“I started the site when I was 19.
I didn’t know much about business back then.”
Mark Zuckerberg, Facebook
In 2003, Mark Zuckerberg, then a sophomore at Harvard, contacted classmate Eduardo Saverin about becoming his business partner in a new venture, which he called The FaceBook, a website dedicated to connecting people. Eduardo joined and invested $15,000 for the servers to run the site. Fans of David Fincher’s The Social Network know Saverin eventually sued Facebook and settled for 5% stake, worth more than $2.5 billion today.
While this story is widely known today, if Zuckerberg and Saverin had been asked in 2003 what the future of their endeavors held, they’d most likely given an answer sprinkled with amity.
Ask the Right Questions
The optimism associated with starting a business is exhilarating. Often family members or friends jump into a new venture with blind enthusiasm, forgetting to ask essential questions.
- How much stake does each person own?
- What if we go public?
- How much does each person invest?
- What if one partner isn’t pulling their weight?
- What if we get an offer to sale?
- Who has the deciding vote on major decisions?
- Is there a non-compete for a partner who leaves?
Additionally, questions about business formation must be asked.
- Do we file as an S-Corp, a C-Corp or a non-profit?
- What are our licensing and distribution agreements?
- How do we handle contract disputes?
- Where does financing fit in?
- Who actually owns the business’s property and equipment?
Protect Yourself and Your Relationships
Not only is it imperative to answer these questions, but binding contracts are crucial. Few splits can result in unpleasant departures as partner splits can, especially considering the variable of stakes, capital, and profit. Let Robert R. Robles, Attorney at Law, guide you through the legal process, protect your rights and preserve your interests. Contact us today!