Starting a joint project with someone

Question

I run my own small business - basically building websites. I am always on the lookout for side projects, where I build and manage a site and the other person brings something equally valueable to the table (marketing or access to information or unique access to products to sell etc). These are done on a 50:50 profit share.

Recently someone approached me with a great idea for a site, but involved massive amounts of up front work, as it would have been a particularly complicated idea to implement. We had met to discuss the agreement, 50:50 was agreed, we set out a basic plan and the other party said he would put the agreement in writing for us to sign.

When the agreement arrived, it said initially it would be a 0:100 split, where I would have 0, until the site as planned was up and running. Clearly annoyed by this we spoke again and he said it was because he wanted to protect his idea, and that previously a developer had committed to it and then dropped out. He apologized and said he didn't want to be a 'dick' about it but it would end up 50:50 if everything went to plan. I questioned who would decide when that happened, and that basically he wanted me to work for free, with no ownership, on the basis he might be pleased and some day give me the 50%. I also explained that this is not what we discussed.

Clearly the project never went ahead. I could no longer trust the person.

My question is, after a long winded explanation, is, was he right to want to protect his idea? Did he have a point, or was he just being unreasonable. How should I proceed in a given situation and does anyone know of any resources for the sort of agreement we should be using for such a project.

I know this is an opinion based question, I hope I don't get penalized for that. But any opinions would be very warmly welcomed.

Thank you in advance,

Paul.

Answer 1

1. He was right to protect his idea.
2. He was being a d--k in the way he went about it - you two agreed on one set of operating rules, but he decided to give you an ultimatum about his real preference. Reasonable people do this by consulting an attorney (both sides get their own, and negotiate).

I am a veteran developer. I had an acquaintance (who called himself my "friend") who had a connection with someone working on a reality TV show a few years back, and that third-person wanted some work done. My acquaintance lacked the expertise. He asked what I'd charge. I gave him a number, and he told me he'd like to mark it up 15% or so to get his piece in the deal. That sounded great.

However, he flipped out when I asked who the third-party would be receiving invoices from (I had a concern that he would try to raise the markup severely, and try to keep me in the dark). He got REALLY defensive all of a sudden, even though I hadn't accused him. I explained that if we were going to partner for the effort, things needed to be transparent. He kept saying "Don't worry about that!"

I left him ALONE.

Answer 2

I'm on the other side of this situation. I have a friend that had a massive project converting a very old application to a new C# .NET application. He needed help and went to the client and was upfront with them and said he needed to bring on one more contractor to be able to meet their requirements and deadline. They understood and actually agreed. They trusted him to find the right contractor and that is when my friend contacted me. It just so happened I was just laid off along with several other developers from a company going under fast. Anyway, how we worked it was the client paid me for hours worked.

I provide a time sheet and invoice every week. My friend does the same. At first, he was going to have me work for him and then he pay me but talked to the client and the client paying me directly was a much better way to go. If there is any issues with payment of hours worked (which there hasn't been and this project has been funded through December of this year)... but, if there had been any issues, it would be between me and the client, not my friend. Also, if I ended up doing poor work, the client would be a lot more forgiving of him because my friend could explain that I have always done good work in the past... etc.... etc. It would be the client letting me go and it would be on me, not my friend.

I'm still on this assignment. I do the very best job I can, and put in the hours needed to complete the tasks. It has also worked out well that I'm doing my favorite part of putting a database application together, which is the database design and the business classes in an n-tier application.

I've decided if he doesn't land another large job, I'm already doing some marketing to go out on my own since I've enjoyed this so much. Anyway, I wanted to mention this because maybe that would be the best way to get help when you need it. If you have a pool of contractors out there you can choose from, then go to the client and hopefully be able to arrange something like was arranged in this story I just told. It has a lot of benefits but even then, you have to make sure it is someone you trust that will treat the client fairly because their reputation is on the line as well.

We also have it arranged that even though I technically get paid directly by the client, I get my work from my friend regarding what he needs in the business classes to be able to call from his presentation classes. We've been working together on this project just over a year now and it has worked out great. I just consider him to be in charge and I do whatever he gives me to do that he needs to keep things moving. Anyway, just a thought of a way to get extra help.