so this friend got 150k startup fund. He is just getting started and he told me his idea and it had many risks in which I was happy to hint it to him for free, then he decided after that he will change the whole concept and it's the same as my old project in which I won at competition he was in for his project but he lost to me. Now he wants to work on my old idea " the reason i did't proceed with the project is because i left the country at the time" and now he is in the same country that I am in and he wants to do the project for our home country. I am super confused, apparently I won't have any shares, he offered either a monthly salary or if the project succeeded a sum of money for me just to be his second hand in thinking and brainstorming. For the record the project is risky and the home country has unstable economical, security and infrastructure, no project has ever had this amount of investment, he said that till now there is no money coming to him until he does the work in which I am supposed to help him in. I am confused between a small amount of pride since i might be working on a project that I once half made with zero shares and just modest amount of money, and the excitement of working on a project that will help my profile of helping startups/small businesses on the long run. I am confused of how much should I ask for my brain's worth and if I will feel disheartened later on if the project succeeded. What should I do n a situation like this, should I decline to help, or ask a good sum of money?I don't have rights about my old project, so I can't just say hey don't do it when he has 150K investment! or can I ?
1. Ask for 5% of his personal equity, together with a personal put to him (for your exit strategy).
2. In addition, ask for a modest cash start-up payment with final payment when you complete your deliverables. Make it clear you own your deliverables until you get paid and If you don't get paid on time, he never gets your deliverables.
3. Ideas are a dime a dozen.
4. You do not yet know who is going to end up working for whom. If your friend crashes and burns, it might be you who eventually picks up the pieces and makes the thing work. You just never know.
5. Stop being so jealous.
It sounds like it was your idea. Which I would imagine has upset you. He offering you a paid salary not a partnership also rubs salt in the wound.
But that all by the way, ideas are a tad two-a-penny everybody has an idea. It's a little like going to the moon(if you be-leave in that sort of stuff). We have all had the thought, it's who has the money, the skill and the determination to do it that gets there.
In this case sounds like he has done quite well, no doubt with some of your advice along the way.
But it's early days yet you have a long way to go, as you say things could be tough.
You should not value yourself on the worth of the idea. If that were the case you should of protected that in the beginning. But had you done so the idea would be in your head, not with $150K of backing. (I'm guessing based on your info, so don't be offended I'm on your side).
So this chap has done a good job, he has got you some money for your idea.
The problem is you probably want to have a slice/partnership in that idea. But as of the moment, he has invested money, done the homework and got the backing (giving away a large chunk already).
So, where does this leave you:
Morally he is not going to give up his slice for a few chats about an idea, So what is it he wants you to do? where do you fit? what is your value? This is where you need to look first. Judge this like any other partnership or Job, What do you have to do, how big a role will you play, will you get your reward.
If you feel your input from today onwards is worth more than a salary, if you feel you want a slice, stake your claim, tell him what you will do and what you want. But understand whatever you offer, you will need to deliver it to get your stake.
If on the other hand you feel peeved at his business tactics probably your best bet is steer clear and think of another idea, ask him for advice how to pitch it get investment later for yourself, or if his idea fails, offer him a cut to get the backing + wheels rolling sounds like he is quite good at it.
Business is tough, keep smiling and be proud that you are on the right track!
I think there are 3 questions you should focus on which you should separate in your mind: (1) how viable and risky is the business itself; (2) how good is the deal your former partner is offering WITHOUT considering the back history; and (3) how do you personally feel about the proposed arrangement.
From what I gather, the business does seem to come with risks. Also, your former partner seems to be offering a salary or a success fee. A salary might be quite tempting if you want some income without taking the risk?
It is interesting that your former partner seems to want your continued input. Do you think you are necessary or very valuable to the project's success? If so, you could try and negotiate a better position such as original shareholding. If that is what you want of course!
Onto how you personally feel about the arrangement, I understand you have mixed feelings and might feel aggrieved even though you would also seem keen to be involved on your original project. Although the purely practical advice would be to leave emotion aside, realistically we are all human beings. Will the relationship involve ill will and bad feeling all round? How will you feel if it is successful?
I would talk more with your former partner and try and understand things from his perspective. He may be being hard nosed and unfair - some people operate that way - but nevertheless, it would be good to try and understand his side more. Maybe your ex partner has taken risks or invested in the business in ways you haven't fully appreciated. Also, maybe your ex partner should also try and appreciate your situation more and why it might be fair to have a better deal.
For most of us, negotiating the best deal feels easiest when we have both a strong bargaining position and also a strong moral case.
Easy...apply the Slicing Pie model. It will take your past work into account and determine a fair split. So, as long as he doesn't think your idea was his, you should be able to work it out.
If he is taking a salary, too, then it's likely that you deserve a larger share (you'll see why when you take a look at Slicing Pie).
I hope the $150K was a convertible note...but it probably wasn't. We'll worry about that later.
In all seriousness, first stand up for yourself. No one ever had success who let themselves get walked over. Communicate, communicate, communicate. If you are friends, place that at the beginning that you do not want anything to come between your friendship. BUT, from my experience as well as others I know…If you let this go under the guise of friendship, it will eat away at you and likely jeopardize your friendship as much if not more as if you confronted what you feel is unjust treatment. I’ve been in your situation before. Early on in my 20’s it happened a dozen times. I was so quick to create new strategies and ideas, I didn’t care. But looking back, I should have said “no” much earlier on. And more important than that, I should have been a stickler with having it in writing. You have learned that, so it’s a good lesson. Some entrepreneurs never learn the value of properly prepared contracts. They are the ones droning on about how contracts are not important…and they are usually always in a dozen lawsuits…not all but many which could have been avoided. Don’t discount the value of ideas but more importantly, the strategy behind those ideas having success. THAT is where the true value of an idea always comes out. And it sounds like you are responsible for the idea and the key elements of the strategy behind it. Now, that does not necessarily mean you deserve more than half or even half. As you acknowledge he brought his own investment and other investments. Like it or hate it, the person who brings the money usually gets the edge of control. But no equity? Seriously? That’s not a generous move by this guy. He’s not the type you want to be in business with IF you discuss the above and he holds firm. BUT, he may truly see your side and come to his senses. You have to communicate it. Do not ride second class on this thing when you built the first class cabin. That is garbage. I don’t care what anyone says here or elsewhere. You will regret that. Going along for the experience is ok early on but you have to determine if that’s what is happening. I don’t read that is the case here at all. Ex: as one of my endeavors, I have developed movie projects. When I first started developing them, I was working with the producer of a 6-Time Oscar Winning film including best picture. The other man I was working for put together an 8-Time Oscar Winning film including best picture. I was 23. I could not very well come in from the gate and demand equity. I built with them. After a year of them utilizing so many of my strategies, frustration of second class turned to me saying Adios. With that, the person who hired me came back and made me an equal partner. It culminated in a huge battle of him accusing me of trying to take his power, and me telling him if that was what he thought he needed to fire me and quit wasting my time. Otherwise he needed let me support him and realize my value. It could have been communicated less intense, but the end result occurred. They saw I had had it, and they brought me up to first class. Power perceptions are complicated, and they only get more complicated when people do not communicate or you just truly have greedy and selfish individuals in the mix. At the same time, there were other projects with younger non veterans. In one case the individual invested millions of his own money. But I had the industry relationships, competence and strategy…so I was an equal player take it or leave it. So pay attention to whose in first class. If you are truly learning from them, don’t be pushy and demand your seat. Ride coach for a while if necessary. Get a footing. But if the people in first class have no more experience or competence than you, don’t ever let them tell you you belong in coach. Stand up for yourself. Guarantee the right people will notice you.
Based on your latest response, he won't give you any equity.
Your options are
Slicing Pie can help you come up with an option that does not involve your friend giving you any equity. For example, you can ask for a combination of
In the first place this is a lesson for those who wish to do business together. Business is not conducted on friendship basis. Yes friendship can bring you together but when it gets to the real thing, procedures should be followed. Yusuf Oladosu talked about legal backing but bringing this at the stage the project is now is like putting a cart before a horse. It is rather late. It should have come first really.
The now owner of the project appears to be a bit more knowledgeable than you are. He now tells you that you should forget anything about equity because he has got 1/3 and the investors have 2/3. You are out! Were you business inclined, at the onset you would have quantified your idea generation and contribution (including goodwill) into monetary value and made it your contribution to the business before handing over to him. This will ensure your presence in the project. Asking for payment now shows you are external to the business and you are soliciting do offer your service to the business. And being a good business manager, he has weighed his options and calculated his cost to arrive at $50 a week pay for you. Take it or I look elsewhere is his stance now.
Even if you elect to come in as a consultant, you are still external to the business and he will give it to you on his own terms NOT your terms. The idea is already with him and the investors are there to prop him up. So you are a loser (sorry to use this word).
Your only lee way now is to appeal to his conscience (if he has any) to see how he can compensate you based on the past relationship. Next time never do any business transactions of this nature without first putting pen on paper no matter how simply put or crude in legal presentation. But you can still talk with attorneys to see if there is a way you can make a slice out of it. The slice pie model does not apply here because you are QUITE external to the business already. No partnership relationship at all and the guy knows this.
Easy peasey -how much are you being paid to START working on the project?
No money no start..
Mike Moyer, from what I understood from him is that he won't give any equity to me he already has 1/3 of the company (putting money from his pocket too) and the rest are investors. He even told me that he got inspired by me but I don't think he wants to make me a partner on the long term nor give shares and I don't think I can stop him, because legally I have nothing and morally well it depends on him. I can get ugly and fight him over it but it seems childish and I am not the one with the 150k investment so..