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Fundable comes to an ugly end

fundable.com

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Re: Fundable comes to an ugly end

#21

Post by ars »

megaduck wrote: post #9

As my cofounder and I are currently finalizing our own incorporation, I look at Fundable's sad situation and think, "Wow. What if that were us? Is there any way we can avoid ever having that kind of situation with a clever bit of legalese?" Unfortunately, I suspect the answer is "no". As soon as you give one partner the ability to eject the other (for whatever reason), you open the door for all sorts of abuse. Beside…

I think you have two ways of dealing with it:

51/49 split, or have 3 partners.

Both methods ensure you never end up with a stalemate.

Re: Fundable comes to an ugly end

#22

Post by brianobush »

wheels wrote: post #6

I have to really ask, "Why is this upvoted so much?" There aren't really lessons in here; it's just bitter drama.

Lesson: in the articles of incorporations, spell out the arbitration process and include clauses that prevent out of control behavior - like automatic forfeiture of company stock.

Re: Fundable comes to an ugly end

#23

Post by sachinag »

tptacek wrote: post #17
patio11 wrote: post #14

I am having a total mental block trying to recall the name of the "Donate people money through Twitter" service that was on HN a few times, but I think this is what he meant when he said "Do not take payments lightly." [Edited to add: Tipjoy. I knew it was T-something but I ran through about 15 combinations of Twit-X before realizing that it was not from that naming convention.]

They were a YC company, weren't they? Ivan and Abby?

They were. Ivan's now at Facebook, where everyone assumes he's working on Facebook Payments. Abby's probably doing something even cooler, although IDK.

BTW, Tipjoy never held the money; they were just a front-end for PayPal, so they didn't have the issues that Fundable apparently is having.

Re: Fundable comes to an ugly end

#24

Post by hristov »

WesleyJohnson wrote: post #7

I'm curious if anyone has experience with something like this or know of other situations where a joint venture was owned 50/50 and one side allegedly decided to take their ball and go home? Is there legal recourse either side can take to reclaim ownership and move on?

There may be legal recourse but the legal system moves so slowly that in Internet time you are pretty much screwed. So in the beginning stages it may be a good idea to keep copies of all software, data, etc. close just in case one gets locked out of the servers.

I know of this one company that decided to move their servers out of a collocation facility. The collocation facility hated to lose a good customer so they just locked the company out, disconnected the servers and did not let the company get to them. But they helpfully offered to reconnect the servers if only the company would sign another long term contract. The litigation took many years, so the data on the servers was pretty much lost for all practical purposes.

So yeah ... keep backups and keep them where you can get to them if the s hits the fan.

Regarding the domain name ... I suppose one person needs to have control of that, no way around that. Well, it is possible to set up a trust where an impartial party (such as an attorney or a professional trustee) controls the domain name according to a previous agreement between the founders, but if you have to resort to this, there is probably not enough trust to do a startup.

Re: Fundable comes to an ugly end

#25

Post by jws »

ars wrote: post #21
megaduck wrote: post #9

As my cofounder and I are currently finalizing our own incorporation, I look at Fundable's sad situation and think, "Wow. What if that were us? Is there any way we can avoid ever having that kind of situation with a clever bit of legalese?" Unfortunately, I suspect the answer is "no". As soon as you give one partner the ability to eject the other (for whatever reason), you open the door for all sorts of abuse. Beside…

I think you have two ways of dealing with it: 51/49 split, or have 3 partners. Both methods ensure you never end up with a stalemate.

You can always fall back on a shotgun clause for a cleaner ultimate solution. http://en.wikipedia.org/wiki/Shotgun_clause

Re: Fundable comes to an ugly end

#26

Post by wmf »

megaduck wrote: post #9

As my cofounder and I are currently finalizing our own incorporation, I look at Fundable's sad situation and think, "Wow. What if that were us? Is there any way we can avoid ever having that kind of situation with a clever bit of legalese?" Unfortunately, I suspect the answer is "no". As soon as you give one partner the ability to eject the other (for whatever reason), you open the door for all sorts of abuse. Beside…

http://en.wikipedia.org/wiki/Shotgun_clause

Re: Fundable comes to an ugly end

#27

Post by megaduck »

wmf wrote: post #26
megaduck wrote: post #9

As my cofounder and I are currently finalizing our own incorporation, I look at Fundable's sad situation and think, "Wow. What if that were us? Is there any way we can avoid ever having that kind of situation with a clever bit of legalese?" Unfortunately, I suspect the answer is "no". As soon as you give one partner the ability to eject the other (for whatever reason), you open the door for all sorts of abuse. Beside…

http://en.wikipedia.org/wiki/Shotgun_clause

A shotgun clause is probably the best method out of a bad lot, but it still has the potential for abuse.

If a partner is going through financial difficulty (outside of the company), then the partner with a better financial position can force a sale at a depressed valuation.

Say my mother has a massive stroke and requires expensive ongoing medical care. After a while, I'm financially drained. At that point, my partner can trigger the shotgun clause at an amount larger than my ability to scrape up cash, and wham I'm out. Out with a small payout, but out regardless.

There isn't a silver bullet to these kinds of issues. At the end of the day, people are involved, and people are complicated and difficult.

Re: Fundable comes to an ugly end

#28

Post by vaksel »

ivankirigin wrote: post #18

seek legal action against Louis Helm personally should he fail to resolve your payment issues promptly Well, IANAL, but I don't think that is how it works. The corporation is liable for funds it holds on your behalf. Boy would I be worried if I were Pratt.

they are incorporated, so he himself isn't liable, the corporation's assets may be seized, but he should be fine

Re: Fundable comes to an ugly end

#30

Post by patio11 »

sachinag wrote: post #23
tptacek wrote: post #17

Earlier quoted context omitted.

They were a YC company, weren't they? Ivan and Abby?

They were. Ivan's now at Facebook, where everyone assumes he's working on Facebook Payments. Abby's probably doing something even cooler, although IDK. BTW, Tipjoy never held the money; they were just a front-end for PayPal, so they didn't have the issues that Fundable apparently is having.

Tipjoy never held the money

That does not match with my understanding of their business model.

http://tipjoy.com/faq

Look for their instructions on, e.g., cashing out.

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