Let go of the company or keep the company?
February 19, 2015 4:08 PM Subscribe
Started a new company with my partner based on an idea that I had. But now im giving it up to help build up my other company and I need some advice.
So here is the story.
Currently I run a design agency which i'm trying to expand. On the side I have some other projects that Ive started but have had a hard time finishing. One of them is an App idea that I started with a partner.
We verbally agreed to split the company 51% me and 49% him. Though we never signed on paper the actual agreement.
I was talking to my mentor one day and he told me that if I ever wanted to succeed in something that I have to give 100% and since my agency has always been what I enjoy most I decided to opt for my agency and handing over the company to my partner for 5% equity for the entire duration of the companies existence.
Just recently I had my partner come to me and tell me that he felt that he should take 100% of the company since im no longer doing any work and that he would pay me for the Branding work I had already done on it. I thought maybe he was right so I agreed and that was it, though I have yet to receive any payment and again nothing was written down on paper.
The company has made no real money thus far except for recently winning $5000 in a startup competition. I cant help but feel like ive made the wrong decision, I mean it was my idea? and if the company does well I feel like I would forever regret my decisions.
The issue is nothing has been written and it would cost quite a bit of money for an attorney to draft an agreement. What should I do? Should I swallow my pride and just accept the money and concentrate on my own business? Or should I take action to get a percentage?
Anything would help!
So here is the story.
Currently I run a design agency which i'm trying to expand. On the side I have some other projects that Ive started but have had a hard time finishing. One of them is an App idea that I started with a partner.
We verbally agreed to split the company 51% me and 49% him. Though we never signed on paper the actual agreement.
I was talking to my mentor one day and he told me that if I ever wanted to succeed in something that I have to give 100% and since my agency has always been what I enjoy most I decided to opt for my agency and handing over the company to my partner for 5% equity for the entire duration of the companies existence.
Just recently I had my partner come to me and tell me that he felt that he should take 100% of the company since im no longer doing any work and that he would pay me for the Branding work I had already done on it. I thought maybe he was right so I agreed and that was it, though I have yet to receive any payment and again nothing was written down on paper.
The company has made no real money thus far except for recently winning $5000 in a startup competition. I cant help but feel like ive made the wrong decision, I mean it was my idea? and if the company does well I feel like I would forever regret my decisions.
The issue is nothing has been written and it would cost quite a bit of money for an attorney to draft an agreement. What should I do? Should I swallow my pride and just accept the money and concentrate on my own business? Or should I take action to get a percentage?
Anything would help!
Ideas for apps are cheap - implimenting them is time consuming and expensive. Unless your idea for the app was incredibly innovative (and if it was, wouldn't you be excitedly working on it?), consider letting it go. If you trust the partner, maybe ask for a small percentage after a certain level of revenue has been met.
posted by Candleman at 5:02 PM on February 19, 2015 [3 favorites]
posted by Candleman at 5:02 PM on February 19, 2015 [3 favorites]
You've made an agreement. It may not be written, but it's legally and morally binding.
Tell your partner that you have this small fear that the company may take off, make a billion dollars and leave you with bad feelings. Suggest that maybe you can give a discount on the branding work in exchange for a written agreement entitling you to 1% of all profits over $100,000 in any given year. If he builds it into the next Twitter from this very small starting platform, you will still get your payday, and the compensation will be fair for the small amount of work you have put in compared against the much larger amount of work yet to do.
If he is not interested in that, chalk it up as a lesson learned and stick to the current agreement.
posted by 256 at 8:10 PM on February 19, 2015 [1 favorite]
Tell your partner that you have this small fear that the company may take off, make a billion dollars and leave you with bad feelings. Suggest that maybe you can give a discount on the branding work in exchange for a written agreement entitling you to 1% of all profits over $100,000 in any given year. If he builds it into the next Twitter from this very small starting platform, you will still get your payday, and the compensation will be fair for the small amount of work you have put in compared against the much larger amount of work yet to do.
If he is not interested in that, chalk it up as a lesson learned and stick to the current agreement.
posted by 256 at 8:10 PM on February 19, 2015 [1 favorite]
The issue is nothing has been written and it would cost quite a bit of money for an attorney to draft an agreement. What should I do? Should I swallow my pride and just accept the money and concentrate on my own business? Or should I take action to get a percentage?
You've already made your decision. Maybe you're second guessing yourself, but you've given your word. It's up to you to decide what that's worth.
Bottom line is, you need to be a better businessperson. Go to a place like Legalzoom for contract information. Get stuff in writing.
Maybe the company will succeed, certainly your partner hopes so. Maybe it won't. The odds are against most startups. But you wanted to do something else. You didn't want to put in the energy into this project that your partner did and does.
Give them a reasonable deadline to get payment to you. If they don't then consider it not sold. If they do, don't give the app a second thought and move on, determined to take business seriously going forward.
posted by inturnaround at 1:17 AM on February 20, 2015 [1 favorite]
You've already made your decision. Maybe you're second guessing yourself, but you've given your word. It's up to you to decide what that's worth.
Bottom line is, you need to be a better businessperson. Go to a place like Legalzoom for contract information. Get stuff in writing.
Maybe the company will succeed, certainly your partner hopes so. Maybe it won't. The odds are against most startups. But you wanted to do something else. You didn't want to put in the energy into this project that your partner did and does.
Give them a reasonable deadline to get payment to you. If they don't then consider it not sold. If they do, don't give the app a second thought and move on, determined to take business seriously going forward.
posted by inturnaround at 1:17 AM on February 20, 2015 [1 favorite]
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I think your mentor is right by the way. Focus on one thing at a time if they are both at a build up level.
posted by 724A at 4:20 PM on February 19, 2015