Hollywood producers need to spend more time with startups. The swashbuckling stories of how entrepreneurs turn ideas into companies are a complex mix of drama and comedy. In some cases, the stories are so surreal that one could easily confuse them for a movie script. One example that we can all learn from is the case of Paul Ceglia and a startup you may have heard of: Facebook.
Paul Ceglia and Facebook are currently engaged in litigation regarding an alleged agreement between Paul and Facebook’s founder Mark Zuckerberg. Ceglia claims that he is entitled to 50 percent of Zuckerberg’s equity in Facebook—a claim valued at $10 billion.He states it is due to an arrangement whereby Zuckerberg accepted $1,000 to invest in his project known as “The Facebook” while simultaneously programming another website for Ceglia. This investment entitled him to 50 percent plus additional equity as a penalty for late delivery on the other website. Ceglia claims that Zuckerberg simply blew him off when Facebook began to show signs of success. Zuckerberg admits that he had an agreement to develop the website StreetFax for Ceglia, but states that the part about Facebook is a fabrication.
At first many dismissed Ceglia as a scam artist given his felony conviction for fraud, his delay in presenting his claim and the overall incredulity of the situation. Today, though, fewer people are laughing. DLA Piper, a respected law firm with over 70 offices and 3,500 attorneys, now represents Ceglia. A series of purported e-mail exchanges between Zuckerberg and Ceglia also support Ceglia’s claims (assuming the e-mails are real).
Facebook has a problem whether these claims are real or not. For small business owners, there are several key lessons from these experiences that should be taken to heart.
Assume you’ll be successful beyond your wildest dreams
Companies like Facebook or Google or Microsoft don’t come around too often. Most startups end in failure and the founder’s cash out “life lessons” instead of billions. But what if your company does become a multi-billion dollar success? Or what if it becomes a small success worth “only” $10 million? Are the decisions you are making today with respect to ownership going to hurt you? Are you giving too much away because you aren’t valuing the potential of your project correctly? Think carefully about what decisions you would make differently if you know for a fact that your company would be successful.
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Be careful what you put in e-mail
Despite the countless times that executives have been embarrassed by a careless e-mail, it still keeps happening. Once you hit the send button, you have absolutely no control over what happens to that e-mail. E-mail has been around for decades. It’s not a new tool. Yet I still receive inappropriate e-mails sent from work addresses from people that should know better. And people still send e-mails when they are very upset or very tired. Don’t do it! You’ll regret it later.
If something changes, adapt immediately
When Facebook began to gain traction in the marketplace, it was clear to the founders that they were on to something. Before that moment they didn’t have a credible reason to believe it was going to be successful. But once they had proof, things changed. At that point, it was time to adapt their strategy to the new reality. Side projects, poorly-worded agreements and outside commitments are all things that should have been handled in this new context.
Tie up loose ends
When companies are growing quickly, there are extreme time pressures placed on the founders. It is nearly impossible to get everything done. Many tasks are delegated, but some are simply forgotten and abandoned. Never let this happen with regards to ownership or potential rights or claims associated with your product or company. It’s just too important. If the e-mail exchanges between Ceglia and Zuckerberg are authentic, they show an attempt to settle matters, but before reaching an agreement they just stop communicating.
This case will not be decided for some time. With literally $10 billion in the middle, the stakes couldn’t be higher.