What percentage should the Ideas Man take?

TheSpoon

Jedi
I wondered if I could ask the forum for some advice about a potential friend/business situation that's arising for me?

My wife (L) has a male friend (G) who is in project management. One day last year the three of us were talking about me wanting to build a website and looking for a "killer idea" for it. G said he had such an idea and after some negotiation he explained it to me. L later agreed that it was genuinely original and could be a winner.

G and I had a meeting where we tried to come to some sort of agreement about who's going to own this. G's main thing was that he wanted to retain "control" of the project - he wants it to be "his". His input is the main ideas (for it consists of several related websites), giving feedback on how things are looking and ... I don't know, he's not technical, so his contribution would be thinking rather than hours at the coal face of website creation.

We came up with a fairly complex arrangement whereby I'd do the work and clock up "billable hours". Then whatever money we make, I'd pay myself from that, then G would (subsequently) pay himself the same amount and then after that we'd split it 30% (me) : 70% him. He also wanted to be able to buy me out, use alternative programmers and that the "product" would belong to him.

I explained this to L who said it was utterly ridiculous and that I should be on the 70% and he should be on 30 since I'm doing all the work and taking all the risk - ie not doing any other paid work at the time, while G continues doing his day job apart from a few sessions of reviewing my work and telling me it's not how he wants it - and I can picture that happening quite clearly. G is quite a forceful character...I don't think compromise comes easily to him. I don't consider myself to be a very good negotiator...L drives a much harder bargain that I do.

I should say that I'm going to have some free time on my hands anyway at this point, I'm not quitting a job to work on this.

We had a subsequent meeting where I feed back that I thought his main need was to have control over the project and that - since the money coming in was of secondary importance - we should simplify things so that we split the money 50/50 but guaranteed that he was the "owner" of what was created and that we followed his "vision" for it. But it turns out I'd read that wrong and that really, he's focused on this thing being 100% his and that really he'd just be waiting for his 70% to rack up enough to buy me out entirely.

Hmm, now that I'm writing this all out, it's all starting to look like a case of "Never mix business and pleasure". But there is still a good idea there, and it would be a shame for it to have to be All (for G) or Nothing. He's never going to be in a position to pay someone to develop this so he could own it outright. Also, this would take 2 years of my life to build, I'd be heavily invested in it. I don't think I'd be able to just hand that over to someone - especially if they're not paying me out of their own pocket.

Comments, suggestions?

I thought I'd write to him about it since then I'm not affected by the force of his personality - or perhaps it would be good training for me to stand up to him. But that doesn't sound like a good start to a partnership now does it?

EDIT:

I asked the IChing for commentary on the situation and it came back with 9 - Hsiao Ch'u / The Taming Power of the Small

Above SUN THE GENTLE, WIND
Below CH'IEN THE CREATIVE, HEAVEN

and the 5th line changing:

If you are sincere and loyally attached,
You are rich in your neighbor.
Loyalty leads to firm ties because it means that each partner complements the other. In the weaker person loyalty consists in devotion, in the stronger it consists in trustworthiness. This relation of mutual reinforcement leads to a true wealth that is all the more apparent because it is not selfishly hoarded but is shared with friends. Pleasure shared is pleasure doubled.
 
Sounds like an interesting situation and certainly excellent training ground for you to learn about yourself and the Work!

I have to agree though, his proposed structure is quite ridiculous and clearly he wants you to do all the work so that he can take all the glory. :nuts:

I come from a project management background so can understand his mindset of wanting to retain control, it is built into his blood, so to speak and taking that into consideration, if it were me, I would ask myself what it is I really want from this arrangement? Is it that his idea is "indispensable" and therefore worth such an inequitable distribution? Or is it that his PM skills are so wonderful that I must have his oversight and control? Or is it that I want the opportunity to work together as a team and therefore an equal payment for equal contribution?

You say his idea is "killer" - but do you value yourself and your contribution as being "killer" too? In other words, without your computer skills, could the idea/website be done?

I am sure it could be done by someone, but then this was your idea looking for a website and he proposed some ideas that you resonate with. As you were first seeking to make a website, then it seems to me that, at the least, the split should be 50/50.

The challenge will be how to make him see it from this point of you and of course to do so you must take into account HIS point of view. He is not involved in the Work, presumably, so cannot be expected to act with the same level of knowledge that you have. In a way this is, quite "unfair" :evil: since he gets to behave any which way whereas you might have the strategy in mind of a "win-win" rather than an "all or nothing" proposal, as he is coming from.

Writing to him seems fine to me if you need to get it out clearly and feel that within his presence you might "falter" or become "swayed" - but of course you realize that the entire partnership, if it survives, cannot be done via email so eventually you will have to face/learn about "standing up to him" - otherwise it sounds to me like he will steamroll you whenever he gets the chance.

Just some thoughts, good luck! And keep us posted.
 
Hi Spoon,

Isn’t sharing a two way street?

Doesn’t appear that G wants to share, but has found a way to carry out an idea. Maybe he could come to see it differently?
 
Imo, businesses take a whole lot more than a good idea to succeed. Ideas are a dime a dozen and you could probably come up with your own by researching an industry and finding areas that aren't doing so well, and then create something to provide a solution. I agree that if you're doing all the work you should be getting 70% (I think more actually). And as controlling and out of perspective as this guy is, do you really want to have him as a business partner? You may want to consider looking to do something else. Most successful small businesses aren't based on some golden idea, but hard work. Just my 2 cents.
 
I think it would depend on who spends the most time working on the project, and as a project manager, "G" should know that. It sounds like he wants all the rewards, even though he also knows he isn't capable of doing the work.

That, Spoon, is just basic greed, with some fear of 'loss'.

If this project is something you wanted to do for the pleasure of it, as soon as money comes into the picture, you find out what people are made of....your wife may have good business sense, but I don't see the friendships between the three of you surviving if you plan on going into business together. He has a good idea, but without a willingness to work just as hard as you are, its not going to pan out. Your wife would have to work hard too. She sees a potential money maker, sure, but is that skewing her thinking?

There's an old saying "Never go into business with friends...", that might be worth thinking through.
 
Hi Spoon

If I understand you correctly, you tell us that G has agreed to pay you billable hours out of the potential profits, but pay himself the same "dividends" each time he pays you.

So if profits are slow to realise, or do not materialise at all, the "risk" is 100% yours, because of the time you are investing, G effectively risks nothing.

As you already accepted a 70-30 deal, it might be hard to go back and re-negotiate, however, to share your risk I think it would be fair for G to pay you half the billable hours in advance, thereby sharing the risk that you are taking with your time. (actually if he is taking 70% of the profits I think you could soundly argue that he should take 70% of the risk, and pay you 70% in advance)

Remember, he can not "bully" you, and at the end of the day you are empowered...you can just walk away........

The thing about friends and business...well it might be a bit late for that, but it often dissapoints me how money changes people, or rather allows us to see their true colours.

Good luck

Al
 
alphonse said:
Hi Spoon

If I understand you correctly, you tell us that G has agreed to pay you billable hours out of the potential profits, but pay himself the same "dividends" each time he pays you.

So if profits are slow to realise, or do not materialise at all, the "risk" is 100% yours, because of the time you are investing, G effectively risks nothing.

As you already accepted a 70-30 deal, it might be hard to go back and re-negotiate, however, to share your risk I think it would be fair for G to pay you half the billable hours in advance, thereby sharing the risk that you are taking with your time. (actually if he is taking 70% of the profits I think you could soundly argue that he should take 70% of the risk, and pay you 70% in advance)

Remember, he can not "bully" you, and at the end of the day you are empowered...you can just walk away........

The thing about friends and business...well it might be a bit late for that, but it often dissapoints me how money changes people, or rather allows us to see their true colours.

Good luck

Al

Wise words indeed!
 
Thank you all for your feedback - much appreciated.

Herakles said:
You say his idea is "killer" - but do you value yourself and your contribution as being "killer" too? In other words, without your computer skills, could the idea/website be done?
Well as you say, someone else could do it assuming they had maybe 5 years experience in the industry. But the main thing is that I'm available to work on it unpaid for the next 5 months - I doubt many programmers would take that on. My daily rate is relatively high, I'm sure G could find programmers somewhere in the world that would do it for < 50USD/day, but he's got other things tying up his income right now - he's not going to be in a position to pay anyone up front.

Jerry said:
Isn’t sharing a two way street?
I'll make that point when I write to him. This currently doesn't feel like a partnership, it feels like I'd be a means to an end.

Gimpy said:
Your wife may have good business sense, but I don't see the friendships between the three of you surviving if you plan on going into business together. He has a good idea, but without a willingness to work just as hard as you are, its not going to pan out. Your wife would have to work hard too.
Not sure I was clear on this, L wouldn't be part of the project. She would be working hard in terms of doing the childcare on the days I'm working though. I will be working on something I'd hope, even if not this - both of us agree that we'd prefer to share the childcare rather than do 100% - it's one of the most demanding jobs there is!

alphonse said:
If I understand you correctly, you tell us that G has agreed to pay you billable hours out of the potential profits, but pay himself the same "dividends" each time he pays you.
I would be paid 100% of my accrued hours before G took anything and ideally the money would be coming through me first since I'd be registering the domain and setting up the payment systems. Although I'm sure G will argue that it should all be in his name of course! That's something worth discussing up front. Also websites that involve people get pretty demanding in terms of monitoring and responding to queries - we'd need to discuss what's involved there too.

alphonse said:
As you already accepted a 70-30 deal, it might be hard to go back and re-negotiate, however, to share your risk I think it would be fair for G to pay you half the billable hours in advance, thereby sharing the risk that you are taking with your time.
Oh I've no problem with ripping up that previous deal and renegotiating it. As you say, I can just walk away (there's nothing in the deal that says I'm committed to doing this) and G is always welcome to take it to some other programmer. As said above, he is not in a position to pay anyone up front.

alphonse said:
The thing about friends and business...well it might be a bit late for that, but it often dissapoints me how money changes people, or rather allows us to see their true colours.
Well you know it depends on the circumstances. G is one of the most hospitable, generous, caring and intelligent guys I know. It's just when he starts dealing with tradesmen like joiners and plumbers, he watches the deal like a hawk and (for example) asks to see receipts for the parts they're charging him for. It's just one particular program in his personality. But one I can see me having problems with. It's not too late at all - I'm leaning heavily towards thinking that the friendship is worth more than a website, and what are the chances of that making money anyway, for every Facebook there must be a few thousand failures.

Well I think I'll let L read this thread, get her opinion (for a man that doesn't take his wife's advice is a fool) and draft an email to G. I'll let you know how it goes.
 
Just followed a numerology link in Legolas' post in the Number 1 or 11 thread to find my Karmic Lessons, thinking they might have some bearing here. Came up with Lessons 6 and 8 which (and I checked out all the rest) also seemed the most appropriate to me of the set:

Karmic Lesson 6
You have a major issue with commitment and responsibility to others.
You have a hard time committing to marriage and other important personal relationships. You have to learn to show true emotion.
You may feel isolated and alone, but do not understand why. The reason is that very often you form relationships yet remain heavily guarded, putting up a show of emotion without truly communicating affection or care. This can make the bond between you and others superficial. You must learn to establish sincere relationships.
You will learn the importance of close friends and lasting relationships. You will learn to give and, when necessary, sacrifice. This is the one true way to true friendship and lasting love.

Karmic Lesson 8
You can attract a considerable amount of money and even be a good business person, but you experience major ups and downs in your financial affairs, due largely to your lack of caution in handling your resources.
You are highly independent and do not want to be told how to do things. You have great problems with authority figures. This stems from a kind of know-it-all attitude and stubborn behavior that prevents you from knowing your limits.
You will have to work at knowing how to handle money. In all likelihood, you will attract enough of it, but it has a tendency to slip through your fingers. This Karmic Lesson forces you to learn your limitations, and the limitations of your resources.
Learn to be efficient.

I also worked out L's Karmic Lessons (according to the Decoz site anyway) and she has none. Sheesh! :rolleyes:
 

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