equity, intellectual-property, co-founderJack and Will begin a startup together. They make plans, designs, sketches, etc. for their SaaS/web app, but not much coding. They’re about to begin making a visual, non-functioning demo of their product (in other words, just an HTML skeleton of their webpage), when all of the sudden, Jack brings up many reasons to avoid the meetings and work sessions. Family emergencies, social commitments, random chores, and so forth. Jack does not make any sincere efforts in rescheduling. This becomes the norm.
Will does his part, but it’s unconfirmed whether Jack has done his part in building his half of the visual demo.
Perhaps Jack is being honest. The lack of rescheduling on Jack’s part causes Will to begin doubting Jack’s intentions.
Seeing that the release of the beta has been stalled for nearly a year, Will decides that perhaps Jack is slowing him down, and begins to consider parting ways with Jack. Will does want to continue building the project.
Question: If Will chooses to part ways, what is Jack entitled to?
Recap:
At this stage I don’t believe the problem is the agreement or the equity split. The problem is more in terms of the desire and motivation to develop their original business products (SaaS/Webapp) which will obviously change as they go. I would suggest that they go on their separate ways rather than wasting time on an early equity split resolution…
In any case, the future outcome could be: 1 - They merge efforts 2 - They become competitors 3 - They go into a dispute and try to resolve…
Will really needs to talk to Jack. Will needs to keep in mind the fact that if the situation doesn’t get clarified, and the company eventually succeeds, he will get sued for half of his share. It’s just a given.
So rather than make the mistake of waiting to have an unpleasant discussion, settle the discussion now.
Assuming Will continues on his own, it’s not shocking that Jack gets a small percentage of the company (around 5%). It’s impossible to ever decide precisely who should get what. For Will, what matters it peace of mind and the guarantee that you have a deal that allows him to proceed.
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