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Should I sign this agreement? (neilni.com)
68 points by neilni on Sept 24, 2014 | hide | past | web | favorite | 53 comments

It's generally a bit taboo to directly address dominance in social interactions, but you were manipulated into doing and then handing over work for nothing in return.

You were successfully made to believe you would be the bad guy for walking away when nothing could have been farther from the truth.

You worked, for nothing, on a project which belonged wholly to someone else, and they didn't even bother to turn up for project meetings.

There's often a big disconnect between people's superficial behaviour and their genuine intent, and you have to learn to read the signals which tell you the difference.

This episode might have been unpleasant but could be a cheap lesson if you learn the right things from it.

"could be a cheap lesson"

Not to mention the fact they wrote it up and it is now popular on HN means that other people might learn from this and avoid getting into the same mess.

[I once did a pile of work on a proposal for a large project for a customer who turned out to be using it as part of his MBA... I probably would have noticed something was funny but he was introduced to us by Sun!]

HN has showed me that this sort of thing is more common than I expected. Any and all experiences shared help people know what to look for.

the flip side is:

why would you destroy this relationship if you're the mba student. You have to realize there is a benefit to keeping the original engineer on board. There's probably a benefit to having a partner that can prototype any stupid idea you come up with.

If this were me, i'd be jamming 50% of this business down the coder's throat.

It's never good to burn bridges, but giving someone 50% as they walk off to take another job doesn't seem all that smart or equitable.


This is a standard NDA from HBS: http://www.hbs.edu/entrepreneurship/pdf/Sample_NDA.pdf

Always trust yourself, your gut and your instincts in business. Never do anything in life you get a bad feeling about, including signing a CNDIAA.

"I made an iOS ecommerce app, along with backend server and a simple web-app POS system. My co-creator asked me to sign a standard NDA agreement except it specifies that I am an unpaid intern. My instinct tells me not to sign it."

Trust your instinct and good job writing a blog post about it asking for help.

You definitely weren't the 'bad guy' in this relationship. If anything, it looks like you were being taken advantage of. People deserve to be compensated (somehow) for their work - and it's somewhat clear to me that this wasn't going to be the case in your situation.

On the other hand - if you did want to be a consultant, there are different things at play. First, the NDA. NDAs cover only the disclosure aspects, nothing else. Next there's an MSA - Master Services Agreement. The MSA covers the method by which services are to be delivered, and the contractual obligations around them. It's important to separate the two, as typically an NDA's lifespan is significantly longer than an MSA (i.e. after you're doing with a client, the NDA continues to live for 6-12 months).

There's absolutely nothing wrong with discontinuing a partnership that isn't working. It's a hard thing to do, you feel like you're letting people down, but you're not. The reality of the situation is that a partnership is just that - a partnership. If it's not good for both sides, then it's not a partnership, plain and simple.

tl;dr - Get compensated for your work, and put yourself first - no one else will.

I want to know why walking away from such a toxic deal made this developer feel like that would make them the bad guy in the partnership. It seems like the other party wanted everything and was giving nothing in return. I was disappointed to read the developer gave the code away in the end.

I was disappointed too, but it was basically "screw off" money. At face value, it doesn't seem like the developer needed to do anything, but I could see it being something along the line of "here's what I've done so far, and in return for me giving this to you, you never talk to me again." The developer is paid in sanity, and while it seems like a bum deal from the outside, I could see myself doing something similar in order to get out of a toxic situation.

Things are complicated when you're dealing with actual people as opposed to hearing about it second hand.

You're right we are hearing one side of a story, but we can only go on the information we have. The co-creator wanted all of the product, and wanted to give nothing in return, and never really wanted to be a partner in the project but use the developer for unpaid work since it would be a learning experience.

Anecdotally I've turned down many projects in the past of a similar nature. "Do this X or Y for me for free I'll tell everyone what a great job you did and it will bring you more work!" "The experience and education you get from working on this is payment enough."

I've dealt with actual people in these situations, and this developer isn't the bad guy. There are no bad guys or good guys in business. This is one business partner taking advantage of the other. The developer should have never signed anything, used the project for their class, and not hand over any right to the code since no exchange of value for it was made.

@xarien, I couldn't reply again to you, but I wanted to say you're absolutely right about guilt being very complex, and to thank you for clarifying your thoughts. Guilt and me go way back as I'm sure it does with most folks. (^_^)b

I don't disagree one bit, only pointing out that feelings such as guilt are extremely complicated. I remember the first time I had to let someone go (was a friend too). It was the hardest damn thing to do and I let it drag on for months...

Assuming your description is accurate, you should have had %95-%98 of the equity of that startup, and all ownership of the code. She was defrauding you (says she's taking class, so you enroll, turns out it was a lie, says she'll meet with you, doesn't show up, claims she should get %100 despite doing less than %5 of the work, etc.) and gas lighting you attempting to emotionally manipulate you into thinking you were the bad guy.

My response would have been to give her none of the code, she didn't deserve any.

But I really expect that she'll get nowhere with this app anyway... she can't get traction with just an initial release, it will need constant work.

Her actions are very typical of the "clueless business type" that has no respect for the effort of software development (just pointing out functions not yet done is a prime indicator- they can't be bothered to dig into the project and think there's some value in pointing out the obvious?)

Which means she will be a failure with this startup.

You would have been better off, I think, taking your software and shopping it around to other MBAs in this class and seeing if you can find someone who will give you a real offer.

You could work on the app on the side, and you don't have to give up your permanent job, but even if you didn't work on the app, you should have still owned a chunk in the company that developed it further (assuming it was worth developing further.)

But owning a chunk in a company run by someone who is clueless and trying to defraud you is not worth anything.

Actually, according to the rather useful sociopath/clueless/loser categorization it's the OP who is "clueless":


> I drafted up an agreement for both of us to sign,... and gave her the code for free.

You did WHAT?!

I was similarly appalled by this - but reflecting on it further, it was probably the easiest way out. Sounds like at that point, he just wanted rid of the whole project.

If it were me, I'd have just refused to sign it and let her take the risk that she didn't own the code. It was her changing the arrangement after the fact, and if she'd wanted an NDA and invention assignment she should have brought it up ahead of time.

He was doing it for "free" because he was doing a class project and saw it as a learning experience. He not only didn't get paid, or get equity, but in fact paid for the opportunity to do it. The idea that there is any conceivable reason why he should in any way be restricted in the future is sad.

Hopefully the "agreement" is simply a copyright assignment on the physical code.

That doesn't sound right to me. "I just want to get rid of the whole project" sounds like a position of great strength in a negotiation. You might as well say "I'm not signing anything unless I get X" and as long as X is less costly than hiring someone to duplicate your effort, you've got a deal.

My approach would look like "I know that I have a relatively stable job lined up and am facing less risk than you, which is why I'm willing to step down from 50/50 to 30/70 while signing this NDA, or 20/80 to sign a lesser agreement, like a non-compete which still allows me to reuse my code. I'm not accepting a 0/100 split because I don't have to; make me an offer which isn't insulting. Or pay me for the hours I put in. Either way." If that burns a bridge then I'm not sure that I would have wanted to save that business relationship. I'd think "Surely an MBA can understand that a dedicated employee who takes it upon himself to be more prepared than his boss at every meeting and who actually delivers the prototype should be compensated somehow."

It sounds to me like the costs of continuing to deal with this person, along with the almost certain failure of the venture, makes "I just want to get rid of the whole project" equal "I never want to have any dealings with the person again".

Better to have a clean and total separation and get on with his life vs. striving to have some fraction of nothing at a continuing time and energy cost (well, till the person gives up on the venture).

ADDED: As oddevan puts it elsewhere in this discussion, he was "paid in sanity".

Given that he was about to start a full time job, he had a choice of deep sixing the code and being 100% sure her venture would fail, and have a smidgen of responsibly for that, or let her have the code and have no responsibility for her almost certain failure.

Either way, he gets nothing besides a lot of invaluable experience, that became certain once she tried to formalize their implicit? arrangement. This way all the onus for bad outcomes is on her head.

I would have just deleted the code and moved on with my life. Far simpler.

I can completely understand wanting to be rid of something like this, if only for the author's mental health.

Under a typical founder vesting arrangement, he wouldn't have gotten anything anyhow. That's why they do that - to keep people from walking away with significant equity after a brief time working on the project.

It doesn't sound like that was the arrangement, but it should have been.

> My co-creator, an EMBA student, and I are taking the course as a way to iterate through our product and process. She is in charge of the business model, and I am doing the coding. Our professors urged everyone to start talking about equity splitting as soon as possible; and my co-creator had a really simple answer to that: "I should have 100%," she said.

That sounds like a bad deal already. Good thing he didn't sign the agreement. But i wonder what the agreement he drafted up contained.

Read the very next sentence. He accepted a full time position somewhere else.

She knew that I had accepted a full-time offer prior to starting the class

If he's not joining the company to run the project, he shouldn't have any ownership. How would that work?

What if one of the founders doesn't work full time on the company? Then they're not a founder. In my book nobody who is not working full time counts as a founder. Anyone who holds on to their day job gets a salary or IOUs, but not equity.[1]

Trying to making him an unpaid intern is a dick move. Although apparently the immigration status gets in the way of compensating him fairly?

[1] https://gist.github.com/isaacsanders/1653078

> If he's not joining the company to run the project, he shouldn't have any ownership. How would that work?

He wrote the damn thing. It is literally only right to compensate him for his work. And when you know going in that you can't compensate in cash, you're compensating in points.

Hell, even giving 50% to someone who only has an "idea" to bring to the table is ridiculous. It sounds like he put in MUCH more effort because she didn't even prepare for their meetings. Then what DID she do?

Profited from her MBA education?

Worked Smart, Not Hard?

The use of "smart" to mean "act like a complete dick" is something that makes me incredibly angry when I encounter it.

I don't know, but he ended giving up the code for free. I would've gone solo in that situation.

That's why you have the tongue in cheek pre-money valuation (seed) equation from Guy Kawasaki: Add 500k for every engineer on the team and subtract 250k for every MBA.

As someone who knows both parties involved, here's a little context from the other side.

While the MBA student was not in the class, she was drafting and writing all of the classwork (with the exception of the project) for this class that she was not enrolled in. Our school uses a bidding system that played a factor in her ability to enroll. Strings had to be pulled to manage to get the developer into the class (a bureaucratic headache because of cross-registration).

From her perspective, she had an implicit agreement that helping the developer get into the course and then completing the vast majority of the coursework was her end of the bargain. This should've been made more explicit between them, but the point is that the work done was not one-sided.

What did he get out of it? If he got nothing, then the contract is typically invalid. You can't give something of value without getting something in return (the consideration)(I'm not a lawyer)

If it's any consolation, the odds that your "co-creator", if the business practices she has displayed thus far are any indication, makes something noteworthy or profitable out of your project, seem very low.

I have first-hand experience with a situation like this and can tell you this:

Keep the code. Walk away. Learn from it. Don't look back.

God this is frustrating to read. Basically you chose to make yourself a slave to this woman for NO reason.

The MBA student sounds like she's a complete and total sociopath who is very skilled at manipulating, using, and discarding people. I've worked for someone like this before, and it probably took years off my life. I'm older and wiser now, hopefully :)

If she wants to be successful, she should get herself hired at a large corporation. Perfect environment for someone like her.

I just don't get how "business" types who can't code or design get the idea that deserve 100% of a project when they don't want to pay the developer.

It just blows my mind. If you can't pay me, then I deserve at least 50% of the equity.

She was doing the "business" end of a project that had no customers and no "deals". So, what exactly did she do here?

You know, "business" it's the stuff a little coder like yourself can never grasp, or even begin to comprehend, so let me take care of business, and you keep coding, ok?

From a purely legal perspective, such an agreement probably would not have been enforceable.

The coder would be giving up the right to his code, and taking on the burden of non-disclosure, in exchange for...nothing. Basic contract law (in the U.S.) requires that both parties receive adequate consideration (essentially, payment) for the bargain they are making. Unpaid student internships are generally not considered to be valid consideration because it is illegal to have interns perform the primary business activities without some sort of compensation (monetary, or in the form of academic units).

It's surprising that it didn't come up in the previous HN discussion but it appears that none of HN's usual legal commentators dropped in.

You're quite right, the contact contains no consideration on the part of the company. It's basically a contract of slavery.

It also fails to assign his existing work to the company (as contact terms cannot apply retroactively), which is a major blunder, as prior to signing this contact he could not be said to be an employee (if indeed he is).

The patent warranty is particularly ominous, anyone who signs that would be taking on enormous risk for the rest of the business's life.

The part that bothered me most about the situation (and I realize that it's only your side being told here) is that she gave lots of warning signs that she was not holding up her side of any form of partnership. If she couldn't show up to the meetings, give you feedback on the tasks that you were tracking, prepare for your discussions of the app, etc... you should have run away from her right there.

Never stay involved with partners who aren't adding their share of value in an undertaking. Since she wasn't paying you or even offering equity, the least she could have done is to participate in the work that you were doing for her benefit.

Don't tolerate being systematically disrespected.

>... this was a particularly uncomfortable and inappropriate conversation to cover through emails and text messages.

I think this is a key lesson. If you're getting into a business relationship you need to be able to dispassionately discuss arrangements and contracts. It is far better to do that via email than verbally.

The bad guy? At that point you could have given her an hour to turn up with a briefcase full of cash or it's rm -rf time, and you still would have been the good guy IMO.

Note: this is not legal advice.

The key to success is to not give a shit about others and only care for yourself. Walking away as the bad guy but gaining profit from it is much better than being the good guy.

Rule of thumb: If you aren't sure if the other person is being a jerk or not, they're being a jerk.

why did you give her the code for free? you should have charged her for it

He/She is a much "better" person than me. I would not have given the code for free, I would not even have given the code at all. I've developed tough skin over the years. Lots of us who code do so because we really love to, outsiders look at us as business stupid and easy to push around, and more often than should be the case, we get taken advantage of.

The "it would be illegal to pay you" is easily circumvented: start a company of your own (slightly more expensive than a domain name, but not much), have her pay the company, do not pay yourself from the company until you have completed your course.

The big lesson here is to sort this out before you start coding.

I have an MBA and I write code. In my experience, coders overvalue their contributions and business guys overvalue theirs. But in the end, the business guys usually win. You have to think like a business guy.

When I do contract code, I'm under no illusion that I am a critical piece of the business. In fact, the only thing that has any sort of ability to lock me in is typically that switching costs are high- developers hard to find and it's expensive to get a new one up to speed.

That's just the way things are. If you're not an integral part of the business, you are replaceable.

Engineers can learn business. There's very little that is difficult in business. Have yet to meet a business guy who could learn software development.

That's an unfortunate attitude that I would encourage you to drop. Any reasonably sharp, motivated person can learn anything.

Am I a business guy who learned to code? An engineer who learned business? I have degrees in both and have taken jobs in both fields. Or am I just someone who took an interest in these things and learned as much as I could about both of them?

Anyone could. But it takes a long time. Most people won't do it.

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