless of the legal
situation.

So, at the end of the day, I think the best you can do is choose your business
partners carefully, keep things above board, and do the best you can to behave
morally and ethically. That way, even if things go to shit, hopefully you'll
still be able to walk out with your head held high.

I'm sorry Fundable went out this way. Sounds ugly as hell.

~~~
wmf
<http://en.wikipedia.org/wiki/Shotgun_clause>

~~~
megaduck
A shotgun clause is probably the best method out of a bad lot, but it still
has the potential for abuse.

If a partner is going through financial difficulty (outside of the company),
then the partner with a better financial position can force a sale at a
depressed valuation.

Say my mother has a massive stroke and requires expensive ongoing medical
care. After a while, I'm financially drained. At that point, my partner can
trigger the shotgun clause at an amount larger than my ability to scrape up
cash, and _wham_ I'm out. Out with a small payout, but out regardless.

There isn't a silver bullet to these kinds of issues. At the end of the day,
people are involved, and people are complicated and difficult.

~~~
mr_luc
I agree with your premise, reasoning, and conclusion. However, I'd disagree
about what your biggest fear should be.

A horrible, Fundable.com meltdown should be, by far, a bigger fear than
getting abused by a shotgun clause.

Even in the land of the do-over, I can't see how this won't destroy the
confidence that investors would have in either party going forward. Your
_future_ is so very much more important than your ownership in a startup with
a co-founder who has no qualms about ripping you off.

As you say, there is no legal solution to the problem of bad humans. But
there's no legal solution to death or car accidents, either; what we have are
legal measures to manage those risks, in the form of contracts of some kind.

A shotgun clause is a last-resort clause, and from its very nature, it
_appears_ to me that it would only be invoked when you would most want it to
be invoked.

( disclaimer: mr_luc has no personal experience with shotgun clauses and may
very well be talking out of a suboptimal orifice. )

------
vaksel

       Louis Helm programmed the the payment system.
    

if this is an indication of their attention to detail, it's probably a good
thing they had to close before they lost their user data to some hackers.

Based on what was written, I'd be surprised if both "founders" aren't 18.

edit: googled, and found some photos(Pratt looks to be ~26, while the coder
guy does indeed appear to be ~16:
<http://emilychang.com/e/go/ehub/interview/fundable>

~~~
mquander
_> After John Pratt contacted Louis Helm's father, Louis Helm called John
Pratt and agreed that his actions were immature._

16 sounds more likely.

~~~
drusenko
Did either of you read the interview? They both graduated from the University
of Michigan...

~~~
encoderer
And it's this Buckeye's opinion that THAT explains a lot :D

------
eplanit
I'm torn between 'sad' and 'pathetic'. The word 'immaturity' applies, without
question or hesitation.

~~~
pvg
No need to be torn, it's both (and more). Obviously, it's sad when your
venture fails; writing a long rambling missive (in the third person) about how
you called your partner's parents and how everyone should sue your partner,
though, is pathetic. Could have simply said the company is shutting down, that
one of the founders is no longer able to work on it and provided a contact
address for people who need to recover their money.

~~~
9oliYQjP
While this is a particularly nasty situation, absolutely off-the-wall meltdown
behaviour like this is actually pretty common in startups when things start
going bad. Anyone remember the meltdown between the partners in the
documentary Startup.com (<http://www.imdb.com/title/tt0256408/>)? I think most
people at least have the wherewithal not to air the dirty laundry out in
public.

It's just another risk and potential downside to partnering with someone in
business. Everybody's done something at least a little bit crazy and out-of-
character when a romantic relationship has hit the rocks. Maybe you did
something innocent but pathetic like burning compilation CDs (i.e. Nick and
Norah's Infinite Playlist). But we've all heard of the crazy girlfriend who
dumps her (now ex-) boyfriend's stuff in front of the house after catching him
cheating. Business partnerships aren't all that different. Really they involve
the same levels of emotional attachment and passion.

It's important to try to assess the behaviours that a potential partner
reverts to when under stress. For programmers, that might be shutting the
world out and ignoring calls/emails rather than facing the music when there's
a disagreement over deliverables. For non-programmer business-types, that
might be writing and re-writing business plans and coming up with rather
dreamy fantasy plans rather than actually getting deals done. These particular
cases I think are the more common revertive behaviours (for lack of a known
proper term) for programmers and business types. They're also behaviours that
tend to drive the other party in such a partnership absolutely bonkers.

You definitely don't want someone who reverts to a temper tantrum like this
guy from fundable. To be fair to him, this is most likely a sad case of both
partners having individual meltdowns simultaneously.

~~~
jacquesm
> But we've all heard of the crazy girlfriend who dumps her (now ex-)
> boyfriend's stuff in front of the house after catching him cheating.

Why does that make her crazy ?

------
ivankirigin

      seek legal action against Louis Helm personally 
      should he fail to resolve your payment issues promptly

Well, IANAL, but I don't think that is how it works. The corporation is liable
for funds it holds on your behalf. Boy would I be worried if I were Pratt.

~~~
vaksel
they are incorporated, so he himself isn't liable, the corporation's assets
may be seized, but he should be fine

~~~
mishmash
What about officers of the corp, aren't they also responsible?

~~~
justinhj
Only if they act illegally or irresponsibly, right? Otherwise only assets of
the corporation are at risk.

~~~
billclerico
holding customer funds without complying with banking laws is a federal crime
- making them liable personally

~~~
justinhj
you should tell paypal about that

~~~
billclerico
paypal is a registered bank

~~~
justinhj
Not in the US it isn't.

------
chrismetcalf
For those who are late to the party like me, here's a screenshot I found of
the original farewell message: <http://img18.yfrog.com/img18/2396/s8u.png>

John was actually one of my college roommates, it's sad to see this come to an
end like this.

~~~
idm
I visited fundable.com right now, and it looks like the site is functioning
again. What gives?

~~~
chrismetcalf
I bet John's lawyer suggested he pull down the message. Either that or the
other guy wrestled control of the site back.

------
falsestprophet
This is what happens when you give someone 50% of a company for _simply having
an idea_.

~~~
fhars
From the perspective of the writer it reads more like "this is what happens
when you give someone 50% of a company for simply writing the code." At least
one side seems to have gotten something wrong...

~~~
fnid
I have found that people who think the idea is worth half the company are
usually so irrational that they make really bad decisions about their
contributions to the firm later on.

Companies like this can't thrive if the scales are not balanced in terms of
ownership, labor, and results. Animosity and resentment brew and people get
selfish and defensive and it all breaks down.

It appears that is what has happened in the fundable case. Perhaps the
programmer did not feel like the business guy was pulling his weight. Maybe
for him, the upside of working all the time and fixing all the bugs in the
code and making the site reliable weren't worth whatever he was getting from
the deal. Maybe he wanted the business guy to spend some money on more
programmers or maybe the solution was more reliable infrastructure and it
wasn't something the programmer could fix with more code.

Who knows. I just know that from the tone, it isn't good and lots of users of
fundable are left in the dark now. Sad.

------
gwtwscrltt
John Pratt and his company FUNDABLE NEVER SENT ME A CHECK for the $400.000
raised. It was raised JULY 27 2009 AND THIS IS OCTOBER 18 2009. He will not
reply to any emails and the company has NEVER had a way to SPEAK to anyone
EVER. I am sure i am just one of many people who have had their money stolen
from FUNDABLE. I would like to start a class action suit and am looking into
creating a website so that we (ripped off people) can all find each other. He
is a common THIEF. This is not a story of basement company gone awry. This is
a story of outright plundering of peoples wallets and then walking away and
thinking there is no consequence. WHERE IS THE 400.00 ALL THIS TIME? Anyones
guess but it (minus their huge 10percent cut) is NOT in my hands nor
supporting the rescue dog SY that it was intended for. DO NOT USE FUNDABLE
EVER.

------
wheels
I have to really ask, "Why is this upvoted so much?" There aren't really
lessons in here; it's just bitter drama.

~~~
vaksel
people love a train wreck, + it has the lesson of being careful of who to pick
for your cofounder, and about giving second chances to people who screw you
over.

~~~
wheels
I'd like to believe that this site is better than that – that it's not about
watching train wrecks. The problem with picking co-founders isn't that people
don't know it's important – it's that they ignore it anyway or don't know how
to tell. It's about as useful as a surgeon general's warning on cigarettes.

~~~
callahad
Not train wrecks in general, but a very specific train wreck along the same
tracks upon which many of us are traveling, or hope to travel.

------
patio11
I am having a total mental block trying to recall the name of the "Donate
people money through Twitter" service that was on HN a few times, but I think
this is what he meant when he said "Do not take payments lightly."

[Edited to add: Tipjoy. I knew it was T-something but I ran through about 15
combinations of Twit-X before realizing that it was not from that naming
convention.]

~~~
tptacek
They were a YC company, weren't they? Ivan and Abby?

~~~
sachinag
They were. Ivan's now at Facebook, where everyone assumes he's working on
Facebook Payments. Abby's probably doing something even cooler, although IDK.

BTW, Tipjoy never held the money; they were just a front-end for PayPal, so
they didn't have the issues that Fundable apparently is having.

~~~
patio11
_Tipjoy never held the money_

That does not match with my understanding of their business model.

<http://tipjoy.com/faq>

Look for their instructions on, e.g., cashing out.

~~~
sachinag
I guess I only read it early on and didn't see the change. Building a totally
new payment system is actually rather impressive.

------
piramida
Could not resist a laugh really, this is so childish. That's why I would not
put any trust in an online business without knowing it's background - can as
well be two boys in a basement.

~~~
Mentat_Enki
Absolutely...I mean, look how Sergei and Brin's and Steve and Steve's ventures
turned out... sheesh.

------
DanHulton
Wow, that's not good for anybody. I guess this is really a case of "be careful
who your partners are", jeeze.

------
citizenparker
Long live <http://www.kickstarter.com>

------
jrockway
This is exactly why I will never go into business with a non-technical person.
This site is exactly what I think of when I think "business person".

~~~
maukdaddy
That's a piss-poor attitude.

~~~
astrodust
I think it's a responsible attitude, but perhaps for reasons you're
overlooking.

Communication is important in general, but vital in a start-up situation. If
you're of a technical mindset and have a partner who is business minded, you
two may have a significant communication barrier.

Any healthy partnership has enough overlap in terms of expertise that the
ability of one partner to communicate to another using a language they
understand.

Sometimes this takes a third partner who's somewhere in the middle and can
intermediate and provide a more objective opinion when the other parties take
opposing sides.

That being said, I'm sure there are start-ups where the founders do not have a
lot of overlap, but I doubt they will succeed if they do not make the effort
to find or create some common ground to have informed discussions on.

If you don't understand "business types", then perhaps it is responsible to
not go into business with them. The "poor attitude part" may mean that you're
not willing to make an effort to learn more about business, though.

------
edw519
In spite of all the issues this case raises, only one popped out at me...

Team of 2: 1 programmer + 1 non-programmer = bad combination.

Maybe I'm a little old fashioned, but in a 2 person web startup, _both_ should
be programmers. I'm certainly not suggesting that this is what caused this
situation, but it sure didn't help...

Since only one programmed, the probability of future difficulties increased
dramatically, and once they did occur, he was the only one who could have
dealt with them. A team approach probably would have been much better for
technical problems, both preventing them and handling them.

~~~
mikeryan
This depends entirely on the business you are trying to build. Trying to
generalize this into 2 people == 2 programmers == success isn't going to work
in a vast majority of situations. Who's going to do business development if
you have corporate clients? Who's going to do visual design?(programmers?
Yikes!) Who's going to deal with investors and press?

This product didn't fail because there was only one programmer (heck I'm
pretty sure digg started with obyrne and Kevin Rose). Fundable failed because
it poorly managed itself.

------
WesleyJohnson
I'm curious if anyone has experience with something like this or know of other
situations where a joint venture was owned 50/50 and one side allegedly
decided to take their ball and go home?

Is there legal recourse either side can take to reclaim ownership and move on?

~~~
hristov
There may be legal recourse but the legal system moves so slowly that in
Internet time you are pretty much screwed. So in the beginning stages it may
be a good idea to keep copies of all software, data, etc. close just in case
one gets locked out of the servers.

I know of this one company that decided to move their servers out of a
collocation facility. The collocation facility hated to lose a good customer
so they just locked the company out, disconnected the servers and did not let
the company get to them. But they helpfully offered to reconnect the servers
if only the company would sign another long term contract. The litigation took
many years, so the data on the servers was pretty much lost for all practical
purposes.

So yeah ... keep backups and keep them where you can get to them if the s hits
the fan.

Regarding the domain name ... I suppose one person needs to have control of
that, no way around that. Well, it is possible to set up a trust where an
impartial party (such as an attorney or a professional trustee) controls the
domain name according to a previous agreement between the founders, but if you
have to resort to this, there is probably not enough trust to do a startup.

------
pilif
so he's complaining about his partner being immature and the second phrase on
the site gives away said partners personal contact information?

Am I the only one seeing a slight bit of irony there?

------
jjames
Here is the boing boing post referenced in the original farewell message:
<http://boingboing.net/2009/08/22/fundable-rips-off-hu.html>

Comments #5, #13, #23, #25, #30 and #31 between Mr. Pratt and Cory Doctorow
are the relevant bits. I'm sure there is lesson here about mega-blog PR.

------
dschobel
Kind of frighteningly, it's now back up in it's original form, ready to take
your money again.

------
kingkawn
It does not matter how fucked up things became, you don't go broadcasting it,
if for no other reason because its a taint by association.

------
stakent
Very enlightening.

Better to learn on _others_ mistakes.

------
tybris
When two immature people get together to form a business.

------
elblanco
Nice ending.

~~~
elblanco
sarcasm _woosh_

