Ask HN: Dropping cofounder from an unincorporated startup, what are my options? | Hacker News


It might prove easiest to start a new LLC on the down-low (out of state might be a nice touch) and then tell your cofounder you've just gotten an offer to acquire the IP (and acquihire you) but not the rest of the company (which you've yet to formalize as an actual company, but still.. it has problems).

That way, you can safely get a feel for how quietly they'll ride off into the sunset. Three months full-time is not nothing, and if I was in that boat, I'd expect to see something for my trouble. At this point, they can rant and scream and you can tell them oh, ok, I'll tell them no, and this way they have nothing to hold against you (other than maybe more faith in the company you're trying to push them out of).

If you appear to be stuck at that point, then make arrangements to where you're going to set up your current company as a licensing firm, where your cofounder gets X percent ownership, and arrange an opaque deal with your new LLC to pay a contingent licensing fee for the IP, maybe 10% of whatever it generates the new LLC after expenses, or whatever. Kick a few nickels through the arrangement to your cofounder and break the news after 3 years that the new entity isn't using the licensed IP anymore (which it probably isn't).

After 3 years, nobody got screwed, nobody felt like they got screwed, and you keep what you make.

Everyone tells you to hire a lawyer but the fact is, lawyers work for who pays them, which means you'll need one, and your new entity will need a separate one. They're incentivized to bill as many hours as possible (which would make things take as long as possible). As long as you do things legally, and do things intelligently, you should be able to do this without a lawyer (though getting free legal advice from a lawyer, which is actually something that exists, is something I would still recommend).