The Sunday New York Times profiles the litigation against Facebook founder Mark Zuckerberg by the founders of ConnectU, another social networking site. Mr. Zuckerberg allegedly did some work for ConnectU at prior to starting Facebook. Brothers Tyler and Cameron Winkelvoss claim Facebook as their own, while ConnectU founders (in the other sense of the term).
Unfortunately, the Brothers Winklevoss didn’t exactly put their ducks in a row at the time:
Here are the facts that are not disputed: In 2002, when the Winklevoss brothers were juniors at Harvard, they conceived what was initially called the HarvardConnection, which was to be a social network for the college. In November 2003, they asked Mr. Zuckerberg, who was studying computer science at Harvard, to develop the siteâ€™s software and database, promising to compensate him later if the venture prospered.
The brothers contend that Mr. Zuckerberg “procrastinated” about finishing up coding to “gain a competitive advantage.” The judge is not amused:
At a hearing on July 25, he scolded John F. Hornick, ConnectUâ€™s lawyer, over what the judge saw as his inability to provide documentary evidence, saying, â€œDorm-room chitchat does not make a contract.â€ He gave ConnectU two weeks to prepare a better case.
One wonders if the situation was reversed, and ConnectU wildly successful, would the Brothers Winklevoss cut Mr. Zuckerberg into the venture absent an agreement to do so?
I have seen time and time again otherwise bright entrepreneurs feel like they can do their own legal work with forms off the InterWeb. They either pick the wrong form, don’t respect it in any event, and then wonder why things don’t work out when they start to get some traction.
The worst part is when they give equity with no rhyme or reason, handing out shares like potato chips at a frat house kegger.
Lawyers who know how to counsel start-ups can be expensive. Wannabe entrepreneurs who skip this step in the process can learn that that the alternative to a few legal bills is way more expensive.
Check out ConnectU, by the way. Looks like the brothers didn’t spend much on a web designer, either.