Congratulations for not calling your cofounder your “partner,” as you are not a couple but rather shareholders in a commercial enterprise. Personally, I hate 50/50, as it implies an perfect equilibrium in an imperfect world.
Somebody has to go. This is what separates the boys from the women, since at this point in the relationship the two of you don’t sound particularly adept at working through the tough calls. So flip a coin, draw straws or beat each other senseless until you come to terms.
As for the stock, remember the immortal words of Aristotle: “The law is reason free from passion.” You shouldn’t exit a startup with half the stock in the company, so whichever of you slinks away with a black eye must sell the bulk of their equity upon departure.
Presuming neither of you are crooks, possibly the most difficult and challenging part of the breakup will be maintaining an ongoing civil relationship. Basically you are now divorced corporate parents (one of you got custody) and for the sake of Junior, you need to behave yourselves.
[Note: I got the Aristotle line from “Legally Blond.”]
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My outsourced programmer just sent me a cryptic email promising the requested fixes would be completed “in due time,” and hinting that his retainer doesn’t cover “emergency fixes.” Should I sit tight or make a move?
Losing Patience in NoLiTa
You are screwed. Now it is just a matter of getting out of the relationship. (This is becoming a theme!)
As a general rule I don’t like outsourcing for this exact reason. In my experience, the programmer always falls in love with his creation and for some psychotic reason (which you are going to have to spend much of the next phase of your life divining), is going to make you pay dearly to pry it from his fingers.
In my particular case (writing code with the early Prodigy Services Company, circa 1995), I didn’t paper the deal properly. So on one perfectly timed day, the programmer starts dictating terms to me. Suddenly I was the employee afraid to be dumped! It wasn’t so much the extra time and money that pissed me off but rather a feeling of losing control of the process. [Note: At the first possible opportunity, I got rid of this guy. Then over the next couple years I quietly found out where he got his subsequent jobs—all of which were decidedly short-lived].
Next time, follow a few key outsourcing rules to avoid such headaches.
1. Ask yourself, does the programmer love his mother? Remember you are in a relationship with this person and if they do not have personal integrity don’t go all the way with them.
2. Get a prenup. Hire and experienced lawyer and don’t skimp on the fees. An airtight contract will make for a better working arrangement for both parties.
3. Make sure that the code is well-documented and that you have real-time possession of all intellectual property (probably cloned).
4. If you are working off-shore, make sure to visit the outsourcing company on a regular basis. Get to personally know the people you are working with. Videoconference as much as makes sense.
5. Instead of straight outsourcing consider a mix of cash and equity. I work with replayful.com out of Uruguay in this manner and have had good luck with them.
Josh Harris is the founder of JupiterResearch and Pseudo.com and the ceo of The Wired City, a web tv network in New York.
Need some advice? Email Josh at askjoshharris at gmail dot com.