Move on. The project is tainted. Neither of you will be able to use the code: your business partner has no rights to it, but surely has a good enough story about your partnership and his contributions to take you to court (see 'grellas comments on the TechCrunch v FusionGarage fiasco if you were hoping that everything is clean since you don't have an actual contract). Court = death. Forget investment; there's a storm cloud hanging over your business.
Your BATNA in this negotiation is "get on with my life and leave you with zero"; that may be a strong enough position to get your partner to let you buy him out (or vice versa). That's about the best that will come of this.
You could "lawyer up", but that's not going to help you that much, unless your former cofounder is dumb enough to take you to court or make a break for it with your code. It's hard to argue that someone shouldn't talk to a lawyer, so I'll just say: don't spend too much money on it.
There's no chance you're going to work with someone who threatened to sue you because you wouldn't sign over your code after he tried to take a 60% share of a product you coded by yourself.
I'm being grim, and surely that will irritate you or someone else in this thread, but I'm trying to point out the path that costs you the least time, heartache, and money.
This is a great starting point. Start by assuming you'll get nothing out of it, then see if you can claw back anything from there.
Giving up this fundamentally, fatally flawed business is step 1. From this fresh point of view, you might be able to come up with a relative win-win. Maybe your so-called cofounder can purchase the code from you instead of wasting many months getting it rewritten again. That would be better than walking away empty-handed.
That said, I propose a fundamentally different target for the "clawing back".
You said this is a close friend. Fuck money. Fuck the business. Save the friendship. In your position I would assume the business is lost and do whatever it takes to salvage the friendship. Get another friend to mediate. Come to an understanding. Accept that you've both got your fixed, blinkered view of things, and you're not going to agree about it, probably ever, but you can still get back to being friends despite that.
Close friends are far more valuable than any business. I was lucky to keep my best friend when my first business blew up. I am really glad I made the effort, as hopeless as it seemed at the time.
> I've often felt bullied and mistreated by this person, who treats me like a "resource" and bosses me around like a child.
> My attempts at discussing/negotiating this with my co-founder only stir hostile, belittling responses from him.
I wonder if there is much "friendship" left now.
However, you should take a break for a few days/weeks so that both parties can cool down, and then try to talk to him again. Hopefully you guys will be able to patch up things and launch the site.
I wouldn't call somebody a close friend if he planned to sue me, take the share that was rightfully mine (unless his work deserved 60%, maybe not in code, but in deals, connections and marketing), and insult me around. That person wouldn't deserve my friendship.
People do stupid things over money or careers. Friends sometimes screw each other over. Shit happens. If the worst thing you do in your life is to demand 60% when you're really entitled to 50% (or even 40%), you've done OK.
Couldn't agree more. I faced a similar dilemma an year and half back. After moving heaven and earth for a month to make it work, eventually I just moved out.
To give an idea of how worse the situation was, the fellow would ask the employees to spy on me for mundane things like connecting to internet. Later verbal accounts of people, suggest that he used my caste as a device in manipulating them.
Nevertheless, I'm really grateful to the person for showing
true colors so early instead of many years and dollars (or rupees) later.
Throwing out good code after putting 2+ years of time and money was nearly soul crushing. Yet, it turned to be a better decision when I realized that I could create a superior and totally different product. Now, instead of me worrying for getting sued, the fellow who cheated me has to carry that burden all the time. That leaves me more freedom to focus on the real needs of my users.
Besides, with this experience under the belt, OP will surely get a better co-founder if s/he continues to keep working.
Shocking, I suppose, but apparently very true and very ugly.
As the son of two professional parents who grew up on farms, that latter fact turned out to be ... rather unfortunate WRT to the last Indian manager I had (a naturalized citizen but was born, raised and went to college there).
" Court = death. Forget investment; there's a storm cloud hanging over your business."
To me, this sounds like the nuclear option. In fact, the idea of "Mutually Assured Destruction" could be applicable here. If the OP's partner sues them, they could countersue and they'd both be out. That could make an effective bargaining chip.
But if that doesn't work, I'd say that you're right. The OP should move on.
There are several failed startups that I'be been in where there was no possibility of the phoenix rising from the ashes because the people responsible for the failure were clearly going to sue if it became a big success.
Even in one situation where the ownership of the code was crystal clear (the primary author was the son of a very big time lawyer and was very careful about that).
In that last case they insisted on owning a majority of a new venture despite their proven ability at failure. In my experience, greed of the sort we're seeing here is a strong sign this situation will never work out; among other thing it reveals a whole lot of things about how the other person views you and your contributions to the venture. It also suggests the other guy is not going to be able to make it work if he parts with you.
So he is supposed to chuck all his hard work and walk away? No way. He should roll up his sleeves and put up a fight. No one has ever succeeded by being a wimp, except windows 3.0.
It would take less effort, and offer far greater chances of eventual success, for him to simply pick something else to work on and execute on that.
It's just business.
This is why partners should incorporate and come up with a mechanism for handling acrimonious departure before getting to work. A classic response to this problem is the shotgun clause.
If great companies were built by those exerting the least effort we would live in a very different world today.
The early histories of many successful SV companies are peppered with a sour business deal or two. The winners are those that hung on and fought. Did Gates walk away when when Jobs discovered that he was building GUIs? Who walked away from Facebook? Zuckerberg or the other guys? You know the twins...or "those other people" whoever they were. You get the point. Exactly, its just businesses.
I don't see the issue here as being the choice of the easiest road, but of the road with the least to lose. There is definitely a lawsuit here if he decides to continue with the product and use the code he created, leading to quite a few legal fees. If he drops it and moves on to another product he is guaranteed not to lose any more money on this project.
If he had a business, instead of "99% complete and ready to launch", you might think about offering him more optimistic advice. Diving headfirst into the drama swamps with no users up front seems like a bad business call.
Well, there's definitely a lawsuit if he uses the code and succeeds. For a Facebook level of success, well, that's just a cost of doing business. A moderate level of success will probably leave only the lawyers as winners.
So he is supposed to chuck all his hard work and walk away?
This "company" has no actual assets of any sort (users, contracts, relationships, press, brand recognition, ...), except for the code, which his co-founder does have a legitimate claim to. And due to the founder dynamics, the company will never amount to anything.
So these guys are basically fighting over 10% of nothing. Yup, walking away seems like the best course of action.
Your BATNA in this negotiation is "get on with my life and leave you with zero"; that may be a strong enough position to get your partner to let you buy him out (or vice versa). That's about the best that will come of this.
You could "lawyer up", but that's not going to help you that much, unless your former cofounder is dumb enough to take you to court or make a break for it with your code. It's hard to argue that someone shouldn't talk to a lawyer, so I'll just say: don't spend too much money on it.
There's no chance you're going to work with someone who threatened to sue you because you wouldn't sign over your code after he tried to take a 60% share of a product you coded by yourself.
I'm being grim, and surely that will irritate you or someone else in this thread, but I'm trying to point out the path that costs you the least time, heartache, and money.