Monday, July 20, 2009

Collective Genius

I'm writing this as an appeal to my readers intelligence and life experience. Any and all advice and suggestions will be appreciated and carefully considered.

And please accept my apologies again for a less than humorous post...

For the past 5 or 6 years, I've run a small software development business from home. About a year or two into it, I got connected with a guy out of Chicago developing some software. After working on various projects with him for 5 months, he asked me to look into building his product into a full scale web application.

I started work on this in December of 2006. He actually flew out to Utah and met with me for a couple of days to strategize and plan it out. During lunch on the final day, he drops the bomb that he can no longer pay me, and suggests a partnership on the new project, wherein we split the proceeds 50/50. Having just quit my job to pursue the home business full-time, the timing was bad, but at the same time it seemed like a good investment for the future.

Anyway, after a year, we had a pretty respectable project built and he starts talking about changing our arrangement. It went from a 50/50 split to my getting 50% of all sales for the first 5 customer, and then 50% on the first 5 customers for the first 3 years. Red flags were already waving for my sweet wife, but I was an idiot at this point and assured her that it would work out for the best.

June last year, he invites me out to Chicago for a week to meet with him, the new IT guy he wanted me to start reporting to, and his new business mentor. I was pretty excited about it, and after convincing my wife that a week in Chicago was a good idea, and getting leave from work, I call the guy back, and was informed that I didn't need to be there anymore, since they were only going to be discussing the future of the company, and I wasn't involved. About this same time, he also changed our agreement again to where I would get a 25% share in the new company, in exchange for my work thus far.

Red flags went up for me at this time, but like the idiot I am, I did nothing about it.

From June through December I asked for a formal agreement as to my share in the new company. It was always with the attorney, or he needed to review it or something. At this time, he'd asked me to start billing him hourly again, requested my rate stay what it was when we started - some 25% of what my actual market value was.

In August they picked up a huge national customer as a client, and brought in a development firm in the Philippines as well. From August to December I spent 20-30 hours a week correlating with the Philipino developers and working on the application. In December this ramped up to 40-50 hours a week. I was doing all this while trying to be a husband and father, and working another full time job.

The IT guy he'd brought it, was a nice enough guy, but communication broke down. Mid December I got a really nasty email from the head guy, which was basically the result of them providing me incomplete data, and expecting me to somehow load all the data into the system.

Having had almost no sleep, I was getting real tired of being the whipping boy for his and his IT Guys incompetence, so I asked him again (Nicely mind you!) for my formal agreement. Funnily enough (on a Sunday too) within 10 minutes I have severl pages of legal document, offering 10,000 shares in the company, and absolutely no say in how the company in run or anything.

I politely asked what percentage of the company that worked out to being, since the numbers in the documents where adding up the way I thought they should. He responded with all kinds of warnings about looking at the big picture, and how we all had to make sacrifices to make this a success... And then tells me that my share in worth 1.6%

I was understandably upset, and told him that I thought that was inappropriate, and that if that was all I was worth to the company, my hourly rate was going to be changing to what my market value was.

Within 5 minutes all my access was removed to servers, databases, everything. 4 hours later, an email explaining that he feels best that our relationship be terminated.

I sent him my bill for my hours up until that date, which where only for the past couple of months.

I emailed him in January after my invoice was over due, and I had heard nothing.

I emailed him again in February, and indicated that we needed to discuss my compensation for the past 2 years as well as the overdue invoice.

He called my cellphone almost immediately (I let it go to voicemail) and made all kinds of excuses about how his client hadn't paid yet, and then launched into a long tirade about how awful my code was, how I had bailed on him at the worst possible time, and that his developers had to rewrite my code, since it was useless and therefore he owed me nothing.

My invoice was paid a month later and I've heard nothing since.

My initial approach was to chalk the whole thing up to experience, be grateful I got some money out of him, and just kind of let the whole thing die.

I've been told that is the admirable thing to do, and that many around me are proud of my approach. My wife if just glad the whole thing is over.

But the thing is, it isn't. Every so often, it comes back to haunt me, and this weekend was one of those weekends. I gave up 2 years of my life to develop this guy an application, that meant time away from my family, and many, many hours of uncompensated work. To put it mildly, it pisses me off. Having relived the whole experience right now, I am physically shaking.

I'm not sure what to do about it.

I figure I have a few options:

1. Just deal with it, and hope it goes away sometime soon.

2. Meet with an intellectual property attorney and find out what my rights are. I could then:
a - make sure I am legally entitled to sell the code myself and try and market it.
b - Request the attorney to send him a cease and desist order, specifying that all my code be removed immediately, as well as the table structures in the database and all of that. (Seeing as I worked with him on much of this, I wondering if I do indeed have full ownership of the code though.

3. Find a tough attorney and go after his company with everything I can. I suspect this will bankrupt the company, which would be satisfying, but I wonder if it's worth all the stress, and if it really will be satisfying in the long run.

4. Send the guy a letter informing him of my intent to sell my code, offering to let him buy it, and if not, requesting that he immediately cease using any of my code. I doubt this would have any effect though, and I'll either get a nasty letter in return or they'll just laugh at me.

Does anyone like any of those options or have any others? And does anyone by chance have a good intellectual property attorney they could recommend, since I think ultimately I need some good solid advice at this juncture.


  1. As a person who has worked on the Registry side of Courts and Tribunals for a good, long time now, I'd suggest trying to let go.
    This is personal to you, clearly, and when you involve the personal with the legal, it can drive a person insane. Literally, quite mad, I've watched it happen (many, many times). It eats up all your spare time, your money, your life, and can damage your sanity. It can crush your spirit.
    If you think it's possible to just let go, write it of as experience, then do.
    But if you can't, good luck.

  2. Thanks Morgan - I think that's probably the best way to go as well - but it's one of those things thats easier said than done.

    I guess at the end of the day the lesson is, don't give up time with those you love chasing money, even if the reason you want the money is to be able to spend more time with the ones you love.

  3. "I guess at the end of the day the lesson is, don't give up time with those you love chasing money, even if the reason you want the money is to be able to spend more time with the ones you love."

    I needed to hear that. Thanks.

    My thoughts on what you should do? Dang, that's tough. In the end, just letting it go is probably the best way to deal with it. But I totally understand what you're going through, and if it were me, I'd probably become obsessed with getting even with this guy. I'M getting pissed off reading your account of this.

    So part of me wants to tell you to go after him relentlessly, using any and every legal means to do so. But another part of me knows that while you may get some degree of recopense, you'll be worse off for it.

    Venting, as you have, is probably the best way for you to get over it. I'm here for ya, bro!

  4. Thanks Guys!

    The worst thing is that this guy used to be a great guy to work with, but he got involved with a corporate coach towards the end and thats where things went south.

    I actually called up a local Intellectual Property law office yesterday and I'm meeting with them next Friday. They seemed really good on the phone suggesting that the first thing to do would likely be to get a dialogue going. I'm hopeful after meeting with them, I'll have a better idea of what my options are.

    At the end of the day, I don't wish any harm on the guy, and I don't want to put him our of business or anything like that. Ultimately it would be nice to get some compensation for my work - just something fair, and/or establish what my legal rights are associated with it.

    One option I have considered is marketing the product myself, but I don't want to end up getting sued in a couple of years, because I didn't cover myself before embarking on that course.

    I'll give a full report after the meeting next week!

    The some irony in all of this as well, which I may elaborate on next week.

  5. I think you should definitely talk to an attorney, which you're doing. Beware of scorched earth tactics, they don't actually work and are a sign of a bad attorney. The whole "go after them for all they got" is more of a myth than reality in terms of results. It rarely works. You want your attorney to tell you realistically whether or not it's worth pursuing, aside from the emotional angle. Scorched earth attorneys play on your emotions and drag you into litigation that will cause you more harm than good. Let me know if you want to run what they tell you by me, I'm an attorney and a damn good one. I can't advise you on your particular sitch, but I can give you feedback on the attorneys you talk to.