Free Startup: An Insider's Guide to Launching and Running a Business by Kevin Ready Page A

at meeting after meeting for years—and had agreed to equity sharing.
    I can only imagine what the owners of the company who got millions of dollars in the transaction were thinking. Mind reading is a dangerous thing, but they likely felt that they always treat people fairly and that the employees in question had actually failed to deliver in some way.
    Everybody considers themselves to be justified in their actions. All of this is a matter of perspective.

    Figure 2-5. Time and lack of effective communication can lead to problems that nobody wants
    Another recent instance comes to mind. I met a gentleman in Albany, New York who is a lobbyist working with the state government. He, in his suit and tie and with his youthful enthusiasm, is the only employee of a small firm, and he works under the owner. This young man works for $200 per week. His story is that he is willing to work for less than the minimum wage because the company is going to grow, and his boss “takes care of him,” as he put it. The boss buys him lunch most days and gives him an extra Hamilton or two when he needs it. In listening to this, I started to get a bit agitated. I asked the question, “Does your boss need you in order to continue his business? Are you critical?” The answer was a decided yes. Furthermore, since the boss “takes care of him,” my friend believes that he is going to be taken care of when the business grows into something bigger. My advice to him was, “Get a contract.” Directly communicate that the only way to move forward is to trade “fair value for fair value.”
    I told him this, “You should expect an equity share to compensate for the lack of a living wage, and the fact that you are critical to the business.” I also told him that he should directly ask for it in a fair, level-headed, transaction-minded way. The likely outcome otherwise will be that the young man diligently puts in his time, grows the business, and then gets handed his walking papers when he asks for any special consideration later on. Never count on your boss agreeing with you that your effort was critical to the success that created the business, after all is said and done—it is not going to be visible to him in the same way it is to you.
    Peter, a good friend of mine put it succinctly when he said, “Emotion has no place in business.” Clearly, people, as emotional beings bring emotion toeverything they do, but he means that you should lock down your understandings and agreements in a contract or written form so that the ambiguity of emotional decision making can be held in check.
    So, I say this to anyone who will listen:
     
Never rely on abstract ideas like “good feelings” or beliefs like “they are great people” or “I feel like I can trust him” in business. These are important things, but they are not sufficient by themselves for forming the basis of real and reliable business relationships. Assume that the worst will happen.
Get a contract to define roles, responsibilities, ownership, and financial details for any aspect of the business that has value.
Have your contracts reviewed by an attorney that represents you as an individual–distinct from the company.
Remember that nothing changes things like money. If your business becomes valuable, you will be thankful for having worked out everything between the people involved well in advance.
    Create value together with your partners and build something that benefits everyone in powerful ways, but put a mechanism together that protects you.
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    Watch Intellectual Property
    Intellectual property is important. It is easy to get in trouble when you don’t remember this. With the quick availability of information, images, video, opinions, software, and any other kind of human output that you can imagine on the Internet, it is easy to forget that much of this content is owned by people or companies that are serious about protecting it.
    By 1999, we were running a whole