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Ask HN: How do I break up with my co-founder?

by pricees on 12/6/14, 12:14 AM with 11 comments

• by tptacek on 12/6/14, 1:29 PM

  You must talk to a lawyer about this, and you may not like what you find out. Because you didn't set up vesting, both of you will own 50% of the company no matter whether either of you leave. You plan on leaving and starting a new company, so that shouldn't matter. But it might if your cofounder shows up in a year and says that the IP belongs somehow to the company they own half of.

  These are the worst kinds of problems: the ones that only matter if you get "lucky" and are "successful", but your success is counterfeited. You want to make sure that can't happen here, or else work on a different project.

• by greenyoda on 12/6/14, 12:36 AM

  You need to talk to a lawyer. You might not have had a formal founders agreement, but there may have been some kind of implied or verbal contract between you and your co-founder regarding your intention to share the intellectual property.

  Would your co-founder have agreed to start a company with you under the assumption that you'd personally own 100% of the intellectual property forever, no matter how much work they put into developing the product? As you said, your current sole ownership of the IP is accidental.

  Since you're incorporated in Delaware, the laws of the State of Delaware would presumably govern the dissolution of the corporation.

  So, you really want to talk to a lawyer right now. Don't make assumptions that could lead to your co-founder suing you after you've developed a successful product on your own.

• by alain94040 on 12/6/14, 12:22 AM

  1. Get in touch with your co-founder. It's just not practical to split up any other way. Time is not critical, if it takes 2 weeks, so be it.

  2. Once you talk, make sure your co-founder agrees with leaving without creating a mess. The 50/50 split is a potential issue here. Technically, you may not have the power to remove your co-founder.

  Did you have vesting in place? Did you incorporate with a decent lawyer?

  If I understand your train of thought, you are thinking of leaving the company, ignore it and continue working on the idea. If you do so and later become successful, definitely expect a big lawsuit from your old co-founder claiming his share... Not to mention the fact that investors will not like hearing about such a liability. If at all possible, work out something with your co-founder.

• by charlesdm on 12/6/14, 12:56 AM

  Talk to an attorney. Maybe even two. A lot of lawyers have specialisations, i.e. litigation, IP, tax, etc. Good firms have all these capabilities in house. Just like software developers, genuine good lawyers are actually hard to find

  First, it would probably be a good idea to talk to an IP lawyer, to understand who owns what under the laws of Delaware (and the state your live in). I'm not US based, but I can imagine some states have different laws, with some having precedence over one another. It could be that you inadvertently transferred the IP to the company, by some action or event. Now you know where you're at, which is important if you intend to continue building the product.

  Second, and I'm not sure on this, but I would probably talk to a corporate attorney to understand what my options would be. Dissolve the company? Somehow acquire his shares?

  Third, try and fix things by just talking things through. This is usually the easiest and quickest way.

  Best of luck! :(

• by neosavvy on 12/7/14, 1:33 AM

  It will probably cost you more to hire an attorney to solve this issue.

  If you aren't that far down the road with the IP, just start over.

  Get a new GitHub Repo, Private of course and check in a new iteration of the project there. Give him or her everything you have and say go for it if you want.

  Assuming you are the engineer in this relationship you can probably recreate the value you have built in a short period of time. At least you'll know how much time you have currently invested.

  That only leaves the matter of the $500 so just get that split after you pay to dissolve the company and reincorporate under your own new company.

• by MichaelCrawford on 12/7/14, 5:54 AM

  Hire a process server to deliver a letter to your cofounder. Be polite about - just say that it's important that the two of you talk. Either they should come back and work with you, or the two of you should part ways.

  Imagine what might happen if you _don't_ break up, and your company is a success. Your cofounder would sue you for their share.

• by andymoe on 12/6/14, 12:20 AM

  You should find an attorney. They can probably answer your questions in a quick phone call and lay out all your options and what they will cost.

• by gus_massa on 12/6/14, 12:24 AM

  [Not very helpful now, but next time remember to add a standard 4 year vesting period with a 1 year cliff.]

  By the way, how old is the company?

• by MalcolmDiggs on 12/6/14, 8:53 PM

  Start writing down everything you can recall about this business (before you forget). Every phone call, every meeting, every conversation, every missed call. Also backup and print out every email and letter.

  Take this big heap of stories and evidence with you to an attorney.

• by LukeFitzpatrick on 12/6/14, 5:13 AM

  If you're not good at communicating, it's probably the best way, but a messy one. I'd chat to him first, then get a lawyer if necessary.