Need Advice. Tricky Business Situation...

scottspfd82

scottspfd82

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Dec 29, 2006
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So, a good friend of mine, one of my best friends, tells me about an idea he has for a website...

Since all of my friends know I "get computer stuff" I get to hear about Facebook/Twitter clones and other stupid ideas all of the time.

But my friends idea is seriously genius. Like, I'm VERY realistic when it comes to estimating the value of an idea. This is something no one has done yet, and if I don't do it someone else will in the next couple of years.

I'm not saying what it is on a public forum obviously, but it's a web 2.0 app that will explode when it's finished.

I really think it's a multi-million dollar idea. For anyone who thinks I'm full of shit, I've been involved with launching numerous multi-million dollar sites.

Here's the rub...

I have to give him credit for the idea. It was 100% his. When he told me about it I immediately regged a perfect domain for it.

I have the cash to make it happen.

I have the know how to get a team of coders working on it, and even code myself when needed.

I have the resources to launch it. I know how to promote it.

Beyond the idea, my buddy brings absolutely NOTHING to the table. He's broke. He doesn't even know what Wordpress is. He's clueless about the internet.

If this wasn't one of my best friends I'd run with the idea myself.

But he is one of my best friends.

How would you handle this? Give him a cut of the biz? If so, how much?

Advice is much appreciated.

Thanks!
 


If you plan to move on it, get a lawyer and draft a contract. Make it thorough. No "napkin contracts." lol

Knowing you write copy and are good with promotion, I have more faith in you than your friend. Ideas are a dime a thousand. Action and promotion is everything. Copy will not only help push the app, but will also help you recruit and get funding to scale it, if necessary.
 
Right.

I'll basically be doing everything. I know ideas are a dime a dozen. Even if he wanted to help with programming or promotion or whatever he wouldn't know how.

I'm planning on putting up my own cash and doing all of the work on it.

But, it was his idea.

So, I guess my question would be what's the idea worth? The dude is my friend, I don't want to rip him off.
 
As the gentleman Mr. Stratham suggested, get an attorney to draft something that essentially sells the idea to you. Since your friend is broke, even a few G's will sound good to him.

Of course, if your shit goes platinum, he'll resent you for the rest of his life and tell everyone that it was his idea and that you took advantage of him. You'll get sheened.

gl bro.

P.S. Giving him a % satisfies one's moral compass, but if he doesn't contribute to the project, then does he really deserve anything? Business is business, but mixing it with friendship is a bad idea.
 
Unless you are willing to give him a percentage for the life of the corp be ready to lose that friend. As onlinemoniez said if it takes off and your have a private jet he will hate you for the 2-3k you gave him.

You are going to have to sit down with him and either work something out or just steal it and run with it.
 
immediately thought of this:

600yahoo_socialnetwork5.jpg
 
Ideas are a dime a dozen, execution is what set's you apart.

Go to your best friend and tell him you would like to pull it off. You will give him 1% royalties over life of the company and a $3,000 signing bonus (arbitrary number). If this is the next 'Facebook' 1% of a $100+ Billion is a billion dollars (I'm exaggerating of course).

Make sure he understands that he will have to sign a contract that a lawyer you both agree on works out. Make it understood that he has to do NOTHING in order to receive this money and will be credited with the 'idea' in any and all material. Assure he knows that YOU have the resources and know how to make it happen.

If this becomes a huge business, you can always pay him more. This way you cover your 'arse' however.

Unfortunately, when it's about money - friendships end...

If he has 10% douchbag in him - he'll whine for the rest of your life of you running with HIS idea and making money with it.

If you value your friendship (and it sounds like you do) and he is not willing for you to do it... PASS on it. You are a smart cookie and there is much MORE opportunity to go around. There are only few TRUE friends you will have in your entire life!
 
As the gentleman Mr. Stratham suggested, get an attorney to draft something that essentially sells the idea to you. Since your friend is broke, even a few G's will sound good to him.
Click to expand...

No, he sees this as his potential "out"... I don't think he'd take $20k for the idea (and I wouldn't pay him that for it anyway).

I'm thinking I tell him "you do nothing, you risk nothing, I do everything, I take all of the risk, you get 10% of net profits once it's profitable, for doing nothing"...

I'm trying to think of a way for him to be involved, but he doesn't have the knowledge or the resources to really contribute any value to it.

Appreciate the replies so far.
 
it's either 50/50 or pass if you ask me. Sure, you're gonna do all the work. But he probably won't see it that way - he will always fall back on "BUT IT WAS MY IDEA!"

You know this is gonna happen too. It always does.

split it 50/50 and enjoy the monies together. It will probably make you closer friends. When the ball is rolling, do what you can to find a productive job for him, but if you can't, you just gotta be the strong one

50% of millions is still plenty
 
An idea is worth exactly 0$.

Him being your friend complicates things. Find out what he can do.
He is a genius? Have him write the specifications, ad copy, etc.. make him work.

::emp::
 
Just thought of this and it's a completely different angle.

If he is a 'REAL' friend... one of those kind, that doesn't ask you 'WHY' but 'WHERE' to bury the body...

Since he is broke, see's it as his ticket out, etc...

If you teach a man to fish...

Help your FRIEND out and TEACH him, what he needs to know to be successful. Take him under your wing and take 40% of profit for your consultancy for the first 2 years only. Make him do the work but educate and TEACH him. This way, you both make money and with your HELP he can LEARN to make money for himself.

He'll be eternally grateful to you for being a friend, you'll collect good karma points and most importantly you get to keep a friend.
 
Garrett said:
it's either 50/50 or pass if you ask me. Sure, you're gonna do all the work. But he probably won't see it that way - he will always fall back on "BUT IT WAS MY IDEA!"

You know this is gonna happen too. It always does.

split it 50/50 and enjoy the monies together. It will probably make you closer friends. When the ball is rolling, do what you can to find a productive job for him, but if you can't, you just gotta be the strong one

50% of millions is still plenty
Click to expand...

+1 - another good choice!
 
@Gertex, loved your reply.

He's definitely a "where to bury the body" friend.

So take him on as an apprentice, get his ass working and learning shit (he is smart, he's just never learned anything about tech stuff) and charge a cut of his share for consultancy.

Good shit.

That's the way to do it. Much appreciated.

Also, what Emp said.

-Scott
 
Don't give him a cut, just give him one lump sum. IF it works. Set a goal say once you make your first 100k profit you will give him 10k for his idea.

Don't do business with friends. Pay him off and be on your way. If see fit later give him a bonus.
 
Although the 50/50 sounds like a good idea, I would take advcie from Felix Dennis on this.

Always assure ownership.

So make it a nifty deal, like 30% / 70% or 49% / 51%, but do get ownership (in a good, legally binding document, including non-compete, etc..)

And make him work, if he is not willing to do anything but provide his idea, 20 / 80 is generous as fuck.

Edit:

What Big Will said. NEVER do biz with friends if you can avoid it at all. I was always fucked (yeah, I am the techie) when doing that.
If you can't avoid it, waterproof contracts are your friend (and the friendship will still be over).

::emp::
 
Garrett said:
it's either 50/50 or pass if you ask me. Sure, you're gonna do all the work. But he probably won't see it that way - he will always fall back on "BUT IT WAS MY IDEA!"

You know this is gonna happen too. It always does.

split it 50/50 and enjoy the monies together. It will probably make you closer friends. When the ball is rolling, do what you can to find a productive job for him. And if you can't, you just gotta be the strong one
Click to expand...

Yup, THIS ^.

I have to agree. If you value your friendship, there really is no other way than 50/50. He'll always resent you, even if you give him a %. It takes a lot of character to go 50/50 on something like this, especially when the other person can contribute absolutely nothing. But if you value the friendship, I really don't see any other way.

Chances are, though, that you will probably end up resenting him when he contributes 0.0, but that's better than him resenting you and holding the "it was my idea" over your head for the rest of your life and vilifying you behind your back as an unscrupulous, opportunistic business man.
 
If he is a good friend and this idea banks give him 50% - thats a good deal and he will still be your friend in future if the idea banks - get it in wirtting though!
 
emp said:
Although the 50/50 sounds like a good idea, I would take advcie from Felix Dennis on this.

Always assure ownership.

So make it a nifty deal, like 30% / 70% or 49% / 51%, but do get ownership (in a good, legally binding document, including non-compete, etc..)

And make him work, if he is not willing to do anything but provide his idea, 20 / 80 is generous as fuck.

Edit:

What Big Will said. NEVER do biz with friends if you can avoid it at all. I was always fucked (yeah, I am the techie) when doing that.
If you can't avoid it, waterproof contracts are your friend (and the friendship will still be over).

::emp::
Click to expand...

This ^^
 
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