Should I start this company with my brother?

[Levitt]

Hey all,

I'm in need of some advice. I've been working on a startup company with my brother for about two months now. He is a CSE grad working making a very good 5 figure salary. On our team, there are 5 others - all college graduates with good 5 figure salaries. The team consists of 3 more CSE engineers to code, 1 business guy to handle business, and a marketing / sales guy.

I've been doing the Marketing for this project since it's inception - building up potential client lists, doing market research and analysis, developing marketing strategies that can be executed in phases based on developmental progress, as well as budgeting for Marketing in respect to the net profit of the company and developing spreadsheets with financial projections based on metrics such as M/M (month/month) growth and dividing up the Marketing budget into a diversified set of multiple Marketing techniques. That being said, I'm still a college student entering my 4th year at university and do not have much "experience" in Marketing outside a couple internships thus far.

With an initial 5-man team, I was given 11% stake in the company. This was when we had 3 engineers, business guy, and me for marketing. My brother recently decided he wants to quit his good paying job along with another of the engineers on the team and they are going to take more of a stake in the company since they are taking more risk. With that in mind, as they are taking more risk, it only makes sense that my stake in the company would go down. At the same time when they decided to increase their shares in respect to their risk of quitting their jobs, they added another marketing/sales guy and another engineer. Then I go to check what they decided to do with equity.

I'm down at 6%. Ouch, but understandable. But the new Marketing guy? He has 10% and he's been here for 1 day. Granted he has graduated college and has a couple years experience, but it feels like a serious kick in the side. My experience has not changed since I began this endeavor nor has my work quality depreciated. It seems that, in light of recent developments such as their willingness to quit their jobs and having this fancy new Marketing guy on the team, my lack of experience is suddenly a problem (but wasn't when they could seemingly string me along before things started getting serious) and my value to the company going forward is, in their eyes, dwindling.

So, long story short, should I keep doing this? It's putting a severe strain on my relationship with my brother. He's seemingly putting a double-standard on me out of nowhere in regards to my experience for no reason I can see. It's frustrating. I know this was a bit like a rant, and there's no way I could fit all the details, but I want some advice.

I really think the idea has a lot of promise to become extremely successful, but at what cost?

[Deleted]

Do you have any other employment opportunities on the horizon? what would your prospects be if you quit this, in short, what is your alternative?

If you don't have much else planned or lined up apart from college, I'd carry on with it and see where it goes.

[THE Bigzoman]

you should know more about the potential l to profit then some people on a MMORPG fansite.

[drwelfare]

Dont trust friends or family with business dealings.
You will get burned

[DEATHETERNAL]

If you do quit, just be ready for this company to turn into the next Google or something meaning you threw away hundreds of millions by quitting, because if you do quit that will most certainly happen making you want to kill yourself.

If you aren’t quitting, I’d advise trying to negotiating that you get the same share as him once you get a degree while accepting the reduced share for now.

As for the relationship with the brother, will quitting not make that even worse as you are turning your back on him or betraying him or showing you don’t care about him or something (not saying you do or do not do any of that, but he may see it as such)?

[THE Bigzoman]

Dont trust friends or family with business dealings.
You will get burned

Plenty of companies started with a bunch of college buddies.

As long as the friends are committed, there is no problem.

Family however...

[theWocky]

With an initial 5-man team, I was given 11% stake in the company.

So, from 11%, you're down to 6% ? How does that work?

You set up the shares prior to the start of the business - You don't promise more of the pie to others as you grow. That is just absurd.

With the founders, you would have, for example said: "ok, guys - we'll take 70% share of the business amongst us five to be split up with portions of 30% in shares for new members" or something along those lines - you don't cut into the original founders part. I realize it can be difficult for non-public companies, but you guys are still doing this wrong.

What promises were made in the beginning? No contracts? Verbal agreement and then your stake was downsized?

Sounds like you are on the other side of the gratuity curve.

Him acquiring more risk should not reflect on your slice of the pie as the shares / responsibilities should have been decided prior to splitting things up. His stake he gave himself should have been under the premise of doing it full-time as should yours have been.

Merely a good idea does not a good, successful company make. Your administration is most important.

Sounds to me like a family business where you're getting used. In fact, it sounds to me that if you don't put your foot down and threaten to walk away you're probably going to end up being your brother's "bitch" ~ to put it in simple terms.

Get a clear, concise contract drawn up and then make your decision. Don't let anyone push you around. If your brother is not willing to negotiate to terms, walk away.

[Anshinritsumai]

Even though it is a dramatization, based on a book, which in turn was based on opinionated accounts of the real-life events; this sounds awfully a lot like The Social Network (the movie about Facebook).

I'd say go over and verify all paperwork to make sure you're not getting screwed over because of a mistake you signed awhile back, that or have a lawyer go over it for you (one that you personally hired, no one else). That and given the opportunity, raise your concerns to those in charge; getting blackballed in your position and shares after the work you put into it just because someone else came in to do the same job and has a degree shouldn't be a case for screwing you out of what you're entitled to, even more so if he's doing the exact same job with little difference.

Worst case scenario, make sure that you can keep your shares even if you leave the company as an employee and just wait till a good point to sell them off.

[theWocky]

Plenty of companies started with a bunch of college buddies.

As long as the friends are committed, there is no problem.

Even the best of "friend" based companies should have clear, concise contracts at the onset. Doesn't sound like this is happening here.

[Starsinn]

As a person who is working for a year one business started by friends i will say this...

Get everything in writing, signed and dated. Everything

Assume the worst, and prepare for it. Dont tell anyone though.

If there is any kind of disagreement it needs to be handled before moving ahead.

Good intentions are just intentions. Actions are what matters.

Take it slow and careful.

[Chick]

Looking at it objectively it seems like 6% is a pretty good deal given the lack of experience. Are you stumping up any capital? (that would change my opinion based on the size of the investment to the others) I guess what i am trying to say is it the lost 5% justifyable or is it just a "he has a bigger slice of the pie than me and i want it too"? (also did the new marketing guy put in any equity to justify the 10%?)

Your first post said that the new marleting guy has experience and has graduated a few years ago, in all honesty, experience and finding out first hand what actually works is much better than reading/studying about what works (sorry if I am over simplyfying the whole college experience but that is what I found to be the case). I am sure this is something you will learn and experience very quickly and as a poster said above, as the business grows you may be able to opt in for a greater stake.


As numerous people have said, what ever you do decide make sure it is in writing and agreed (make sure you get someone legal to look at it - not the MMOC forums).


From my own experience though, it sounds like there are a lot of chiefs and not alot of indians and unless you manage it well it will only take small issues to divide the group.

[draganid]

if it was my brother trying to cheat me id tell my mom and have her fix it :P

[Arialla]

I say that if they play with % of the company without it in writing...something is up.

[Deleted]

I have a bad feeling about this..

[Deleted]

I suggest talking with your brother about how you feel regarding your stake in the company. I can see why he would give more stake to the new guy because of experience, but you were with the company sine it began. That alone holds a lot of ground and should merit, imho at least, more than the new guy. Talk it over, it he doesn't budge then you'll just have to think if it will be worth staying with them.

[Deleted]

Starting business with family members can be extremely tough. Money can break families.

[Kuniku]

He's your brother, talk to the guy, as both your brother and boss(?) he should be open to frank discussion about your thoughts on these things.

[Silhouette of Seraphim]

Kind of sounds like he hasn't found you up to par and wants to make you quit without the drama of having to let you go.

[smelltheglove]

im just not getting how your stake in the company got halved. as i understood it "stake" in this context isnt just a cut of profits, but ownership, which cant be adjusted arbitrarily. if he didnt even discuss it with you he pulled a major dick move. at this point i would either get shit in writing (if you think staying is a good path forward) or bail. any other option is doomed to major angst to say the least

[someotherguy]

This is all wrong.
If they have only been working part time, and you worked fulltime, you should have gotten higher percent in startup than they did.
Startup requires full time commitment. Their opportunity lost (current salary) is higher than yours, and it's their problem, not yours. They are free to not be in the startup.
You have 11% ownership? Is it already vested? Can you walk away now, and keep your 11% ownership? that would be hilarious, and a terrible vesting scheme on their side.
If startup gets bought for 100 mil a year for now, is the opportunity lost of their potential 100k salary any different than your potential 30k salary? no.

Having said all that, and how it's totally not fair to you, you're blood relative of one of them.
I think you should research what your worth is a lot more, before signing anything or agreeing to anything.

Post your question here: https://news.ycombinator.com/ask (you can create throw-away account, it takes same time as login), there are people there who actually make startups, and they will advise you better than I can, but it sounds too fishy, my gut says if you love your brother, just get out and give up all work you did, and never work for him again. If you want to be hardass, keep to your 11%, and walk away, and they'll have to give you 11% of company when they make their billion, and you'll have 110 million for no work done since now.