If there’s one thing the Facebook startup partners debacles have illustrated to us about getting involved with other entrepreneurs and investors in starting a company, it’s this: get everything in writing. In fact, don’t just make sure it’s in writing, make sure it’s written as unambiguously as possible. MAKE SURE YOU INVOLVE COMPETENT LEGAL COUNSEL. I cannot emphasize this enough! You must have competent, and better yet, exceptional, legal counsel, when you are starting a venture. This is particularly true if you are starting the venture with partners and/or investors! What good does it do to get everything in writing if your attorney who’s drafting and reviewing the documents doesn’t know what he or she is doing, especially with regard to protecting you from the many pitfalls of partnering in a startup? This subject merits a lot more discussion and education. I will bring in legal experts to discuss the key issues in further detail, but in the meantime, I wanted to make sure that all of the craziness happening with supposed significant equity owners in Facebook has raised a huge red flag for you. Not every venture will be Facebook of course, but pretty much every startup will be subject to the same issues and risks when co-founders and investors are part of the picture. Your comments and questions, as always, are welcome.
I think part of the problem is that facebook became so popular. If nothing really ever took off I doubt that so many people would want stakes in the matter. I do agree however that its better to protect yourself in case something were to come up. Make enough copies for everyone involved that way nothing can be claimed later. I cannot stress enough that you all sit down together and write out everything no matter how insignificant the matter may be because you never know what can happen down the road.