
Where did three months go (AKA where've I been?) - goofygrin
I'm a nobody around these parts, but someone I've emailed back and forth with on here asked me a couple weeks ago where I've been.  I'm finally at a point where I can take a breath so I thought I'd post something in the hopes that it helps someone else.<p>My "day" job is a 1 man IT consulting shop.  This started about 8 months ago after a stint at a startup didn't work out.  I had been consulting before that startup, but always through firms.  I mostly fell back into a job with an old client.  It's the proverbial golden goose (easy work, flexible schedule, not a lot of BS, decent rate, pay on time, etc.).  Consulting doesn't "fulfill" me, but it pays the bills nicely enough.<p>About 6 months ago, a friend of mine (we go back 14-15 years now), that I'd done some work for/with in the past, sold his business (a small maid service) and started up another company.  He didn't have a great idea.  In fact, everyone on here would have poo-poo'ed his idea immediately.  He needed software, didn't really have the money to pay for it and asked if I could help.  I offered to work with him for sweat equity.<p>I honestly didn't ask for enough, but I figured the company wouldn't survive anyway (really the idea was something that was a great grand vision but would have been nearly impossible to make a significant amount of money with).  I used it as an opportunity to learn Django and Python, and figured, at worst, I just wasted some time.  I've got way worse ways to waste time :)<p>Flash forward 4 months and sales have been slow (surprise, surprise).  Then dumb luck struck.  A local company, that did something old media like what we were trying to do, new media style, came to us and basically asked what we could do for them since they were having major problems with their current provider (man I wish I'd taken screen shots of what their provider was giving them).  We went back and forth a bit over having to refocus the business, but finally came to the conclusion that managing 20-30 large customers is significantly easier to manage than thousands of little ones (which we would require in order to make the business really work).  We dove in head first a little over a month ago.<p>Luckily the choice of Django and Python paid off, because even though we were shifting the direction and purpose of the software, the modifications required to get everything going were not super significant (I say that, but looking back it sure sucked a lot of time, so there must have been some level of difficulty there!).  I mean the concept was fundamentally the same.  Just how we got our money and information was different.<p>We now have that one client on board under a long term contract (they've assumed our previous 40-odd clients) and have a very good looking next 10 days (we had a prospect meeting today and a half dozen more next week -- good timing with a conference next week puts them all in the same place :D).  It turns out that the client we landed is on the board of one of the associations in their industry and through them we have been able to reach quite a few of their peers.<p>Decompressing a bit, we stumbled upon a niche market that was ripe for the picking.  I sincerely doubt that we could have found this niche on our own.  We had to make a few mistakes and then just have some dumb luck and chance to get here.  We have some competition (one is within a mile of our office space even), but it is the typical story of poor service, poor offerings and we really do provide a better solution for our customers to sell.  Here's what's the funny part: it's boring.  Nothing earth shattering, nothing that's going to make use the next Mark Cuban or anything -- just a market that needed exploited.  Funny how that works ;).<p>So finally, I'm coming up for air.  By my count, I've been basically working two full time jobs (my consulting practice is paying my bills and I've had the typical deadlines there), raising my kid (not alone, my wife puts up with a lot :)), and still weekend racing my car (work/life balance and all that) for about 45 days now.  It's amazing how the human body can survive you putting it through lots of hell and late nights, even in your lower 30's.  Of course, I've not "watched" tv in months (sure it's on in the background, but I couldn't tell you what's going on) or played golf since June, so there's quite a bit of time that most people just piss away.<p>In the next two weeks, if things go as planned, I will likely have to make the tough decision of whether to step off the plank and dive into the business full time (or at least part time in order to maintain my relationship with my client) or to figure something else out.<p>Of course, my partner and I need to come to terms on a couple things (like more equity for me -- which is a very difficult subject, but considering that we have nothing in writing at the moment I think there's some flexibility there).  We also have a bit different styles in that I am more of a "do as needed" type and he likes to be prepared ahead of time.  This mostly comes into play when talking about office space (we already have 5 employees including the two of us), equipment, hosting, staffing, etc.  I am much more cautious than he is on most fronts.  It typically produces a nice balance, but it can cause some bit of conflict.<p>In any case, I thought I'd post this because I've always enjoyed a bit of voyeurism in reading other peoples' experiences and figured someone might find it interesting.  2009 will definitely be an interesting year for me.<p>Good luck everyone!
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noonespecial
_...but considering that we have nothing in writing at the moment I think
there's some flexibility there._

You are thinking wrong. The odds of you coming out with what you think you are
owed in this deal... well, we need C3PO to tell you with enough character to
get the tone right.

~~~
goofygrin
I'd say he'd be hard pressed to find someone to put up with his shit and to
work on his system for what I'm asking for. Especially in our market.

In any case, I wish that people would find partners that they could actually,
you know, trust. I am as cynical as the next guy, but damn people.

~~~
anamax
> I'd say he'd be hard pressed to find someone to put up with his shit and to
> work on his system for what I'm asking for. Especially in our market.

You think that this is a rational process?

He knows that he had this great idea and worked until he found a huge market
for it. Sure, you did lots of work, but kids learn programming at the local JC
and there are lots of them who do that web stuff. Besides, he'll soon find out
that django practically writes web applications by itself. Sure, he wants to
be fair, but you just sat around playing on a computer.

You're doomed.

~~~
petercooper
He said this guy's been a friend for 15 years now. Whatever happens, he gets
value. He either gets a part in a growing business, or, less likely, he gets
to discover that a "friend" is not really a friend at all. Both valuable in
their own ways.

All that said.. original poster, get everything formalized ASAP!

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browser411
Would be a lot more interesting if you could mention what your startup
does....

~~~
shadytrees
It converts political gaffes into clean energy.

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aditya
Just like every other story, this one makes you wonder, if you haven't started
up yet, why the hell not? Screw all the doubt and do it ASAP, the worst thing
that could happen is that you'd learn some Python or Ruby. :-)

Congrats goofygrin and thanks for sharing!

~~~
goofygrin
Thanks!

The one thing I guess I didn't highlight well enough was that we were lucky to
be presented with a way to change our business that would allow us to shift
into a better market space. We were even luckier to recognize it and jump on
the opportunity.

I think that a lot of the time people go heads down and start rushing in and
when presented with an opportunity to shift, they don't see it or are
unwilling to make the change.

I guess "Be Flexible" is what I'm trying to say.

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HeyLaughingBoy
"managing 20-30 large customers is significantly easier to manage than
thousands of little ones " Something I agree with wholeheartedly. I'm more of
a hardware/embedded software type (I do wireless data monitoring) who hangs
out here for the general software business insight, so my perspective may be
different. But that's my goal: a small number of customers who each spend many
$1000's per year. Right now I have one :-( But if I had just 5 like him I
could grow my business much faster with the additional income.

~~~
neilc
I don't really disagree, but a startup trying to do business with a small
number of very large businesses can also cause problems. When your customer
knows that the startup is dependent on their business (to some extent), they
have a lot of leverage, and many big companies will naturally exploit that.

I've heard lots of stories (and experienced first hand) how a big company that
is doing business with the startup will demand lots of outrageous things and
cause the startup to expend lots of resources just to keep them happy. The
trick is structuring the licensing agreement/contract so that if this happens,
you're compensated for the additional time you have to spend.

~~~
goofygrin
Yes. This is actually something that we have run into with at least one
prospect already.

I have a pretty easy response to unreasonable customer demands: "Some
customers aren't customers that you want." My partner agrees and so far it's
kept our head in the right place.

We also are targeting some of the smaller clients so that we can a) polish our
offering b) get some "street cred" and c) just make sure that we can make
money in this space :)

~~~
neilc
Absolutely: choosing the right customers is important. Both in terms of
finding customers who are good from a revenue-per-effort ratio, and also
customers who will help you develop your product in interesting ways (e.g. in
ways that might be applicable to a broader market). Often, finding a great
customer is an essential first step toward building a great product, because
they can work with you to help you _understand_ the sort of product they need
(and by extension, the sort of product a broader class of attractive customers
requires).

~~~
goofygrin
I have seen it both ways unfortunately, so that's one of the reasons that I am
somewhat cautious (I guess that's what happens with 13+ years of experience in
the field).

One that sticks in my mind is one of the first "real" jobs I had. The company
was a solid, well established company that was about 20 years old. Best place
I ever worked. They had a piece of supporting software that was written in VB
on Access. The software was basic, but it worked as a great support to the
methodology and theory of the company.

One big (REALLY BIG) client came in and needed the software to be housed on
central servers, with the ability to roll the data up for reporting purposes.

So the company went off in the weeds, building a huge (2.5meg!) java applet,
basically tailored to this one client's specifications. The company had no
java experience. Had to hire java guys. No Solaris experience (as required by
the client). Had to buy hardware and hire people. They had no oracle
experience. Again, more $$ and more people.

Within 3 years the company went through two acquisitions, one of which was a
reverse buy out of a crappy company that had IPOed. A year later the company
folded.

A 20 year company was destroyed by this choice to build a bespoke system for a
huge client.

Another memory is making said 2.5meg craplet run under the IBM JVM for OS/2
Warp 3. On token ring. Banks got sold some horrible systems!

------
rw
Lawyer up _right now._

~~~
goofygrin
Not necessary. We both are responsible adults, not whiney children.

~~~
orib
You say that now, but it's amazing how quickly responsible adults turn into
whiny children. I don't think it's too much effort or cost to get a lawyer to
make sure you have the legal situation on solid ground. You probably won't
need it, but learning that you screwed up the hard way would really suck.

~~~
goofygrin
I'll just slash his tires _< wink>_.

I understand the warnings and I'll protect my interests, but I certainly am
not going to _lawyer up_ aggressively.

~~~
davidw
> I certainly am not going to lawyer up aggressively.

I think what they're saying is that you and your partner _both_ go see the
lawyer, together, and sit down and work out the details, not that _you_ get a
lawyer on your own. The idea is that you first discuss what kind of terms you
want, and then the lawyer helps make that a legal reality, and maybe helps you
think of things that you hadn't considered.

By the way, it's an inspiring story: the fact that you didn't "get rich quick"
makes it more real, something anyone could do by trying hard and with a bit of
luck.

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bkj123
congrats goofygrin on the success and fun! Regarding "getting things in
writing and what not", screw what the others are saying. You're on the path to
having the discussion. Good luck and enjoy the ride!

~~~
goofygrin
Thanks. We've actually talked compensation in reasonably concrete terms, so
I'm really not concerned with it.

Right now, I want to get the business to the point where he can start drawing
a decent salary to support his family. Remember, he's a long time friend
first, partner second.

~~~
Retric
Get something in writing even 60 (him) - 40 (you) is a reasonable number, but
it's easy for him to think 75 - 25 when you think 50 - 50.

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sirsean
Nothing in writing?

You just got screwed.

~~~
lief79
No one is screwed yet. Odds are, if goofygrin goes (his user name non-
withstanding), then so does the company, which benefits no one. However, this
ought to be rectified as quickly as possible; as greater time leaves everyone
with more to lose.

Since the other individual, a friend, is full time; and goofy is still working
elsewhere part time, it might make sense to get an agreement to gradually
escalate goofy's profit sharing in recognition of what has already been
accomplished. (Yes, we all know that this is counter to PG's recommendations
on startups.) This will allow the founder to live successfully and make
everyone eager to grow the company in the short term, and, as profits
increase, then the developer can dedicate more time to the company and get
more in return ... possibly abandoning the part time job eventually.

~~~
goofygrin
Well I'm actually full time on my "day job" and part to full time on the
startup (being ADD helps a bit LOL).

But this is basically the plan. Equity doesn't really mean anything unless the
business sells, but when the business gets to the point where it can support
founders drawing decent salaries then that'll be happening. He knows what I
make now and what it would take to shift my focus and it's all within reason.

~~~
drusenko
i'd highly recommend having "the talk" sooner rather than later. everybody
agrees on sharing when the stakes are small, but when things become
successful, you'd be surprised how fast people can change their perspectives.

if you are the main technical person who has built the product, you should
have _at least_ 20% of the equity, if not split 50/50 with your co-founder
(that would be fair). if one of you put more money or time into it, the
numbers can be adjusted appropriately.

the best construct for dealing with equity also happens to be vesting. you
don't need to "grow" your share as time goes on, it just naturally "grows" the
longer you stay, but you've agreed upon the total amount from the beginning
and it's committed to you.

i've gone into business with friends several times. it's not that you can't
pull it off (i have) or that you don't get into disagreements about
compensation/equity (we have) -- it's just not worth the potential strain on
the relationship to leave it an open question, as opposed to agreeing early
on.

~~~
goofygrin
We've had "the talk" multiple times and have had paperwork for a while, just
nothing signed (so I consider it worth nothing).

I renegotiated more equity with the last round of work.

I talked to him tonight and we're going to get the paperwork updated and get
everything squared away now that things are picking up. He also got sold a key
man policy, so there's some paperwork there that we have to do.

~~~
drusenko
perfect, it sounds like you are a lot more far along than you originally
sounded to be... there's nothing wrong with being trusting, it's just that the
longer things go, the larger potential burden it becomes on the friendship,
and by sorting things out, it sounds like you're on the right track :)

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bayareaguy
Who is going to honor the promise to goofy when his life-long friend gets hit
by a bus and some random next-of-kin (who could probably care less about what
may or may not have been promised) takes over?

Goofy, you're taking a tremendous risk. If your friend really is one, they
will care enough about you to get the legal stuff out of the way so that
you're not screwed should something happen to them.

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rapind
Sounds great. Best of luck. However, golf isn't time being pissed away. Just
imagine how many rounds you'll get in once you hit that payday.

As for the whole paperwork & equity. Naive or not I would also choose to trust
your partner seeing as he's a long time friend. Hope it works out, and if it
doesn't for some reason, let us know eh?

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johnyzee
Sounds great - let us know how it goes!

