Evolution of Negotiation, Phase 3

From: Dana

Cc: Adi

To: Tom

Hey Tom! Have you got a chance to talk to people regarding our proposition? We want to finalize it today or tomorrow tops as I'm leaving to Israel on Friday and I want the agreement to be signed by then. Let me know know if we can skype today.

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From: Tom

To: Adi, Dana

We can skype tonight

6.45 Geneva time

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From: Dana

Cc: Adi

To: Tom

Following our last Skype conversation, the last proposition (equity + options + salary) was constructed in order to meet the concerns that we discussed in the last few days. Take time to review it and let’s talk tomorrow to finalise it so we can all move forward either as a team or separately.

Best,

Dana

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From: Tom

To: Dana, Adi

Hi Dana, Hi Adi,

I asked my brother in Miami about his opinion. You can see below his response.

I believe that what he says is right and fair for the all of us, and that we should follow the path that he suggests as we have to be realistic: today we have nothing, everything has to be created. We still have a long way to make a success of it together.

I'm waiting for your comments (if any),

Tom

---------- Forwarded message ----------

From: Tom's brother (apparently the Belgian version of Eric Ries)

To: Tom

My thoughts:

1. Today their company is not a company but just a project/idea.

2. Today their project has no value because there is no entity created, not even a product to show as a concept/demo.

3. Because they seek you to build the first version alpha/beta/whatever they might call it, the fact is that there is nothing today and you will be the one creating the foundation of the system.

Therefore you are here from day 1 and are indeed part of the founders. If they had already a system running of some type, it would have been a different story, but the fact is that today there is nothing.

4. Because there is nothing that currently exist, until that you complete your initial work to have the first version of the system, you will be the one doing most of the work, if not all.

It is clear that until that there is an initial functional version of the system, that the others can do only very little as they have nothing to show.

5. None of the 3 options they offer is neither good or interesting.

A. What they offer you in all cases has currently no value.

Offering you 1% of nothing today is still worth nothing.

Offering you the extra 4% over a period of years is still worth nothing because in between you will have to provide a tremendous amount of work compared to what you get on the other side.

Even if you would be getting 5% today, it would still have no value. Unless it was 5% of a company well grown with existing revenues that would bring immediate substantial cash, it would have been a different conversation, but the way is still long until that point.

B. It is clear that even if they give you 5 or 15% of their idea that you still can do nothing with this.

They will always have the power over you because they have more shares combined.

The fact that they have more shares is not a problem if there is a real trust put in place, but the way this current offer look like is typical of “greedy israeli” style.

C. The offer already state that you MUST move to Tel Aviv to get more shares, etc.

How can they decide from this now? Maybe you will all realise along the way that it is better to be located somewhere else?

There is a difference between the place where the company is incorporated and where you are physically located as a private.

I know for example a guy who is travelling during the week to the UK and during the weekends he is in Israel. Such cases are very frequent.

It is clear that if you all decide to move forward that you will all do your best for the success of the venture.

What I would have done:

There are 3 people trying to create something from scratch? great!

So 3 founders, means 3 people with equal equity. 1/3 of shares each.

Not all ideas can come from the same person; so saying the idea was hers as an argument is not sufficient because she potentially needs you to make it happen.

Now as per the cash money - because you will be the one providing the most of the work until the launch and following the launch - if they are ready to put some cash on the table, even if it is not tens of thousands of pounds, you should agree on a reasonable amount that you would also be willing to pay as a salary or expense reimbursement if you were in their position during e.g. X months until that something happens.

I have done that a few times, it was fair and worked great.

If they have no cash to offer, then you need to decide wether you really want to invest several weeks or month of your time, knowing that they do not commit themselves to nothing.

As until that there is a platform that is launched and that they bring real traffic, the only way to really test their commitment is to see if they are willing to spend some money.

Finally, you guys need to decide who is going to cover the costs involved until that the joint venture starts to make money.

As you will all be founders, once the joint venture starts to make money, you should be all 3 first paying all the costs that may include servers, employees, etc. and then share between you 3 the remaining money.

Kind Regards,

Douchebag

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From: Dana

Cc: Adi

To: Tom

So what exactly is your offer?

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From: Tom

To: Adi, Dana

The same as he is suggesting in the second part of his email.

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From: Dana

Cc: Adi

To: Tom

So just to be clear, you wanted at the beginning 25% and now you want 33%? #areyouforreal

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From: Dana

Cc: Adi

To: Tom

#Anyways just to make it clear, unlike you we went and consulted people from the top of the industry and not only our family members (twice). And just so that you know, the last "greedy" proposition came from Itxaso who knows both you and I and she said this was a really fair deal for both sides and it even took her time to convince me that it actually was.

No worries I think it's best for us to go in seperate ways, but no offense and there is nothing personal, the only one who turned out to be unprofessional and greedy was you.

Best of luck with everything xxx

Adi & Dana

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From: Tom

To: Adi, Dana

I don’t see why family members would less valuable. Especially as they are in the industry, it makes them twice more valuable.

You seem to be offended, while there are no reasons.

I have been extremely professional: I have always replied very quickly, respectful, and didn’t break any deal as this was the negotiation to get the deal. Not finding an agreement is not the end of the world, it is part of the game. That doesn’t make anyone a better or worse person, it just happens.

Good luck with your project :-)

Song to set the mood

Gold Digger- Kanye West & Jamie Foxx


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