There is a great article in the Sunday New York Times Business Section that brings out an issue that all early stage entrepreneurs need to understand and not fall into. The focus is on Facebook, Mark Zuckerberg and how he may have gotten started.
While attending Harvard in November 2003 and studying Computer Science, Mark was approaced by twin brothers Tyler and Cameron Winklevoss who had a vision for creating a social networking site ConnectU. Originally, the called their project the Harvard Connection, a social network for the college.
They asked Mark to develop the the site’s software and database and (HERE IS THE PUNCH LINE!!) promising to compensate him if they site got traction and created revenues. What they didn’t do is have him sign an type of employment contract with provisions for not competing or application ownership!!
A few months later, Mark abandoned the project and at the end of February 2004 he put up his own site using the domain name thefacebook.com, which he registered in January. He aggressively marketed the site and within a few months it had spread to other Ivy League schools and the rest is history.
The Winklevoss brothers are suing to have all of Facebook’s assets be transferred to them. Good luck, at a hearing a couple of weeks ago, Judge Douglas P. Woodlock of the US District Court in Boston, berated Connect U’s lawyer for not being able to provide documentary evidence stating that “Dorm-room chitchat does not make a contract”. He gave them two weeks to prepare a better case.
OK now how many of you have done similar things by not getting agreements with people who you have talked into helping get your business off the ground and promising future payments? Well here’s what can happen; you can be making a billion dollar mistake. Don’t do it! If someones going to get annoyed because you ask them to sign something, you are probably better off without their help.