How can I evaluate whether or not a partnership in a Social Networking Project is a good idea?

Question

An old client asked me to work on a project which is kind of a social networking website. The idea is very good though. I know that guy and his company, he lives in EU while I am in Asia. We never met but I can say the idea seems good. My question is should I accept that 50%/50% partnership? This will be 2 months job for a beta and then we will see how it works. I will handle all the development here. And all the expenses on web hosting and scripts and plugin we will buy would be on him.

We signed a contract and exchanged using email. He owns the domains and hosting etc. Basically we would be interesting in selling it then to some big companies or big people if all goes well.

How can I evaluate whether or not a partnership in a Social Networking Project is a good idea?

Answer 1

You say your partnership is protected by a written contract. That's good.
Now, you have to answer to this questions:

• Does the contract specifies ownership transfer of the domain name from just your partner to both of you?
• Is the contract wrote in such a way that all your responsibilities/rights are listed clear and without any confusion?
• Does this contract list both of you as equal partners with equal "ex-ante"/"ex-post" rights and responsibilities?

The idea is that you have to make sure all your present and future rights/responsibilities are covered (and protected) by the contract. Otherwise you expose yourself.

You are from Asia and he lives in the EU. Is he a EU citizen or same country as yours?
If you are from Asia and he is from EU or another continent than bear in mind that an eventual lawsuit will mean considerable resources from your part this because contractual obligations can be enforced by suing in the country where the defendant resides or the legal personality was created (someone, please correct me if I'm wrong).

As a final point; should you partnership?
Well, if you have the time and resources, if you believe that this is a good investment and you have no reason to chose otherwise than YES, you should partnership.

Answer 2

With the utmost respect to you, this is a dumb idea.

Running a multinational business is nothing trivial. Where will the head office be located? What is the business form? (corporation, etc). Who are the officers? Where will official business documents be physically stored?? Who can establish the business entity, and handle things like taxes, business licenses, and so forth? And most especially, who's got access to the money (banking, merchant accounts, Paypal) when it's time to get paid?

You're taking a huge risk by being the developer on such a project. The work product will be your "baby". You might have some help in designing this with your customer, but who's to guarantee that once you're done, your partner won't disappear with your work, or be selling it branded as something else? Unless you have answered all of these questions, I wouldn't expect to earn one cent if I were you. Then again, maybe you like working for free.

Just remember - once you upload your work onto a server your partner can access, you've basically given away the business in a sense.

You might have a contract, sure enough. But which jurisdiction will the contract be enforceable in - yours, or his? (Here in the US, we usually specify that a contract will be directed by the laws of a particular state, just so it's clear). If you ever need to sue your partner, you'll have to either travel to the EU or pay an attorney there. If you can't afford to do that, then you will learn real quick how useless some contracts are when you cross international borders.

I'd give this a WHOLE lot of consideration if I were you. Don't take it for granted that you've worked with this client for some time. You don't know how your potential partner is actually conducting business in the EU, because you're not there. Business partnerships are like marriages. Would you marry someone via e-mail, in another country? Think about it.