Ownership issue

L

lynxpen

Guest
I am about to register a company for a business idea I had that is almost ready to go into operation. I cut someone in on this business idea for approximately 10% as they were trying to rip me off and I figured it was a good idea to keep 'your friends close and your enemies closer'.

This person had actually sparked my idea when he said something like 'I might make an XYZ website' where XYZ would be something like a 'motoring website', 'poker website', 'travel website'. It was a completely general statement off the top of his head, with no real intent to actually do it, and with zero originality - there are tons of motoring, poker and travel websites out there. The moment he said it, something clicked for me and I said 'actually do you know what would make a great business - xxxxxxxx'. Where xxxxxxxx is a completely original specific concept related to XYZ that has not been done on the internet. I have since gone ahead and developed this idea, putting in countless hours work on it and it is almost ready to launch.

After discovering he was in the process of ripping me off and passing my idea off as his own I decided my only option was offer him 10%. There are emails between us where I offer him the 10% and he accepts. I have done 100% of the work on this business and I came up with 100% of the ideas. He sparked off my original idea with his statement of 'I might make an XYZ website'.

Now that it is nearly ready to launch and I have to register a company I am unhappy having to hand over 10% of the business to someone who has done zero work, didn't come up with the original idea, and is only getting 10% because he tried to rip me off.

So my questions are -

1. His off the cuff statement of 'I might make an XYZ website' - does that entitle him to a % of my highly specific completely original idea that was sparked by that statement.
2. Are the emails between us legally binding?
3. What options do I have in this situation? I would appreciate any advice you can give me.
 
1. No, does not entitle him to anything.
2. Possibly - written offer and written acceptance of 10% carries a lot of weight.

In hindsight, offering him 10% was a big mistake. As there is clearly bad relations between you, I assume you do not want him working alongside you in this company.

One option is to buy him out of his 10%. Another option is to proceed as the majority owner (therefore you have all the decision making power) and pay him his 10% of the profits.

and is only getting 10% because he tried to rip me off.
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Can you be a bit more specific about this? How did he try to rip you off? Is the 10% offer a response to blackmail?
 
csirl said:
1
In hindsight, offering him 10% was a big mistake.
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I believe I had no choice if I didn't want to get screwed over.

Can you be a bit more specific about this? How did he try to rip you off? Is the 10% offer a response to blackmail?
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I discovered he was actively trying to raise investment on an online forum passing my idea off as his own. Lucky I happened upon it it and called him out on it or he would have gone ahead and completely screwed me over. I decided the only way to be sure he wouldn't try and go it alone was to cut him in for a stake. If he had've raised investment he would've been able to hire a team of web developers and bring the idea to market in a much shorter time frame than I could as one man operation. I am not happy that I am giving up 10% of ownership and all future potential profits solely due to his deceit.

I'm thinking trying to 'talk him down' to about 5% could be an option. I appreciate any opinions or advice on this situation.
 
90% of something is better than 0% of nothing.

When you thought he was going to 'develop' the idea himself you were more than happy to give him 10% of the business. Now that the business is ready to go you want to claw it back .... it sounds very much like having your cake and eating it.

You put the offer in writing so I'd be very careful about withdrawing it.

If you had wanted 100% of the business you should have ploughed on and have taken the chance that he'd have failed to secure funding. You didn't take that chance so I reckon you're in a corner if you withdraw the 10% and he decides to pursue you for it.

A great start to a business ...

Get him to work for his 10% ... SEO, marketing ... whatever. Tell him it's now time for him to work for his piece of the cake.

90% of something is better than 0% of nothing which is what you could have had if he had gone off and launched before you!
 
IMHO

"This person had actually sparked my idea"


should entitle the person to something.


Maybe 10% is not enough.
 
PaddyBloggit said:
90% of something is better than 0% of nothing.

When you thought he was going to 'develop' the idea himself you were more than happy to give him 10% of the business. Now that the business is ready to go you want to claw it back .... it sounds very much like having your cake and eating it.
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I wasn't more than happy about it, I was livid about it. The sole reason I gave him 10% is because otherwise I would have my idea stolen.

90% of something is better than 0% of nothing which is what you could have had if he had gone off and launched before you!
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Completely agree, I suppose I should at least be thankful that this didn't happen or I would probably have to check myself into the Central Mental hospital my head would be that wrecked.

Billo said:
IMHO

"This person had actually sparked my idea"


should entitle the person to something.


Maybe 10% is not enough.
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Saying 'I might make an XYZ website' is a completely general unspecific statement offering no original ideas.

If someone says 'I might make a documentary film' and then you go off and make a documentary film on a certain subject do you think you should have to hand them over a 10% stake in profits/ownership?
If someone says to you 'I might write a crime novel', and then you go off and write a crime novel yourself, do you think you should have to hand them over a 10% stake in profits/ownership?

If however they are specific about what they plan to write about in the novel, if they laid out the plot and characters of the crime novel to you and then you go off and copy the plot and characters, well then of course they are entitled to a %, a very large % imo as you have blatantly stolen their idea.
 
Billo said:
IMHO

"This person had actually sparked my idea"


should entitle the person to something.


Maybe 10% is not enough.
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You have to be kidding! I heard someone speak at a free seminar and I got an idea from something they said.
Do you think now I should look up this person - who doesn't know me - and offer them 10% or more?!
 
On a forum like this we only get one side of the story.

Very often the picture changes as more facts emerge.

Only the OP (and the other person) knows the full facts.

I think the OP should stick to the bargain.
 
Is any capital required to move this on the next phase? Could you ask the other person to provide 10% of this capital...and give them the buy-out option as an alternative?
 
If I were you I would seek advice from a solicitor. The cost of a consultation with a solicitor will be a lot less expensive than the cost of giving 10% of your company away. I would be optimistic that a solicitor will tell you that you don't have to give 10% of your company away.
 
You offered 10% to someone to stop them from competing with you. They stopped. That's their side of the bargain.
 
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