tech-company, investment, web-developmentI have a question about working with friend in his startup company. His startup company was a web application including phone applicaition. In this startup company, only me and him who working on it so no other members working with us. Since the web application is a photo sharing so the income was based on advertisement. Therefore, he can’t pay me directly, so we agreed to let him give out 10 percent shares of his company.
Since I am not a businessman so not sure how exactly work. At the moment, even though the company may have received little revenue from the advertisement which can pay for himself to allow him to continue to work in a company, and I did get paid to work at certain time when we get extra of revenue. Since the site now not getting enough to pay for both of us, I am now working only towards the 10 percent shares.
Problem after getting 10 percent share, I will not get any returns if I am not continue to work on company even the company has good income. He told me a lot of companies will use those extra money to invest new technology instead of paying dividends to the shareholders.
In that case, I will only get something out from it when the company grow really really big and sell the shares. It must be really really big may be the size of facebook since I only have 10 percent. If the company didn’t grow much but the income is very good, I have no point of selling it and have nothing as a return as well.
Does anyone can give me a knowledge how to make a bargain? so I can get something out from it?
My foremost word of advice in this regard is that you should take every necessary step to ensure that your friendship is preserved.
Undertaking business endeavors with a friend or work colleague, especially a family member or fiance, places your relationship with that person in a state of potentially increased vulnerability. A cocktail of mismanaged expectations and communication failures can set a precedent for bad blood to develop and so you need to ask yourself how you might quantify the value of your relationship with the person as compared to any potential gains from the endeavor.
This is not to say that it is bad to deal with persons you have a positive or committed relationship with. Such persons can be naturally preferable to the common stranger in terms of your ability to place trust in them and feel that they will not work against or bail on you at the first given opportunity.
That being said, in the context you describe it is clear that you are dissatisfied with the projected gains that you are making. It might also be possible that you and your friend have different priorities when it comes to the business in question (him being more growth-orientated while you are interested in more immediate return on investment).
As such you may wish to schedule a meeting over a coffee, ask him what his intentions are with this organization and then lay out your own expectations. Take both in the context of the projections that you both can agree on for the near-to-moderate future for the organization (ideally in the scenario of both your sets of expectations) and use that opportunity to suggest that you both establish a middle-ground between those sets of expectations that will help to prevent an eventual burnout.
In presenting your ‘middle ground offer’ be prepared to present reasoning to justify each amendment (e.g. that the change will allow you to focus more time on project development, or that it will help you to pay expenses related to working on the project, or even because you are considering so-and-so route that will present much better returns for the project and while you really want to continue because you deeply respect your friend - you also need to look out for yourself). Just be very clear on these reasons before you start the conversation or you may end up muttering and sounding like you are just making excuses.
If you are unable to come to any form of agreement then allow yourselves to sleep on it - to think about it and meet again at some date soon to see if you guys might have thought up new angles of establishing a middle ground - maybe even ways to adjust the business model to cater for such. Do use this time to re-assess your expectations in the off-hand chance that you might be acting a little unreasonably towards your friend and the business. Try to see things from his perspective and never lose sight of your needs.
In the worst event of no agreement then it might be best to start planning a soft exit - although you will need to exercise a great deal of tact and consideration so as not to seriously damage the relationship that you have with your friend.
Perhaps the best way to go about this would be to set a more than reasonable exit timeline - and offer to use that period to assist him in filling any technical gaps that you might be set to leave behind (finding a replacement who is happy to take on your friend’s terms).
In any case - best of luck on your endeavors and hope that you are able to preserve the relationship with your friend (personal and business alike).
As Avestron already said, doing business with a person in your “inner circle” (say, family, partners, friends,…) is a bit risky. If a business with someone you met on a meeting fails, you both are angry but do not have to see each other again. Thats a bit different for family members. anyway. I was in a similar situation. Twice. (Yeah, I know, Fool me once shame on you, fool me twice, shame on me!)
Three Friends from High School had an Idea. One of them was great with Finances and he had good contacts to lawyers and such. One was good with leading a business. And then there was me, the IT “Whiz-Kid”. I was responsible for everything that had to do with the IT. I used to develop the Website (all in all I’ve pushed out 4 versions over 2 years), manage the Servers and do the strategic planning on everything IT like. After the Servers were setup and configured and the site was developed, I haven’t had to do much, neither had the finance guy because there never was much money and so both, the finance guy and I left the company in 2012 after our motivation fell. The company still exists. From time to time, I still help out with IT stuff but my main focus now is in another startup where I am responsible for everything that is in any kind related to servers - starting from hosting, over emails, hosted exchange, owncloud hosting,etc,…
Retrospectively I would recommend you to talk to your friend. You are officially part of this company and thus you have a right to know about the business plans and about the current financial status. I would personally recommend you to demand a meeting every 7 / 14 / 28 days (choose whatever fits you best, in all companys I’ve been working so far, we used to make weekly meetings to discuss what has happened in the last week and what will happen in the next week - similar to a scrum sprint retrospective - You can also say that you want to discuss technical and strategical stuff every week and financial stuff every 4 weeks. By doing this, you have an overview of the way the company is going and about the financial stuff. If your partner does not want to inform you about any financial or strategic things, I personally would leave the company beause if you are a co-founder but do not know how your company can or will develop, you can not do any business related stuff.
All content is licensed under CC BY-SA 3.0.