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Securing my interest in a venture as a Webmaster!

can anyone offer advise?

     
3:59 pm on May 26, 2004 (gmt 0)

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I have been approached by a group of business people / investors who would like an all singing all dancing money making, lead generating site made for them – which all credit to them will probably make good money but of course all hinges on the success of the site – ranking and functionality wise so my role as the webmaster is crucial.

As they’ve offered a 25% share to myself it will be well worth my while to make a go of it, however as they are based abroad I’m not convinced that should all go to plan, the day won’t come when they think to themselves – “well the sites done and working what are we paying this guy 25% for lets hire someone cheaper”.

Normally I would safeguard myself with all necessary usernames and passwords but in this instance they have been careful to arrange all the registrations, etc themselves so apart from a written agreement – that would take years to enforce in the country in question (where the business is based), does anyone have any suggestions as to how I could approach the situation.

Any help would be hugely appreciated.

4:37 pm on May 26, 2004 (gmt 0)

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You're already seeing warning signs (or you wouldn't have posted this question). What type of risk are these people taking? Are they putting ANY capital into this venture? If the answers are anything like "little" or "none" then walk away.

(Better yet, walk away with the idea. Find some people you trust and make it work.)

5:31 pm on May 26, 2004 (gmt 0)

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Thanks for the reply. At the moment they are putting very little capital in, but eventually will be putting about 80% of the work into it. They're doing the "sales" and I'm doing the "marketing" effectively (100% internet based). At the moment I have no reason not to trust them, but thinking ahead, if all goes to plan - which I'm sure it will, people tend to get greedy, and that's what I need to safeguard myself against. It's something I'd rather not walk away from yet.
5:58 pm on May 26, 2004 (gmt 0)

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[devils_advocate]
So it sounds like AFTER you have taken the risk of putting your own time (and some expenses) into getting the site running and SEO'd, they will invest some resources if it appears to be working out. If it isn't working out, then they can cut their losses having not lost any time with their families and having not diverted any money from other opportunities (or toys). And you will be SOL.[/devils_advocate]

There certainly are a lot of open-ended variables that come into a decision like this. Are these people that you knew previously, or did they contact you out of the blue? How much do you know about doing business in the country in question? What formal business entities exist and are they willing to create one in which you formally have a stake?

If you are uneasy about it, and you can't easily travel to that country in case there is a dispute, or any of a hundred other considerations, I say you are better off taking it on as a standard project (with up-front payments) rather than on an equity arrangement. Even when you know people from childhood and live down the street from them, there are a lot of things that can happen to prevent that equity stake from ever amounting to anything.

Primarily, the thing to consider is: what risk are you taking AND is that an acceptable risk? It would seem that principal risk is that you will be investing time (and probably a little cash) to do the development. Are there other legal risks?

I'm rambling - but I think you should get the picture.

6:26 pm on May 26, 2004 (gmt 0)

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There are too many good opportunities around to get into something you have serious doubts about at this early stage.
6:58 pm on May 26, 2004 (gmt 0)

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thanks for the feedback, you're right and I'm probably doing things the wrong way round. Even though I've worked with the guys previously I need to rethink the legalities, etc and probably spend some money with a lawyer (something I was hoping to avoid). I know there are other opportunities but the way I see it I have so little time on my hands now anyway, I can either spend the remaining time I do have working on something that will earn "x" or something that will earn "10x" - both taking the same time and effort, a dilema I'm sure loads of other webmasters face. Thanks for the advice.
1:40 am on May 27, 2004 (gmt 0)

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If you never listen to anyone else, listen to your lawyer and your accountant....

The two most important people you outsource are your attorney and your CPA. Hire people you can trust, work with, and respect. Then LISTEN to them, and do not begrudge what you pay them....

10:24 am on May 28, 2004 (gmt 0)

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you need to own the domain name & look after all of the hosting etc. & own the copyright to all of the website.

if you don't own/control the above, then you can be cut out of the deal too easily later on when you've already done all of the hard work.

9:55 am on June 1, 2004 (gmt 0)

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Subway, nothing good is going to come from this venture, and I think you already know that in your own heart.

Always do the right thing! In this case, it is run IMHO!

10:01 am on June 1, 2004 (gmt 0)

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you need to own the domain name & look after all of the hosting etc. & own the copyright to all of the website.
if you don't own/control the above, then you can be cut out of the deal too easily later on when you've already done all of the hard work.

They'll feel the same way about it.

TJ

5:30 am on June 2, 2004 (gmt 0)

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I agreed on a similar deal last month. But other party is in the same city and I will own and develop the domain so risks are minimum to us. If things did not work out tomorrow, I still own the domain, copyright and all the valuable traffic.

I would you suggest, either you buy and develop a new domain or ask them to transfer the domain to you. Long distance relationships are very risky.

11:44 pm on June 2, 2004 (gmt 0)

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vkaryl advice is golden.

If you have not done a background check [webmasterworld.com] on your potential partners/investors do so before proceeding.

One possible solution (which my lawyer and accountant developed for a similar problem some years ago) is to incorporate a company specifically for the project.

The other side put up an initial cash infusion and then, at predetermined milestones, bought out my stock to a set limit. I retained majority stock (and so had control until quite late in the process). It was complex and not something I would have done but for the profit potential.

12:10 am on June 3, 2004 (gmt 0)

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Thanks iamlost, that background check post is excellent and very helpful. I've decided to put it to “them” that I have the sole ownership of the domain name, that way I put the "investment" in and at least walk away with something if they don't perform / carry out their end of the deal. If they don't agree, I'll walk away... everyone's advice was much appreciated.
 

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