

Advice on partnership issues..... - amrithk

Hi, 
A few months ago, 2 of my friends and I came up with an idea to create a website that would allow people to create and share polls, and analyze the results in various interesting ways. We did not know anything about web programming or databases but spent time trying to learn about it. Our aim was to build a quick "proof-of-concept" prototype without intially caring much about the UI/Design.<p>I knew someone from college who was a good hacker and asked him to join us. I felt he could help us with the technical issues, teach us how to architect the website and point us to the right tools we could use. He also needed housing for a few months and we thought he could stay and work with us. We pitched him about the idea and he seemed enthusiastic. To prevent disagreements in future, all 4 of us signed an agreement which clearly stated how much equity each person would get.<p>Things seemed to go well for a few months. We even managed to get a really basic prototype up and running. Then one night after dinner, the good hacker told us he would gradually step away from helping out. He wanted to focus on his day job and he told us that he had been helping us all along only because we provided him with free housing. Furthermore, he wasn't yet ready to make a major commitment to what we were working on. We were pretty upset but there was nothing we could do to get him to stay. He found housing soon afterwards and moved out.<p>We haven't been in touch with him for a while. Since he moved out, we have been persisting with our idea on weekends (all of us have 14-15 hour work-days at our day jobs). We are more experienced and have learnt a lot, particularly through places like HN.<p>One of our team-members just quit his job to work on this full-time. We are hoping to release a new version of our site (with a good UI and a more fully developed concept) by the end of September and apply to programs like YC in the fall.<p>Our only concern is, how can we draft a new agreement that voids the previous paternership agreement that we signed with the good hacker? We think it is only right that we compensate the good hacker for working with us and teaching us about things like good program design etc. However, given how he chose to drop out of the project in a sudden manner, we feel that he certainly doesn't deserve 10% of the initial equity. What do you suggest we do?<p>I was thinking of arranging a meeting with him over dinner and welcoming back, telling him that we would love to have him as a "technical" advisor". He wouldn't have to devote a significant amount of time to the project and we would still get the benefit of having someone experienced look at our code, suggest better ways of designing the application, and recommend new tools that might be useful for our development process. Is this a good idea?<p>Apologies if this is a long post. Just wanted to get the whole story out there so I could hear some good suggestions.<p>Thanks,
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cmos
An open, frank conversation sounds like the best approach. He might be
entirely reasonable and helpful to have as a stakeholder in the future.

But if you are at an impass, and you really feel strongly about it, press the
'delete' key and start over from scratch, except this time have vesting over
multiple years for the founders stock. This way if anyone bails before the
company is up and running, they will get a percentage based on their time
invested.

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amrithk
Thanks for the suggestion.

Is it possible to come up with another agreement that voids the previous one
already signed? What happens to the 10% we initially gave him?

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radley
Many partnership agreements have time-based equity. In the case of YC-related
companies, full equity doesn't come into fruition for 4 years. The equity
grows over time and usually requires a minimum 1-year commitment for any
equity stake.

In your case, you guys didn't think this part completely through (oh well,
move on).

I suggest you talk with the previous programmer. It's more than likely he
doesn't see any value in his equity and may be willing to give it up
completely or for a small return.

If he wants a return for his effort, you guys could come to some sort of
arrangement of payment. This could be an immediate payout or a payout
dependent on funding (seed/series A). If the value is too high for an
immediate payout and the programmer has no faith in you getting funded, you
could arrange to make monthly payment installments ($300/mo * x months).

As for his rate, I would suggest that he not expect his "corporate rate" for
his work. As he was doing this in good faith as part of a team, it's stronger
to expect a discount, similar to what you'd charge a friend or partner for
work (i.e. $25/hr vs. $100/hr). It's unreasonable for him to expect to be paid
as a contractor considering the circumstances.

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babul
Equity:

If he had not helped you, would you have _started_? Or got as far as you have?
Does he _want_ equity? If he is happy with a lump sum settlement, then pay him
what you both think is acceptable for what was achieved/developed up to the
point he left.

Advisor Role:

Good idea to save you money in the short term and get external and experienced
eyes looking at the code/work.

But, if he is not interested in the long-term will he provide valuable and
considered advice? Are you making things worse for yourself trying to keep him
onboard? Personally, I'd say it is probably wise to part ways and employ him
on a consultancy basis to help you as and when needed. It keeps things cleaner
and less complex.

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amrithk
Thanks, The consultancy idea might be a good idea when we get money.

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epi0Bauqu
Are you actually incorporated? Did you actually distribute shares? What does
the agreement say exactly?

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amrithk
The agreement is really basic, spelling out what share of the profits each
person will get. Of course, at that time, all of us understood that our
ownership will be diluted based on any future investment that we might
receive.

Looking back, we were incredibly naive and unsure about how these agreements
are typically drafted although I have a much better understanding now.

