Does the TV show Silicon Valley accurately depict partnerships???

[sotomo]

Does the TV show Silicon Valley accurately depict the way startups are incubated???

This is a silly way of phrasing my question, but it gets straight to the point. I have started work on a website (not yet deployed). At some point, after it's finished of course, I believe that I'll get over 100 orders per day, exceeding my capacity. Part of the problem is, the business will involve both selling products and designing the site. I'd like to work on it a few years, then sell it for a few million. But to get it up to max capacity, I'll need help, and I'd prefer they were other software developers.

So, back to my question, in the TV show silicon valley, software developers have verbal agreements with one another to own a certain percentage of the company. The founder (like me) would keep over 50 percent while the other team members would divide up their shares. But we all work equally hard on maximizing the business prior to selling and cashing out.

Is this model real?

 

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[Scot]

If it is, it's not something I've heard of.

First off, any business in Silicon Valley and dealing with VC will have very strict and intensive written contracts. VC's always want to protect their interests.

As far as giving away 50% equity.. why? Why would you want to give away half of your business right out of the gate?

Strategic partnerships are great, but I'm not sure it's necessary to give up half your business to do it.

 

[MidwestLandlord]

work equally hard

^^^ my reaction when a business partner says they work as hard as I do (I've had multiple business partners)

 

[c4n]

At some point, after it's finished of course, I believe that I'll get over 100 orders per day, exceeding my capacity.

You are doing mental mastu..., khmm, gymnastics. Get the sales first, then worry about exceeding your capacity.

 

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[Scot]

View attachment 16009

^^^ my reaction when a business partner says they work as hard as I do (I've had multiple business partners)

I honestly didn't even catch that part but yeah, agreed. Partners never work as hard as you if it's your business.

 

[TheRegalMachine]

The show is a dramatization of start-ups in Silicon Valley.
The show skips the true process which is boring as shit.
As for verbal agreements and the like that's Hollywood fluff.
No one (smart) would do that in real life.
You're a$$ better get an ironclad lawyer approved contract that's mostly beneficial to you.
As for the "founder" get the larger cut (someone correct me if I'm wrong) isn't common because most people making business deals are money hungry novices and will get into an uneven deal.
I hate to use it as an example because it's an entertainment show but look at the ham and eggers on Shark Tank. Some of them give a large chunk of their equity away, some have already given equity away to other parties only to divided it up more.
And I will reiterate what others have stated, someone on your team isn't a hard worker. Depending on how many people are on the team they can easily blend in and look like they're putting in work. I pray you aren't that member though.

 

[Brian C.]

Please forgive me if I'm thinking too simply, but isn't this just the founder giving up equity for services rendered?

As in, giving up equity to bring in additional employees?

The reason the "contract" is verbal in Silicon is probably due to a future plot twist of Pied Piper employees fighting over their percentage of a billion dollar company and everything that comes with the territory.

Who'd be stupid enough to not get something like that in writing?

 

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[TheRegalMachine]

As in, giving up equity to bring in additional employees?

Equity has many definition depending on subject matter. In the show Silicon Valley they are dealing with venture capital companies and private investors. When Piped Piper was young and showed promise they were seeking investors to help them finance the final product. When they gain some value as being cutting edge and breaking new ground they started to deal with venture capital companies. Both private investors and VCs are pretty much giving them money on the premise that their promising product will do well to the point where the investors/VCs will gain a profit. The only reason to give employees or partners equity is if they are valuable assets to the team. An ace programmer, a good mouthpiece (marketing man), et cetera. You do that because they were either there from the start, you need them desperately to start, and/or they're working on spec because you all hope the thing you're doing works out.
So your description is close. Some investors can be hands on and aid in advancing a company and some just want you to give them their ROI.

Who'd be stupid enough to not get something like that in writing?

Like I said people who don't know any better and get intoxicated by a lot of zeros. Many people believe that verbal contracts are a good idea and 100% legal. They are but there is so much risk involved and gray area you still end up with more trouble than you needed.