Hello YC,<p>Recently in the past, I have ended up in some pretty bad relationships, getting ideas and hard work stolen by people who would try to turn me into their lowly paid employee with no equity. I have dug myself out of some horrible pits and made great progress in my startup. I found a guy that shares my goals and seems pretty honest. Our skills compensate each other very well.<p>However, I'm still paranoid because of getting burned so bad. I've wasted well over two years because of bad relationships. I want to at least get some kind of basic contract down. What have you guys done on your pre-money arrangements with other co-founders? I'm going to call my normal lawyer tomorrow, but he mostly does criminal defense stuff, so I want other options.<p>I've honestly burned through most of my savings that I had from a successful business years ago, with these previous startups and a terrible lawsuit. I can only spend maybe a few hundred dollars at most.<p>Both of us have some software built and a decent amount of time spent on seperate stuff. There are no patents. The company is an LLC registered in Nevada a few months ago.<p>Please help me with any advice you can give. I can't bear to get screwed over again. I'll probably end up going postal if I do. :)<p>Thank you for your advice,<p>-Zak
<i>I can't bear to get screwed over again.</i><p>I think your only true protection against getting burned again is to deeply face what it is in yourself that created those painful situations in the first place. No contract in the world will protect you from creating an equivalent situation again, if you haven't learned what you need to learn from the previous ones.<p>Your use of phrases like "getting screwed over", "getting ideas and hard work stolen", and so on, suggest that you believe that it was because other people did bad stuff to you that things ended up the way they did. I'm willing to believe that other people did bad things. Nevertheless it was your own choices that put you there in the first place. As a wise person once explained, it was never really the other person you were trusting; first and foremost you were trusting your own bad judgment, and that's what really betrayed you.<p>I'm not saying you shouldn't put things in writing or draw up a contract. By all means do. One way to protect against the risk of a relationship going bad is to have shares vest at a certain rate per month. I think our arrangement is 1/48 per month (so, over four years), with a 1-year minimum, and a portion of up-front vesting for work already done.<p>But that pales in important to the deeper issue: if you don't want to get screwed again, then stop ascribing your painful experiences to other people. This doesn't mean you have to absolve or forgive <i>them</i>, it means you have to be truly honest with yourself about what <i>you</i> did and thought that was wrong. That's been my experience anyway... the only solution that works is fundamental growth.
You can (and certainly should) do everything to protect yourself and you still might get screwed. Going into business with someone is giving them your trust. If you can't do that then you can't have a partner.
I'll highly recommend this book:<p><a href="http://www.amazon.com/E-Myth-Revisited-Small-Businesses-About/dp/0887307280" rel="nofollow">http://www.amazon.com/E-Myth-Revisited-Small-Businesses-Abou...</a><p>It talks about setting up clear roles and expectations from the beginning. Contracts typically aren't worth the paper they're printed on - where you're at in life right now, you're not going to go to court if you fall out with someone. Contracts protect you a bit if you're further along, but a contract isn't worth a damn thing without a good relationship and clear expectations. The most important thing a contract can do is to lay out clearly, in writing, what you both expect to do and have roles set up. But so many of your assumptions will likely be wrong that you might have to redraw some elements of it over time. It happens - but getting down who does what, when, where, and how they're measured is huge. A basic operating agreement goes a long way. Check out E-Myth, it reads fast. Probably my favorite book on small business ever.
One way to test your partner's trust is to deliberately instigate a money fight. It probably will happen later if not now, and now's when there's little at stake. Figure out a few "hard lines in the sand" that an unscrupulous person would really dislike, hold those positions as far as you think you can go without destroying your relationship, then come clean once you've determined the person you are truly dealing with. People will always reveal themselves when pushed to the edge.