Where did three months go (AKA where've I been?)
10 comments
...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.
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.
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.
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.
> 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.
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.
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!
All that said.. original poster, get everything formalized ASAP!
Would be a lot more interesting if you could mention what your startup does....
But my idea is worth something lol
No seriously we are supporting the IYP industry.
No seriously we are supporting the IYP industry.
IYP? The International Year of the Potato? Internet Yellow Pages?
Independent Yellow Pages. Totally not glamorous :)
Pretty big industry though. Congrats - sounds like you've found a good niche.
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!
Congrats goofygrin and thanks for sharing!
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.
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.
"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.
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.
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.
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 :)
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 :)
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).
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 $$ and more people.
Within 3 years the company went through two acquisitions, one of which was a reverse buy out of a crappy company that had IPOed. A year later the company folded.
A 20 year company was destroyed by this choice to build a bespoke system for a huge client.
Another memory is making said 2.5meg craplet run under the IBM JVM for OS/2 Warp 3. On token ring. Banks got sold some horrible systems!
One that sticks in my mind is one of the first "real" jobs I had. The company was a solid, well established company that was about 20 years old. Best place I ever worked. They had a piece of supporting software that was written in VB on Access. The software was basic, but it worked as a great support to the methodology and theory of the company.
One big (REALLY BIG) client came in and needed the software to be housed on central servers, with the ability to roll the data up for reporting purposes.
So the company went off in the weeds, building a huge (2.5meg!) java applet, basically tailored to this one client's specifications. The company had no java experience. Had to hire java guys. No Solaris experience (as required by the client). Had to buy hardware and hire people. They had no oracle experience. Again, more $$ 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!
Lawyer up right now.
Not necessary. We both are responsible adults, not whiney children.
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.
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.
I understand the warnings and I'll protect my interests, but I certainly am not going to lawyer up aggressively.
> 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.
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.
When we started http://www.shadowcat.co.uk/ I was working on contract before the company got incorporated, then free for a while, then slightly paid, then my partner came in free for a while, then he got paid.
There was paperwork and stuff involved saying we owned half each but I left the whole thing to him - the entire point of having a business side co-founder was so I could do tech and not care about it. He put stuff in front of me, I signed it.
To quote a more well known example, Oracle's first accountant was apparently the pizza delivery guy who was a student of such - and told "pay yourself what you need, we couldn't tell anyway".
Sometimes not trusting people just gives you worry and a false sense of being protected. My partner couldn't've told the difference if I'd cloned our work, claimed a backup accident and sold it independently. If we thought there was any chance the other would screw us we'd never have founded together in the first place. Maybe we got lucky by being right, but most company formations require a fair chunk of luck somewhere to survive so I'm not worrying much about it.
There was paperwork and stuff involved saying we owned half each but I left the whole thing to him - the entire point of having a business side co-founder was so I could do tech and not care about it. He put stuff in front of me, I signed it.
To quote a more well known example, Oracle's first accountant was apparently the pizza delivery guy who was a student of such - and told "pay yourself what you need, we couldn't tell anyway".
Sometimes not trusting people just gives you worry and a false sense of being protected. My partner couldn't've told the difference if I'd cloned our work, claimed a backup accident and sold it independently. If we thought there was any chance the other would screw us we'd never have founded together in the first place. Maybe we got lucky by being right, but most company formations require a fair chunk of luck somewhere to survive so I'm not worrying much about it.
Ever seen whiney children lawyer up?
it is necessary for making a liability shield if one of your customers sues you
Man I wish it wasn't like that.
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!
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.
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.
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.
Nothing in writing?
You just got screwed.
You just got screwed.
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.
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.
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.
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.
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.
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.
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.
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.
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 :)
Here everyone is trying to say that it is better to get something in writing, I've seen even best friends turning their back and putting their interests first when it comes to money.
So put things down on paper as others say. You have nothing to lose but everything to gain and do not feel that you partner will not like that.
Good Luck.
So put things down on paper as others say. You have nothing to lose but everything to gain and do not feel that you partner will not like that.
Good Luck.
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.
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.
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?
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?
Sounds great - let us know how it goes!
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.
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.
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 :)
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.
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.
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.
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 ;).
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.
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.
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.
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.
Good luck everyone!