legal, tech-company, equity, vestingTLDR; built an app, business co-founder wants to start a new app right when I just built the MVP, didnt sign equity, no pay, don’t know what future steps to make
So I’m a bit dumb in a sense. I’m working on a startup with a business partner and I’m the only developer and he thought of the idea. He was introduced by a friend.
When summer started I didn’t feel right to ask for signed equity right away because I didn’t know if I could fully build the app. Fast forward a month and a half later I was able to build it. Right when I finish the MVP he said he was interested in another idea he came up with and asked if I was interested in building the app for that.
Essentially my job was to build the app, his was to grab businesses and users. Turns out he thought of the new idea because he thinks it’s “easier to grab users and businesses” which I’m kind of disappointed at this point because he told me before building the app that lots of businesses he talked to were interested in the first app.
So. I told him I was not interested in creating a new app without launching the first app. He said he wanted to build two apps so he can see which one grows faster -_-.
At this point I just feel kind of jerked around. This isn’t my first time trying to start a personal project so I know how hard it is to start a startup, and the possibility of failure. The first idea is good or I wouldn’t have joined or worked for free, but it’s basically his first time so I think he’s just overly optimistic ( he’s a good guy ).
He’s offering to pay me for the second app to be built, but we haven’t signed the equity for the first app. So I was looking into vesting, because at this point his focus is divided between two apps and if one app launches I don’t know if he’ll just leave.
I don’t want to make this too long, but there are two other members (sales and data analyst) who haven’t really worked on the startup because obviously the app has to be made before they can fulfill their roles. So overall I basically spent the most time on the startup so far, and I don’t know how to make it fair for all of us
- They're offering to pay you for building the new app. Count this as a success!
I suspect the money is well below market rate, but this is a good time to hammer out the contract and get the equity distribution set, because
- Right now you have leverage.
Come back to this stack frequently as you hammer out the deal, b/c you probably don't have experience in the business mechanics of startups, equity and contract law, and there are many "gotchas". This stack can help you navigate that process.
- For now, my advice is to take the money, but only on condition of a fair split of the company, and legally binding documents to this effect.*
Two apps may well be better than one, and both would be under the umbrella of the partnership, so you'd benefit from the success of one, the other, or both.
*This could be as simple as a Letter of Intent or Memorandum of Understanding, though a formal equity distribution document of some sort is best, and needs to be drawn up and executed at some point.
It's always a good idea to have an operating agreement (I'm assuming this would be a limited partnership.)
You want to avoid 50/50 split on decision-making, since deadlocks generally result in the dissolution of the company. But since there are 4 partners, this should be navigable.
Since the partner is the business person, I'd cede control, with the caveat that you need provisions that protect your interest (i.e. so they can't do things like dilute other partners' equity exclusively.
Personal Note: Your inclination to spend an inordinate amount of time thinking about what is fair for all parties is the right way to proceed. Win-win deals are how you build long-lasting partnerships.
If the business person agrees to a win-win deal, you want to work with them. If they are non-transparent and want the deal weighted heavily in their favor, you don't want to work with them.
I want to re-iterate that since you're the one building the product, you have all the power at this stage. Use it wisely!
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