

Ask HN: Next steps after being dropped from a startup? - mrmagooey

The story is: two months ago myself and two other friends were approached to help develop, deploy and own what we thought was a pretty cool product, and we were told we would have equal shares in the company.<p>Today however, the story changed significantly. Suddenly we had no shares in the (yet to be created) company, and the development work was going to be completed by a third party IT company and paid for using a grant that we had helped obtain. One of us was offered a consulting role to manage the IT company, but the need for an in-house coding capability wasn't seen as necessary (…for the entirely IT driven product!). This is in the context of two founders whom we now realise are fairly clueless about IT in general (one hadn't heard of Dropbox), and who seem to believe that hackers and code are a generic commodity.<p>We feel a bit let down and foolish for believing the hype, but my question is: What do people normally do when deals like this fall through? We're taking this loss as a sunk-cost, but are still keen to produce something great.
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brk
You have just received what is commonly known as "experience".

What do you do with it? Learn from your mistakes (get things in writing and
signed beforehand next time, interview/evaluate the people you consider going
into busines with, etc.), chalk it up and move on. There is little you can do
in this case beyond picking up and starting over at something new.

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kls
When I enter an arrangement where there is nothing developed I generally have
a contract put together in which I get equal ownership of the resulting
software, and that that ownership is vested on the same timetable as all other
owners. As I look at a pure equity arrangement as me being the technical guy,
I am doing all the other guys a huge favor. As a technical person you need to
look at these arrangements in that manner. I am not necessarily saying be a
jerk about it, but all things tallied you will be taking the most amount of
risk on as the developer, as you put the lions share of the work in up front.

Once you start to look at this arrangements as you doing the other guys a
favor then arguing your fair position becomes a whole lot easier. The thing to
remember is that you can go out and build any idea, you could be working on
your own and taking 100% of the equity, model that in your mind in these
situations, if you view it as they are not letting you in on their idea (which
are worth little), but rather you are, letting them in on your equity by
taking their idea over your own, it sets the stage for negotiating, up-front
to not get in the situation you experienced.

Unfortunately clueless founders are on the rise again, I have had a recent
rash of dealing with them, where these hipsters are going to change the world
with a dumb idea and all they need is some of those tech guys to whip it up
for them. The good news is that they become easier and easier to spot once you
have had one or two dealings with the type. In doing so you start to only
loose a week or so instead of spending months of your life on what amounts to
nothing.

Finally what I personally do when a deal or start-up I have been working on
falls through is I go back to freelancing to built up my reserve to take
another swing. It helps me recharge, learn some new things and see what the
rest of the industry is doing.

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newman314
Ask your local lawyer but if no compensation ever exchanged hands and
paperwork signed, you may well own your IP depending if it's work for hire
etc.

If so, you may have an option of licensing said work. However, it may not be
worth the time, money and effort. That is something that you will have to
decide and possibly chalk it up to a learning experience. But regardless, do
not do any more work. Good luck...

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brudgers
> _"What do people normally do when deals like this fall through?"_

Look for another deal. Write a proposal.

When one hits. Cash the retainer and start work.

I'm a consultant.

When it comes to forming a business, it's different.

In that case, it's like getting married. Except that you're both in it for the
money not just domestic bliss.

If you don't absolutely trust the other person to protect your welfare, don't
own a business with them. And if you do trust them, get a contract.

The upside of your experience is that you were not alone, three of you were
conned - it's a pattern. My recommendation to the one staying on as a
consultant is to require a retainer to be applied to final payment and wait
for the check to clear before doing any work.

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dkersten
I'd say just move on, its not worth getting into a legal dispute unless you're
absolutely certain you can win. You're lucky you only lost two months. Live
and learn. Besides, it may be revenge enough just knowing that the company is
going to flop as outsourcing IT to another firm rarely works for early stage
IT companies - especially if the founders haven't a clue.

PS: not knowing what Dropbox is isn't really a good indicator that they're
clueless - though outsourcing the tech in a tech company is.

~~~
mrmagooey
Your PS just made posting this worthwhile, cheers.

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kosso
Check any contracts and paperwork you might have signed. Read them thoroughly
and then read them again. Get someone else to read them if you can.

What you are 'told' is rarely what actually happens at a startup, unless you
have fully understood, signed contracts.

What is it you want do? Create the same or competing product? Get some
compensation / shares / revenge? Or simply move on?

If you only worked on this thing for two months, then it's no great loss is
it?

