Hi, Billy. Thanks for telling us about your other company with your friend. I'm a little disappointed that you weren't open that you're already in this space. And that your existing company is in direct competition with the one we all agreed to start that weekend.
However, I'm flexible. I'm willing to license my code to your other company for a flat fee of $10,000. This includes all intellectual property rights to my software.
That fee is reasonable given my time and experience. I think that the others on the team will have similar opinions about their contributions.
If you choose to not take me up on my offer, I wish you luck finding programmers to re-implement the software from scratch.
... does anyone not understand the legal rights behind IP? Billy has zero rights to use the software in his existing company. He knows that, which is why he's trying to bamboozle everyone.
Instead of arguing about an "existing" company, they need to talk about their code. They own it. They control it. No one else has the legal right to use it.
What's the problem? They don't give Billy the right to use their code, and he goes away.... or gets sued.
This pretty much leaves Billy in the same spot he's been for the last 18 months.
I think programmers here are assuming "execution" means coding. It really means sales, pitching, customer development. Also product development - refining the features over time. Billy will screw that up for sure.
Can he? He incorporated 18 months before Startup Weekend, and had literally nothing to show for that time, except a business plan. Evidence strongly indicates he could not (easily) "get somebody else to rebuild it". Which is why he came to Startup Weekend and defrauded 8 developers out of their time and skill. He clearly couldn't (or wouldn't) pay market rates to get it done, or he would have done so in the 18 months preceding this.
If Billy gets their code, then they compete against Billy using his client list, his price lists, etc. because those were exposed during the weekend.*
And, it's not like Billy has super exclusive access to the restaurant business. They could partner with other restaurant owners in the region who are similarly turned off by people like Billy. I'm sure those people exist, given the homophobic and generally condescending comments on display here...
So, Billy has: a code base he cannot easily iterate on because he's fucked over his entire potential employee base.
* A lot of Billy's biz dev work over the past 8 months.
* The freedom to exploit personality conflicts in the local/regional business scene to score additional business partners.
* Far lower costs. There are probably tons of bugs in a weekend code sprint product, and Billy isn't going to find any free labor to clean those up. Remember a big chunk of software dev is extending and debugging existing code... Billy ain't going nowhere with a static code base.
* Worst case, the "fuck you" factor and access to free skilled labor (their own) necessary to make break-even or even loss leader pricing structures. This is a unique advantage in their negotiations with Billy.
The last two together would totally screw over Billy. Imagine these developers going into a meeting and demonstrating security flaws or bad GUI glitches in Billy's product during a live meeting... the client might not go with these guys, but in the VERY BEST case for Billy, he's got to hire a freelance developer to clean up the code base. Not going to be able to exploit a hackathon for that sort of stuff, and 80% of software developer is maintenance...
* Maybe Billy claims they only get access to his work done that weekend. But that's bullshit; they developers didn't teach themselves to create rather specific types of products in a weekend... to the extent that there's any contract there, if it came out during the weekend, then it counts toward the agreement.
Billy could block the other 8 partners from using the code written at that weekend. But they don't need it. They would just need another weekend. Conversely, any one of the other 8 partners could block him from using it. He would still need a cooperative coder.
Billy might be able to make the argument that if he used the code, and no one specifically objected, it was implicit consent from the other partners. Any one of the 8 should be able to send him a cease and desist letter, and he would be stuck.
In situations like this it's very clear that whatever you make, you own.
Absolutely false: http://startupweekend.org/about/firsttimer/
"Startup Weekend doesn’t support or take part in the signing of any legal documents"
Startup Weekend would be a lot better if it required all participants to sign waivers releasing all IP generated over the weekend. That way everyone knows exactly what they are getting into.
If you really think a weekend of coding is worth something then why would you go now? It allows complete strangers to join your team and pollute the IP ownership.
10 percent of the effort is worth 10 percent of the equity, no matter how few days that effort is provided.
>> If you really think a weekend of coding is worth something then why would you go now? It allows complete strangers to join your team and pollute the IP ownership.
Strangers yes. But they self selected into groups.
At the end of the weekend, the code is owned by someone. If there's someone interested in it, the author should be as well.
I would agree that one should not have high expectations going to such and event, but one should expect not to be exploited, and if something does emerge that has legs one should be entitled to his share - and if fact (s)he is entitled to it by law unless someone cons them out of it. Copyright goes to the author.
And just to clarify - if everyone on your team signed away their rights then you would still be free to take your code and do whatever you want with it. You could build the business on your own if you didn't like any of the other teammates.
An actual partnership would probably have contracts and articles that make it easier to do business. Notably, many allow for ratification of business decisions by majority vote of the partners, weighted by their ownership share. There may be a conflict of interest if you try to make your partnership buy something you already own individually, but as long as you disclose your interests up front and recuse yourself appropriately from conflict decisions, that's rarely an issue.
That's shitty for Billy; he just signed away 18 MONTHS of business development for a 0.4% stake. Or else he doesn't get access to the code. The sure thing is that he doesn't get it both ways...
If I was being uncharitable, I could say that the reason the 0.4% offer came up in the first place was specifically to deal with this problem - by offering a trivial amount of equity, Billy has an argument that the other programmers were compensated for their time in a form that they mutually agreed to. Why else would Billy bother making this arrangement?
(edit ignore the exact percentages, they ended up with a team of 8 devs than 4)
> A work created by an independent contractor can be a work made for hire only if (a) it falls within one of the nine categories of works listed in part 2 above and (b) there is a written agreement between parties specifying that the work is a work made for hire.
If there's no law covering it, there's no IP.
If you're working on a hack project like this then insist on all copyright notices in the code and site being assigned to a made up organisation with all the names in it. So put
in all the source files and html.
Those files would be a record of the interaction and activity on the hack weekend and would allow for a neat place for lawyers to start in negotiating a smooth buyout in this situation. Because I would rather accept $1K than work with that type of individual.
Anyway, you make a great point about the commits being clear assignment of copyright, and thanks for that!
You don't have to actually subpoena GitHub and get their lawyers involved. The fact that you can means that opposing council will know that you're not bluffing or lying when you say "I authored this commit, and I have the commit logs to prove it". Or if they think you are bluffing or lying, they can certainly subpoena GitHub themselves...but if you aren't, that works in your favor.
Unless Github has some backup logs somewhere, that entire log can be wiped out and replaced with whatever someone wants with a simple `git push -f`.
Which is why it's so important to sign commits. You sign your commits, and keep your private key private, and as long as any copy of the repo exists anywhere you can access, you can prove authorship/ownership.
Commit signing is also very useful for vouching for code integrity.
No, for this to work, you'd really need to timestamp either the git tree hash or (preferably) the hash of the GPG signature (or the signature itself).
Most timestamp service hashes are necessarily public (for trust reasons), so an attacker could grab one and go back and include it in his signed commit message.
But if you timestamp your commit hash (which is a cryptographic hash after all -- albeit an increasingly weak one) or timestamp the signed commit, then it can't be forged (since the attacker can't go back in time and use a cryptographically-verifiable timestamp, like the ones indelibly embedded in the blockchain).
This method of founding a tech startup doesn't really work. Either learn to code yourself, or build a trusted long-term relationship with someone who can.
His goal is not to get customers with this code. His goal is to get investors. And, I wouldn't be surprised if he succeeds. He helped the team win Startup Weekend with a seemingly effective presentation, after all. Further, I wouldn't be surprised if his plan now (that it's become clear his developer team wants nothing to do with him) is to raise money with the prototype built at Startup Weekend, and then trash it and start over, so he believes he is free of the obligations he agreed to in order to get the code (that 0.4% stake everyone agreed to). Investors always ask who else you have equity and economic obligations to...and I'll wager he neglects to mention the situation with 8 devs owning a total of 3.2% of his company.
Regardless, dude's a douche hat, and I would hope nobody would fund him. Nobody smart would, since he's not gonna be able to deliver a product worth selling.
I think it comes from the fact non-technical people don't necessarely understand what building software is. All they see is some nerds doing arcane magic with keyboards.
The question is, can we do anything to make things better?
Such a startup weekend would be a wonderful occasion.
Why organizers do not draw up a simple legal checklist is beyond me.
Just drafting a paper signed by the whole team at the beginning of the event stating "I am going to put ~30 to 40 hours at my hourly rate of $X and thus my contributions can be bought for $Y", or whatever stock terms float your boat, would set clear expectations. They actually were less naive than most since they had that "handshake deal", but they should have gotten it in writing.
That, and realizing "Applicant tracking system in an original niche" is not a revolutionary idea. They owed that Billy guy absolutely nothing and should probably have kicked him out.
They see SW's (in general) as a way to get free labour, they've just learnt enough nerd-speak to bamboozle them into providing that labour.
I've been in the receiving end of "You know this'll be a commodity soon enough" from a guy who's product still relies on a database from 1992, renormalized of course, and who stores dates in packed 16bit numbers.
My advice is to reply with "Great. Best of luck, but you can't use my IP." Better yet retain operational control at all times - don't give out Heroku credentials, etc.
They usually go quiet when you finally show your cards and it's a straight flush.
What would suck is doing everything to protect yourself, and then need to waste money (if you can even afford it) on a lawyer if the idiot tries to sue you.
1. Nerds should run companies. The core problem is this assumption the CEO needs to be a "biz guy" like this seeming frat boy. I don't know why nerds think this, I think it may be some high school trauma.
But being the CEO is a lot easier for a nerd than it is for a biz guy-- biz guys at best are going to not touch the product development side, and more likely are going to undermine it... while nerds can easily manage a VP of sales, a VP of marketing, etc.
So first solution- don't work for biz guys. Only work for nerds. (and for purposes of this discussion, I consider Tim Cook to be a nerd- his nerd area is global manufacturing, but he's not a "guy who owns a restaurant" and thus has no relevant skills for a tech startup.)
2. Biz guy ideas are not better than nerd ideas. I don't know if SW doesn't allow it, but they should have come up with an idea that they, as engineers, were passionate about and worked on that. I think the results would have been better.
3. Focus on bootstrapping. The way biz guys get in is that they have connection to money or money and they use that money to take over and exploit the nerds (VCs and the bad angels are nothing other than these exact same biz guys--only VCs are incentivized to get you to bet it all on a longshot to be a unicorn because it's better for their portfolio, even though it diminishes the likelihood your company will be a success. )
It's a sometimes useful generalization, but it can also be a shortcut people use to trick themselves into thinking that they are part of some wise and good group of people (who coincidentally are just like them!) and gives them carte blanche for othering anyone they decide they don't like or don't want to work with.
It's almost impossible not to do this, it's kind of a necessary evil when you're constantly dealing with lots of different types of people and don't have much information about them to make more nuanced judgements. Not a problem as long as people don't start mistaking the mental shortcuts and generalizations we all employ for reality. Most of the time I behave as if pi is 3.14 because that usually works fine, but I never allow myself to start thinking that it actually is 3.14, which is the vibe I get whenever anyone starts talking about how everybody is either an "x person" or a "y person".
Diving in a bit better: a tech person may well obsess over implementation details (because they understand, or think they understand) them better than whoever is on the dev team. They may rabbithole working on a rewarding intellectual work that has nothing to do with the success of the business.
They may not even know how to deal with a veep of sales or marketing, because they may not have any idea how that world works. I have a friend who is a CEO that, for the longest time, thought marketing was basically lies, and so saw no reason to invest time in it. They've since reconsidered their position as their business intelligence has caught up with their technical intelligence.
As developers, especially ones who haven't really built and scaled a business, we always love to think "Hey, I build the product--how hard could the rest be?"
We're usually wrong.
Sales, marketing, legal, taxes, accounting, organization, etc., are hardly things people automatically know how to do.
Now, that doesn't mean they'd make a good CEO, just a better sales person, which is also a critical skill for most startups (although I do like the "growth engineer" movement, which puts some of this power back into the hands of engineers, in marketing if not in sales).
And for those that read everything in the literal sense: this is a joke because of the /s.
I've seen some really scary situations that started with throwing things over the wall- like having investors and board ready for the finished product in a few months, while it's just some wannabe CTO and maybe a family member helping holding the pile of shit code with some seriously rich and powerful people expecting that they will be in production soon, for large companies they've already talked with and planned to sell it to.
Steaming piles of shit become rolling tumbleweeds of shit doom become ticking plutonium-enriched time-bombs of every-kind-of-animal feces...
GOOD execution is one of the major problems.
This is why engineers should not be afraid to sell, or at least, not be afraid to be out in front. The power in any organization comes from who sells the product.
Good businesses understand that all their functional areas are important, and don't try to preference one over another. You may need to focus on one at first to make progress with it, though I'd argue that when you first get started, that one area should be none of the above (it should be customer development in the Lean Startup sense: talking to people to get a sense of what they need and how they do things).
The big challenge in enterprise software engineering is that your "customer" is the person who forks over money, not the person who uses the software. Pretty much all engineering effort is devoted to pleasing them. Engineering requirements for enterprise software are often insanely complex and sometimes even conflicting, and most of the engineering effort is devoted to satisfying them.
If you look at product/UX debacles like Taleo or Lotus Notes from the perspective of a department head buying them (rather than from the recruiter, job applicant, or ordinary worker who will be using them), a lot of enterprise software makes sense. There's a lot of effort devoted to reporting requirements, to making sure the buyer has visibility on what all of his department is doing and conversely can make that "productivity" visible to his boss, to covering one's ass with regulatory requirements, and not much effort devoted to making things pretty or productive for the end-users. That's because the end-users are not the buyer of the software.
Indeed, a lot of the investment thesis in consumer/smallbiz Internet is this idea that software should replace middle managers entirely, and so the end-users should be the actual buyer of the software who need it to make money, basically replacing management with markets.
Billy doesn't exclusively own the codebase or product. Any of the devs could reasonably start a company, use the product, as long as they award 0.4% to each of the members in his venture. That's what the handshake deal seems to have been all about.
It makes sense for the devs to either say 'buy out exclusive rights to the work and we forfeit the 0.4% share and be on your way, or keep the work, we'll compete with you (and grant you 0.4% in our venture, too, according to the handshake deal) and we'll see who can iterate on the codebase faster and run a successful business.'
The devs still have the power despite Billy's asshole move.
If your goal at a startup event is to have fun, jam on something, see what comes of it, then it's easy to succeed.
If your goal at a startup event is to make something valuable, you've already lost. There is no winning. This is the worst possible environment to create a new business in, and there are way too many variables. Everyone will feel cheated no matter what the arrangement is.
I think you've flipped the situation around a little bit here.
The point is, it is startup weekend, it's time to have fun, to learn, collaborate and do something interesting and a lot of the guys going aren't necessarily interested in ditching their jobs and going full-time startup. In fact most people came to the weekend without any ideas they actually wanted to launch, simply interested to join an existing team and have fun.
So one of the developers who is like this basically proposed the 0.4%. You make it sound as if Billy said 'hey guys work for me for 2 days for 0.4%'. When in reality it was a developer who said 'Hey look, this is going to be fun but let's agree on something simple, if any startup actually does come out of this, let's all have a 0.4% share even if you're not interested to invest anything in the startup apart from this weekend's work. This way everyone is rewarded without having to exchange any money, and only if whatever we built this weekend actually ends up having value'. And the others agreed with that.
This may not make sense in every situation, but I think it was pretty sensible here and I don't think it was insulting either, particularly when the dev proposed this reward himself, for himself, not as some kind of payment to others for getting his company off the ground.
I'd argue that they'd need to make a case, and the additional share would be conditional. Like "If you can close $100K in financing then you will get another 40% stake."
Likewise if team members really do want to quit their jobs and chase after this, they'd be accommodated in a similar capacity. Adjust the share balance when events happen, not by padding it heavily up front with the expectation that they will happen.
Otherwise you're valuing your contribution vs. some future unknown, yet saying with certainty your contributions are worth 0.4% of that. The chance of that being fair is basically zero.
Exactly, that makes total sense. Why then did one of the developers, OP's friend, another developer that agreed, propose 0.4%? This is where I get the feeling OP isn't telling the whole story.
Knowing nothing else and asked to speculate, I'd say that they proposed 0.4% knowing that Billy wanted to work on his own idea and wanted to turn this into a company, while they just wanted to have a fun startup weekend working on someone else's idea and then go home and go back to their normal lives. As a reward, they propose 0.4% of whatever company arises out of the startup weekend, without wanting to be part of anything else later. Billy said he's happy with that arrangement and they go forth.
Why 0.4% and not 100% / n team members? Because it makes no sense for the team of 9 people ultimately for each to have 11% equity in a company that perhaps only Billy will be running. That would mean if a company is formed and everyone gets an 11% share, but nobody actually works there except Billy who works 80 hours a week the next 10 years and turns it into a success, he has the same 11% share as any of the other guys who merely spent 20 hours over a weekend on this. That's why, if you're not interested in running this company beyond StartupWeekend, you'd propose 0.4%, a small percentage for a weekend contribution that is still significant if the company ends up worth a lot (e.g. $10m, means $40k for a weekend of work). A more granular valuation of the work is to simply value it as a fixed amount of money, say $1k per dev, but then you're getting in the realm of 2-day work-for-hire which doesn't make much sense in the context of StartupWeekend, it requires money transfers, investments and risks, and it just doesn't make much sense in a 2 day context to hire random stranger devs. Saying let's see what is possible, if it has any value well let's each have 0.4% even if we don't continue past this weekend, is more practical.
This is why I suspect that the article is only part of the story and that perhaps everyone was aware that Billy wanted to turn this into his own company and that the rest just wanted to work at it over the weekend for fun and get 0.4% in case their weekend work turned into a valuable enterprise. Why else would you agree to 0.4% and not just say 'let's see what we can come up with this weekend, and after incorporate it on an equal basis if we want to, or buy out the work by those who aren't interested in pursuing it further'?
I thought they never actually signed anything with regard to that.
He still owns all the code he wrote. If Billy uses that code in his own business that would be unauthorized and legal action can be taken.
The start-up is called StaffedUp and it's site is up and running (with that unlicensed code, I presume):
This is also why it's such a pain in the ass for open source projects to changes licenses -- they have to get permission from everyone and anyone who contributed code, or rewrite that person's contributions.
You write it, you own the copyright for whatever part you wrote unless you formally transfer your copyright via contract. You don't even have to file any papers to get copyright, it's automatic.
So in this example of startup weekend, whoever writes a piece of code owns it, whoever writes website copy owns it and so on and so forth to the extent that the startup weekend ip policy doesn't setup something different for participants.
(edit: fixed the last paragraph)
I suspect anyone on the SW "team" could claim ownership of the code and any aspect of the business.
SW trys to avoid these issues during the weekend ..from their FAQ: (http://startupweekend.org/about/firsttimer/)
How do teams address the issue of IP/ownership?
As with any startup, the team decides. Startup Weekend doesn’t support or take part in the signing of any legal documents at the events themselves, and while Mentors with legal backgrounds are often present and able to give general advice, they are not permitted to give specific legal counsel.While it doesn’t hurt to be clear about your individual expectations from the start, we’ve found that teams who don’t spend time addressing this issue until it actually matters (i.e., there is a tangible product to have ownership of) are much more productive and successful than those who do.
You can always license any code you wrote.
> How do teams address the issue of IP/ownership? As with any startup, the team decides.
That's not how copyright law works.
No you can't ...not if someone else has a claim on the work you do. I can't put "copyright <my name>" on the code I write at work ... its "copyright <my company>"
EDIT: re license vs copyright : I also can't just unilaterally decide what license I use for code I write at my company. I think its reasonable to think the same would hold true given that FAQ item.
> That's not how copyright law works.
That was from the SW weekend FAQ.
But I think that FAQ holds weight -- just like my statement above. If the rules for the weekend are the "team decides" you can't just go claiming ownership of stuff you did for the team.
Without surrendering copyright, you absolutely do have the right to unilaterally license your code in whatever way you want. The entire reason that companies require you to sign IP agreements before starting work is to ensure that you don't run off with the code.
The developers wrote the code and never signed a license to Billy's company. They own it. End of story.
thanks for the clarifications.
so the "you can always license any code you wrote" isn't always at all
so, my "exactly" above is a wrong. I see your point about signing a contract vs not. got it.
I'm sticking with my arguments about "always" ..its all I have left :)
BUT! Terms like this need (both legally and ethically) to be explicit, and should have provisions for both "person X stays on-board" and "person X leaves after the weekend."
That's a nice opinion. But as you say, it's a "rule". It's not the law.
And the law disagrees with you. If 5 people write code with no legal framework in place (such as a written contract), they each own their individual contributions.
it would interesting to see something like this tested in court.
Do you know what qualifies as a legal framework when entering a weekend hackathon? Is there a different bar for something like this vs a standard employment situation?
We built this internet.
Actually, we are in charge now. You just haven’t realized it yet. Automate or be automated. If you don’t know how to map out complex systems. If you never got grounded as a kid for taking things apart. If you are too lazy or unwilling to learn our ways. If you don’t work for us yet, you soon will.
The above lines are absolutely cringe-worthy and take away from what is for the most part a decent account of the events. I can understand if someone temporarily holds onto such feelings due to the emotional shock of being wronged by someone else they consider a 'bully' (but really just sounds like an immoral/unethical businessman). However, if you actually hold onto this mindset day-to-day, I would say that is problematic.
I believe the entire ecosystem of "hackathons" to be a scam for Billy like people to exploit naive developers. In fact, if one reads the terms of many corporate sponsered hackathons, the corporation (I'm lookin at you Intel) backing the event claims usage rights to any ideas pitched.
I can't take developers like this guy seriously, he definitely falls in the amateurs camp Alan Kay talks about.
This isn't just about "Billy," this is about the startup CEOs that champion "hustle" for their programmers who are on an options plan to earn at best a hundredth of what their bosses will get.
In the end it's all about value: the value you expect to get out of your work, the value you put into yourself, the value you project to the world and the people signing your checks.
The moral of the story is "Don't work for/with people who don't respect what you do." Billy wanted a few code monkeys, and saw Startup Weekend as his way to get a few code monkeys to build shit for free.
Bobby is not entitled or arrogant. He works hard and preserves friendships. He has a strong sense of fairness, and it's my perception it was extremely riled by the actions of Billy.
Bobby's assertions about the software development being more important than the good-old-boy networks and the braggadocio are generally celebrated in this forum, I don't see why there's a minority backlash.
I believe it's clear from what I read that this situation had a non-technical "co-founder" try to screw over technical co-founders, and Bobby is calling him out on it and using it as a teaching moment.
Billy is way off base thinking his company owns the code. That is clear. And his demeanor... I dunno, maybe he's not the kind of guy I'm gonna grab a beer with. But he seems to genuinely believe what he is selling, which to me just means he is misinformed. But all that takes is standing up for yourself, explaining... maybe rallying the troops. If the troops cannot be rallied... well I dunno. There seems to be an implicit acceptance of this agreement which seems odd to me. The reaction seems to be "Why didn't you tell us about this llc and your plans?" versus "Your llc has absolutely nothing to do with this team or our product. We'll happily switch to another domain. Everyone else aboard?" Yes, he has some power because he has forged the sales and has the relationships. But they mean nothing without the product. Just as the product means nothing without sales.
Anyway, having done a couple of these types of fast startup events, I think they're just rife with these types of situations. Nobody has gotten sleep, people are pushing themselves to the limit, and everyone feels emotional. Just not worth it.
The author on the other hand comes across as a guy with a chip on his shoulder. Based on this article I would be reluctant to work with him.
I couldn't help but be reminded of the Dunning-Kruger Effect while reading this article.
Which is more than enough to make Billy a grade-A asshole.
Startup Weekend terms are clear. Hackers show up to build something new, with everybody on an equal footing in whatever results. Billy wanted free code for "his" business, and so he defrauded 8 developers to get it.
I only know it because the article covers it, even quoting the Startup Weekend rules. Admittedly, the article is rambling, and the anger and passive-aggressiveness of the author somewhat distracts from the basic facts, but it's definitely covered in the article.
"If the other guys refuse to sign up why does Billy end up with free code? it isn't stated in the article and doesn't strike me as obvious"
That's a valid question. I certainly wouldn't sign over my copyright in these circumstances, and I'm surprised the author would, either. That said, if Billy were to pursue the business and keep using the code, the legal hassle of preventing it is probably not worth the trouble for the developers (unless the business actually becomes something).
I think if I were in the author's shoes, I would simply send off a contract requesting a formal agreement on the 0.4% stake in exchange for a license to use the code (I'd also want my share of the winnings from startup weekend). If Billy doesn't agree, he doesn't have code. He still cheated people out of a fun experience, by being an asshole and taking advantage of the Startup Weekend; effectively stealing these developers' weekend. They signed on for one thing, and found it was something entirely different. But, at least if the "handshake deal" is fulfilled, then nobody is being fiscally cheated.
But, it's better to just steer well clear of assholes like this. I guess it takes time to develop radar for them. I usually spot'em within 30 seconds of talking to them (and, being a nerd my whole life and involved in the tech industry for ~20 years, I've talked a lot of them).
It's a shield behind which the unempathetic and uncaring hide.
It's not unreasonable at all to be observant and complain about an exploitation that's gone on for decades, perpetrated by MBAs and good-old-boys.
Author is stuck in high school.
Seriously, it is impossible to separate the story from the source here. Nobody should trust this is an accurate conveyance of the tone of what happened.
But don't equate the two. The author built software and expected professional discussion about a business opportunity. Billy attempted to take everything using his 'existing' incorporation that was against the rules.
These actions are not equal, and the author highlights that there were plenty of warning indicators he should have, but did not pay attention to.
The backlash in this thread is mindboggling. The author's "attitude" seems pretty appropriate for someone who was very recently betrayed by a team member. I understand if you don't like the "nerds vs jocks" imagery but frankly that's not arrogance, it's colorful storytelling.
No, you're entering in to a team relationship with others, and sharing your talents with those people.
Grow a pair, people.
BTW, I treat all human beings (coders or not) with equal respect, but I also learned to avoid the "Billy"s of this word like the plague.
Edit: This is not a comment on your comment, which is valid. Just a quote I liked.
I think the author (or his friend at least) entered in the event to test his Speculative Stock Warrant. (It is a ways to get a small kick-back if startup goes big 10 years later)
So he already entered in the event to only get an shadow option of a potential good company.
He complained that Billy did not valued enough their weekend hacking and put an outside parter in the company. But he already only had 0.4%. If I was Billy I wouldn't think of someone who had this kind of deal with me as a cofounder.
Maybe it's because I'm not familiar with norms around "Startup Weekend" type events.
I have no doubt Billy the pitch man is an asshole (almost all restaurant owners are, for one thing). I also think he's being completely reasonable being confused about why this guy he just met thinks he should own a piece of Billy's company.
But I confess I've never understood why anyone would want to go to a 'startup weekend' kind of thing and code for free on someone elses business idea, someone you've just met, in the first place.
I must be missing something about the general cultural expectations of such events.
But it does seem odd to have an event focused on starting businesses (and creating teams likely to work together in the future on the business?) among people who have just met, with no written contracts involved (even prohibited!) based just on cultural expectations which may or may not be shared, and no time to discuss them or get to know each other in advance. Do successful teams actually get created from this process sometimes?
That's part of the reason why contracts are not allowed - everyone owns the IP then so there cannot be an owner-employee relationship in any sense.
To paraphrase a former governer of Texas, he was born on third base and thinks he hit a triple.
When Billy builds a "real company" he can make those kinds of deals with developers. Right now, Billy has nothing like a real company. He has an idea, no ability to execute by himself, and a 50% partner who also can't execute said idea.
Startups are not real companies, and equity for working on a startup is very different than equity for working on a real company.
A real company also expects to pay market rates for developers. So, by that metric Billy should have been paying these developers $50-$150/hour (depending on market, experience, etc.) for these 20-30 hours worth of work, if they were contractors rather than employees. It sounds like at least some of the team has enough experience to be on the high end of the rate scale, and if they actually delivered some sort of working prototype in that time, they certainly delivered value.
Also, saying that X% of something is "a lot" independent of stage or size is absolutely inane.
> "contracts aren’t allowed from the event"
Isn't this kind of conflict pretty much guaranteed then?
> "How do teams address the issue of IP/ownership?
As with any startup, the team decides. Startup Weekend doesn’t support or take part in the signing of any legal documents at the events themselves, and while Mentors with legal backgrounds are often present and able to give general advice, they are not permitted to give specific legal counsel.While it doesn’t hurt to be clear about your individual expectations from the start, we’ve found that teams who don’t spend time addressing this issue until it actually matters (i.e., there is a tangible product to have ownership of) are much more productive and successful than those who do."
Oh, but it's more "productive" during the weekend. OK...
OMG! i was just about to ask what's up with that "no contracts" policy. this is incredible! they should rename to Exploitation Weekend.
These expectations are ridiculously misaligned and totally unreasonable.
Because you believe in the team, the idea and the opportunity.
> when you can take 33-100% of equity to found a startup with no money under highly uncertain conditions
Those who can, will.
But this guy wants to do neither. He wants 0.4% for 20 hours, and then he wants to walk away and let someone else build up the value of the company. Assuming his total stake is ~12%, that's equivalent to a demand for a 4 month vesting schedule with no cliff, for what? A weekend?
He doesn't want to found a startup -- he wants to spend one weekend building a shitty prototype. He's not talking about being there when the thing goes live, fixing the broken deployment, troubleshooting the errors -- you know, the actual work which keeps the customers satisfied. He's talking about writing a model one time, and letting someone else take all the risk.
And IMHO, pretty much everything in this story is set up for failure. This is not how startups get founded. Actual startups get founded by a team working for equal or nearly equal shares, who do all of the work necessary to build something that people want, and then either take funding or use revenues to hire people once they can pay market-rate salaries. Startup Weekend is for meeting people. 0.4% equity deals with no salary are for wasting time on a lot of drama.
I'm not sure how you keep missing this key part of the argument: 0.4% over 20 hours. I've italicized the part which I find ridiculous, so that you can better understand where I am placing my emphasis. Him wanting an equal share for an equal amount of work -- no problem. Him wanting to get a full, post-funding engineer's grant for 20 hours: wild overestimation of his own contribution.
> At any normal company, you would have to work 4 years to get that amount. If you work at a company as engineer number 1-5, prior to any funding, you might expect 50-300 points, over 4 years, after working for a small salary, and under highly uncertain conditions.
It's not normal to work 4 years to get 0.5-3% equity, prior to any funding, under highly uncertain conditions. If the company is funded, growing quickly, and paying you market-rate salaries, sure, that might be fair. But if it's just a bunch of guys with an idea, you're pretty crazy to take that deal, and even crazier to keep working on it for 4 years.
It's also not normal to take 0.4% for 20 hours of work, but that's largely because it's pretty crazy to actually expect to start a startup at Startup Weekend. Go use networking events to meet people, and then if you like & trust the people, make a commitment to working with them for a longer period of time for normal founder equity stakes.
What is that based off of? I've seen that plenty of times to know that it's quite common. I've never seen employees #1-5 being treated like a cofounder, so from my experience, what you're describing is way off base.
> But if it's just a bunch of guys with an idea, you're pretty crazy to take that deal, and even crazier to keep working on it for 4 years.
A bunch of guys who are paying you (admittedly below market). And yeah, if you keep the same salary after 4 years, after multiple rounds raised, after various milestones met, yes you're woefully underpaid.
I also know 2 guys who have exited for ~$80-110M after taking $5-7M in funding, plus the founder of a unicorn who once asked me if I was interested in being employee #2. They all followed the same pattern: the founders built the initial product, they found customers willing to use it, they got funding, and then they hired people. (For completeness, I know an additional half dozen or so people that have followed the same pattern without success, usually getting absorbed back into a big company or other startup that's already gotten funding.)
A dozen data points isn't a statistical survey, but I know which strategy I'd rather follow (and am following).
There's a big seedy underworld in the startup scene that's filled with people working on bad ideas, with minimal funding or just their own savings & credit card loans, who try to get anyone they can to work with them for really cheap rates and small equity promises. Usually these startups end in drama, as they go belly-up and people realize they've spent years being underpaid. If you'd like to be a part of this scene, more power to you, but I'd rather steer clear.
If you want the argument-from-authority perspective, here's Sam Altman:
i.e. if after the weekend 4 members said 'that was fun, now let's go home', and 1 member said 'oh guys, can I use all the code and make it into a company?', then the other 4 guys would each have 0.4% ownership in that company even if they didn't put in any money or any time beyond the weekend, on the basis of their work that weekend. I think that's a sensible idea: 0.4% is not a lot, but it's a weekend of work, and if the startup ends up worth $10m or $100m then it's a nice kickback for a weekend's work. If it ends up being worth nothing, no biggie, after all you just worked there a weekend and didn't do anything after to make it a success.
In short, the 0.4% is a reward for anyone who decides 'I don't want to be part of the process of continuing this idea, but I want a small reward relative to what the idea I helped initialise could one day be worth'.
The issue is that when it's all said and done, the process to decide who'd want to turn this into a startup and who didn't looks to have been really authoritarian. One person turns it into a company and splits it 50/50 with a friend of his who wasn't even part of the startup team, and then declares himself to be the owner and leader of the gig which is absolutely ridiculous. A fair process would either be 'alright let's sit together as equals, decide on how we launch the startup, who becomes the leader, equity, salary etc, and anyone who isn't interested gets the 0.4% regardless'. Instead it was 'I'm the leader, I'm half the owner, the other half is someone you've never met, you can still be part of the startup but it's under my conditions and if you don't like it you can have the 0.4%'.
In short I can see the problem OP has with this, added to implications that Billy was being a condescending asshole.
Fact of the matter is however that (1) OP and the team can decide to use the code and run a similar project themselves if they want and iterate on it faster than Billy ever could given the former have all the expertise of not just development but the codebase as well and (2) if they were never interested in that, they'd still get 0.4% of Billy's venture (as long as the handshake deal is upheld i.e. which didn't seem to be put into question).
I think the handshake deal was sensible and I see absolutely no legal basis for Billy to be able to appropriate the work exclusively to his startup. In short I think OP had the power, met an asshole, still has the power. They still have just as much right to the work, still can run a startup without Billy and still can own 0.4% of Billy's venture.
edit: they ended up with a team of 9, billy and likely 8 devs, rather than 5, billy and 4 devs. Can't be bothered to adjust the percentages etc but the same story applies.
If Billy already was 50/50 owner with another person on a completely unrelated LLC, it would have to license/purchase the code from the entire group of 9 to use it. As the 0.4% deal was agreed to at the start, it is unlikely that licensing/purchase agreement would be accepted without including that provision.
Ideally, each member of the team (including Billy), gets a 1/9th split of the prize winnings. Billy-the-LLC buys the code from Billy-the-team-member at a reasonable price, and each member gets 1/9th of that. Additionally, Billy has to grant each other team member 0.4% ownership stake in his LLC, or they never agree to sell their code.
The team members, of course, surely realize that 0.4% is going nowhere if Billy is trying to run a tech-based business without respecting the nerds, so they might just sell it right back to him while he is still full of himself, and before he realizes that he is dead in the water when the first customer makes its first feature request.
The end result is that the 8 nerds get a nice paycheck for one weekend, and Billy gets a stale codebase that he can still monetize through excessive schmoozy salesmanship. It should be a win-win. The only hitch seems to be that Billy seems to think his LLC already owns the code, rather than his informal partnership-of-nine.
Each one of them owns the whole code. If they want to do anything with it outside the existing nine, they need all nine signatures on the agreement. For practical purposes, that means Billy does not have much leverage. He needs to get all 8 of his partners to cooperate, and none of them need him in the slightest.
If he chose to block any partnership agreement, they could just reconvene as a partnership-of-8, and spend another weekend re-creating a better codebase from scratch. He would be left with nothing. The reasons they would not do that are because the idea itself is rather lame and unoriginal, they could probably come up with something better on their own, and having proved themselves as a team, they might want to try something new anyway.
The 0.4% proposal that was agreed on implies to me that they may have known that Billy was interested in turning this into a company and that before-hand they'd agree that each member has a 0.4% stake in whatever venture comes out of the work they do that weekend regardless of who uses it.
Why else strike such an agreement? Without this proposal, naturally every member would have a 100% / n share if they formed a company out of the team, and no single member could, as you describe it in your post, simply appropriate all the work without consent of the rest of the team. The 0.4% suggests that one member wanted to start a team before-hand, the rest didn't, but that this would be their compensation for the weekend of work regardless of who ended up using the weekend's resulting work.
Again this is all just speculation, but I'm having a hard time understanding a potential rationale for the 0.4% proposal, which was a developer's proposal of OP's friend, not Billy's idea to do a bait and switch or exploit the devs.
I would say so yes, but only insofar as him being a part of the team. Some members of that team wrote code for that team's goals, not on their own in private hours for their own goals. Therefore the code is owned by the team which Billy is a part of.
That also means that all the sales contracts Billy landed or they pitch they did, is also owned by the devs.
That would indeed suggest however that Billy going off on his own creating a 50/50 with someone else, using the team's work, is like Eric Schmidt (supposing hypothetically for a moment he was a business-oriented member of the pre-Google team on day 1) taking page rank and starting a new company, i.e. total bs that wouldn't hold up in court.
The whole 0.4% thing muddies the waters. It may be interpreted to say that whoever uses the produce of the team's weekend work, must give 0.4% of their venture to the rest as a reward, and having given that reward, no other remuneration is necessary to use whatever the team came up with that weekend. That makes sense in the context of a single startup arising out of this deal, or even competing ventures who both use the software and each award each member 0.4% in their respective ventures, it starts to fall apart when you look at the non-software stuff, i.e. who can appropriate the sales contracts, the logo etc which can't simply be used by two companies. It's a muddy deal that could probably go either way in the courts, which is why Billy's move is so asshole-y and why Bobby probably wanted to wipe his hands of it right away, forfeiting a 0.4% for real other reason other than wanting to disassociate and taking his $200 in the prize share he has a right to regardless.
Of course, I'm not a lawyer so what makes legal sense to me is pretty meaningless :)
How can you say this with a straight face? A $100M company takes years to build. You think in 2020, if these guys walk away from the table with $400k each for ~20 hours of work they did in 2015, that's reasonable? That grant would be bigger than anything any subsequent engineer would earn, and it's beyond dubious to think the contribution of this guy -- who's patting himself on the back for figuring out a CRM schema -- is worth more than the guy who stays for 4 years and actually helps brings the product to maturity and exit.
In reality, each of these guys did at most $1,000 of work. If you wanted to express it as equity, they're off by at least one decimal place. Them coming away in 2020 with ~$20-40k is a much more reasonable valuation of their contribution.
It's a lottery ticket with less than a million-to-one odds. The expected value of the hypothetical payout is arguably lower than 20 hours of contract work.
There's a lot of big talk on HN about being a tough guy negotiator, earning your keep in this harsh Darwinian landscape, looking out for number one, etc. I'd like to meet the person who's negotiated a 4 month vesting schedule with no cliff.
Once you put actual numbers to the proposition, it's instantly obvious that these badass negotiators are suddenly full of shit. Reminds me of being elementary school recess, where everyone's dad was the strongest man in the world, and this one time he picked up a car and lifted it over his head.
If I've learned anything since I got out of graduate school, it's this: what you're "worth," what you "deserve," are meaningless concepts. You get what you negotiate, no more and no less.
Someone who thinks that 40 beeps for the founding team is too much probably shouldn't invest in this startup. For me, if I thought that the company would be worth $100M in five years, the $1.6M the SW team would be getting would be the least of my concerns, well behind 'how do I get in on this?'
Not the founding team. Some guys who contributed 10-20 hours one time.
> For me, if I thought that the company would be worth $100M in five years, the $1.6M the SW team would be getting would be the least of my concerns, well behind 'how do I get in on this?'
Nobody would be complaining about how difficult fundraising is if investors were all so amenable.
The guys who built the MVP.
It doesn't matter what you or I think of 0.4%. They all agreed to 0.4%. Either that agreement is honored, or all IP remains with its creator--and Bobby takes his code and goes home.
Like, "oh my these stupid fuxxing nerds. They may know code but they don't know shxt about business and using people."
I prefer passive aggressive over passive passive (aka slave).
If the story is true, Billy deserves the 'bullying'. Did you read the shxt he tried to pull on the coders?
"I had the idea for 18 months and filed for LLC, so I own it." Really?
Yes, I think your comment deserves a downvote...
I can't see either side being 'right' here.
Billy says he owns it. Billy did have a hidden agenda.
Bobby at least owns a lot more than 0.04% of the company.
Had Billy hired the coders to do the work and say I own the company, I have no problem with that. But here, Billy tricks people to work on a project without fully disclosing his intention for virtually free, and than he claims he owns the company.
It's pretty clear who's wrong and who's right.
Billy came into the weekend with the intention to commit fraud on Startup Weekend and on any developers he could sucker into working with him.
It's like people have forgotten that we've got a lot easily-recordable evidence these days.
It's like people have forgotten that anyone can cherry-pick evidence to put themselves in the best light.
Give people like that enough failure with engineers they try to onboard, mix in a little ethical fluidity, and after a while they'll see no distinction between dedicated teammates and expendable assets who will fold before putting in the "hustle" for "your" vision.
I could not agree more. It's a curse of the Silicon Valley mentality; anything can be hacked together in a weekend!
In real life, businesses aren't built with a bunch of random personalities thrown in a room, cobbling an idea together for a weekend. It demonstrates how much value SV places on "code" over "business".
Both sides in this story need to grow up if any of them ever want to launch a successful business.
I just read an article where a guy walked into a Hackathon and convinced a dream team to build his app, for free. The "ideas are worthless, execution is everything" is a curse. It's perpetuated by "technical" people to assert their value. The truth is both the idea and execution are extremely valuable. Don't believe it? Go look at all the beautiful apps in the app store that make nothing. Execution of terrible ideas.
It isn't difficult to recruit a technical team. Like it or not, with a good idea it hardly takes a "Python Dream Team" like in the article to get something done. Most applications aren't pushing technical boundaries. What it takes is money.
You know what is difficult? Convincing your banker to give you that money. That takes an idea and sales skills (both of which, apparently, Billy had).
Go to any 'meetup', its almost all 'idea people' and no tech talent. That means, its very hard to find that talent.
It doesn't take a 'dream team', no, but it does take some team at all. To get that, you have to convince Engineers your idea is good. Almost as hard as convincing the money men.
So lets reword: its hard to get the money, and hard to recruit the talent. That leaves the ideas, which are a dime a dozen. Clear?
Maybe because none of them are?
Again, you're assuming that these are all "great ideas", that just can't be discovered. I'm claiming the opposite. Go grab an app at random. I'll bet you it's an attractive, functional app that's utterly pointless. Thousands of people have executed their terrible ideas.
>you have to convince Engineers your idea is good
Exactly. The idea is important. As is the execution.
>That leaves the ideas, which are a dime a dozen. Clear?
Ideas are a dime a dozen. So are technical people. Good ideas are not, just as good technical people are not.
If I were starting a business, I'd take a great idea and random technical people over great technical people and a completely random idea.
Not hard at all. The first one takes time because you have to be really careful, from then on it's just a matter of contacting a recruiter and specifying exactly what you want, interviewing and making offers that are at market rates.
Investors are much, much harder.
It's really easy. You pay them.
Which is the crux of the issue here; Startup Weekends aren't meant as places to get/recruit cheap/free labor, so when they are used in that way, bad feelings happen.
although i believe that the Billy guy is a jerk (but no, BTW, does not really seem a bully), i kinda had a harder time sympathizing when comparisons with google started flying, while what they were developing was a seemingly usual web app, whose only distinction was the actual business idea, and even that was not original. and why enter into something like this with unknown people, sacrifice family time, work like an ass day and night, all without any contract - i'll never get that. the whole event is simply preposterous.
In this case, there is no real innovative, patent-worthy tech. It's just an idea with some very basic tech any developer worth his salt can put together in months if not weeks.
I see this all the time: developers confuse pure tech companies (like Google or SpaceX) with tech-supported companies.
Google won, because it was fastest and had good links.
Fastest was more important than better links. How did they get
faster than their competitors? They bought cheap servers all over to beat the transportation times to the clients. Also their page was smaller, not overloaded, so the results could be presented faster.
Their bot was also more aggressive. A more aggressive bot contributes more to the link quality than the algorithm, because you get deeper and new stuff more timely. People are searching for new stuff.
That's how Google won. Not because of PageRank alone. PageRank was a contributing factor. But renting out cheap servers in every datacenter out there and keeping the page small and fast and dealing with the consequences of cheap servers (HD fails, fallbacks, ...) was more important.
It wasn't long before I dropped that application and just used google, I wasn't waiting around for any of the other results anyway.
 Copernic - Long since pivoted into desktop search
This helped get users used to google as it was the first page on every machine I had control of as it manager...
Windows required less resources to run and that made it "superior" in mass availability.
The "we are the nerds, we built the blah blah" is terribly cringey. Awful stuff. There's no reason that a 'nerd' can't have an interpersonal and business acumen.
By default, code belongs to the author of that code. Unless another agreement is in place, Bobby owns his own contributions to that project.
With that thought, the potential outcomes of this become a little clearer.
I was in a business (music publishing) for a number of years that dealt heavily with copyright law, but IANAL, so I could be way off here.
1) Pre-weekend: why would you only accept 0.4% equity? Given there was nothing but the idea the company was worthless. So why wouldn't the guys building it demand a much higher slice?
2) Post-weekend: given the company was basically just the code at this point, the devs could have just said "no" to this guy and set up their own company. Why wouldn't they have done that?
Dick move by Billy, but the end result is only a wasted weekend.
I feel so awkward reading this post.
Why disregard the full scope of opportunity costs the author mentions?
He's not banking on a lucrative outcome. He's sacrificing time with the family AND rest on the weekend. Now, multiply that by the size of the team.
Taking what the author says at face value, he got stuck with a duplicitous character who single-handedly dragged a team into violation of the hackathon's terms. The event explicitly asked for relevant disclosures.
As others mention too, his documentation's a valuable urge to caution.
(To be clear, it would also be a failure mode to always prosecute the small crimes.)
Unless it's spoken about publicly, this kind of thing will just keep happening. Which is why it was made uncouth in the first place. If everyone has to learn the hard way, there are more warm bodies pumping through the system.
I want more people to understand what they could be getting into when they enter into events like this. So what it if requires a bit of akwardness to get there?
Now lets take into account that they put a contract of equity at the start
so they are also 0.4% of equity owed of that company to each one.
Last but not least it kinda ruined the experience over the weekend.
People who come to SW and look at is as a free way to get something built for their startup are not the target. It makes it a bit predatory and you get the reactions that you experienced. I try to warn people of this but some folks have their own ideas.
Coming with a team already formed also isn't ideal. The point of the weekend is not to start a company, its to work alongside other people and go through the exercise. With that mindset, you won't be disappointed when you "lose" but you'll gain some experience and grow your network. Thats the main point of going to the event.
If someone already is thinking about equity and contracts while doing a SW, run the other way. Its the wrong attitude for starting a company in general and in my experience generally ends up badly as they focus on the wrong things at the wrong times in other ways as well.
Ended up making a team with nothing but devs and we built a silly hardware prototype. We ended up winning, then stuck with our day jobs. We were all taken our of our comfort zone, would definitely recommend SW despite the few that try to take advantage of it.
As a shy dude who just writes code all day, it basically forced me to become a better communicator.
P.S. It was pretty obvious that Billy was looking for cheap devs when he gave his pitch. The warning flags were there if you talked to him 1-on-1 at all.
It makes it a bit predatory
So, what are you doing about it? I'm not trying to sound accusatory in asking you, but from my position you risk losing the attitudes towards the weekend that enable a culture where people collaborate instead of just showing up to find cheap labor.
All the hungry guys at "hackathons," "jams" and whatever else they're called have slowly put me off from participation in anything but work weekends at a hackerspace full of existing friends.
This type of situation is pretty rare for me, though as on average theres probably one group out of 20 at the events I go to who have this type of setup/issue.
SW should require that teams sign a (written) contract laying out who owns what at the end of the weekend, and offer several templates to keep the process painless.
You could even just put something into the FAQ saying "if no contract is signed, then all team members acknowledge that each member owns all IP he or she produces, following United States copyright law."
But "don't think about equity and contracts, just code" is exactly the attitude that leads to lawsuits, hurt feelings, and people taking advantage of each other.
Contracts are not a red flag, they are a way to avoid assumptions and assure that everyone gets a fair deal. Avoidance of contracts on the other hand is a massive indicator of either ignorance or bad intentions.
With Techstars now being involved, I can see them putting in more clear language about what the outcome of the weekend is as there will always be people who miss the point.
Then... don't call it "startup weekend". Call it "hacking weekend" or something like that. "Startup weekend", as a name, carries certain connotations.