Ask HN: Lost – Please Help (Side Project)
I'm a regular user here that's currently (somewhat) happily employed.
I also have a side project that makes between $800 and $2000 / month (varies by season), and I've been talking with a company about a possible acquisition of this, and hiring me. We are decently far along in the process.
I'm completely lost on what to expect / what makes sense / what to watch out for (I don't live in any big 'tech' areas, and feel a little out of touch). Have any of you been through something similar, and have any pointers? I can discuss privately if you need more details (see my email in my profile).
edit: Hacker News is throttling my replies - they're coming, just slowly...
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I've been talking with a company about a possible acquisition of this, and hiring me ...
Okay, your description is short on details, but it looks as though you have an intellectual property or "idea" (a) and some personal skills (b).
The people you're negotiating with may be trying to get (a) by offering (b). It works like this -- if they hire you, any ideas you have past that point belong to them. All they need to do is claim that you had your idea (or substantially developed it) after you were hired as their employee. And as their employee, any ideas you have belong to them (a common condition of employment).
I'm not saying this is the only possibility, but it is certainly on a list of possibilities. So ... be careful about giving away your ideas in exchange for employment. Good luck.
I honestly would recommend some insightful reading over some PG's essays, they are priceless (http://www.paulgraham.com/articles.html ↗). Here are some that are related to your case and might be helpful:
http://www.paulgraham.com/love.html ↗
http://www.paulgraham.com/investors.html ↗
Would you be happy with the bonus that they're offering you to give up the project completely and walk away from the project AND a job.
There's always the possibility that you don't like working for these people or it doesn't work out.
Also, I think you should talk to an accountant/lawyer about whether you want to be paid for the product as a bonus or as a separate sale for the IP. If they want to pay you for it as a bonus, there may be seriously negative tax implications for you...but if you sell it you want to make sure to shield yourself from liability.
Suppose the product revenue is $10k/year with negligible time spent by you on support. (Deduct the cost of time you spent from the $10k.)
If you value 20x earnings, that's a valuation of $200k for your project.
Since the employment is (presumably) at-will, just value the cost of selling the side-project. If you want, factor in the value of any raise you get by switching jobs.
They could hire you, take the project, then fire you. What would you do?
Look over any contracts. The words in contracts are actually important and they are not EULAs to skip over.
Estimate what the worse case is worth for you.
Thanks for all of the great comments - I'm still going through and replying to them.
Another thing to keep in mind:
I've spoken vaguely about the site, and how it works, but nothing specific. They'd like me to come down, and discuss what I'd be doing, and go through some of the code behind the site. Is there any way to protect myself from them just copying my idea, and stopping talking to me? I signed an NDA, but that just protects each of us from discussing how the other's business works with people outside their business. Is there any way to protect myself from this?
I pretty much asked them this exact question, and they basically said 'they talk with a lot of companies, and if they did so, word would get out, and no-one would talk to them', which is true.