- Write, sign and notarize an agreement that the code is either duplicated or transferred to you.
- Decide who gets the data: users, you, someone.
- Sanitize servers and services by trying to overwrite data with junk values before canceling.
- Cancel monthly services and free services.
- If it was good, don't let the team relationship go to waste. Talk with whoever's left / worked-with previously about doing something else.
---- Then and only then ----
- Do "consultingish" work or solve a problem you have to find a problem worth solving.
- Sell something good people want before you invest too much time/money/mental health building something too much.
- Keep it real: building "your amazing idea" without a feedback loop gathering critical data from paying/potential customers is #fail.
- Someone though will have to step-up to be the sales/buzz builder or one will need to be found (hopefully, someone you've known for some time or a friend-of-a-friend). No useless "idea guys" allowed.
- Sales/buzz person or someone will need to be the captain of the ship ultimately in-charge of everything.
- Iterate fast, executing based on feedback and sales numbers. Prefer the best one you can get into if you can. (YC, hihi.;)
- Everyone at the beginning gets equal equity vested over 3-5 years. First employees should get ~1% equity, more if it's an employee-owned co-op.
- Don't pray for funding, sales/profit cures all.
- Raise funding only if you could definitely grow faster with more money.
- Skip accelerators unless you need a network and/or are relatively inexperienced.
- When you get big enough, incorporate (California or Delaware C-corp). If it's s consultancy, LLP or LLC. https://clerky.com
Good advice. Remember, people may not care about the code as the company is folding. But if it turns into something and money starts to flow then people's memories become foggy.
A side note here: that can be impossible on a cloudy service where your data may have moved between many nodes over its life, and difficult to guarantee in other circumstances. On future projects consider encryption at rest for all data then all you have to worry about is destroying all copies of the relevant keys. Still try a wipe at the end of course, in the name of security in depth, in case there are keys errantly floating around out there.
If you are performing a secure wipe, don't go OTT with 37 sequenced passes (if your threat model "requires" that then you have other matters to concentrate on!) don't make the final stage zeros: fill the volumes with cat pictures/videos, or if you are feeling evil use shock images instead. Give the cracker that tries to poke around something to look at!
> ... and services by trying to overwrite data with junk values before canceling
Also impossible unfortunately, though again you should try if only to show due diligence. Always assume that once your data is out there it is out there for good. Just like a delete is not often a real delete (just a soft delete where a "deleted" flag is set), an update often only affects the current value leaving it and any previous values still present in history or audit structures.
(not that I'm saying this piece of your advice is bad, I just feel it just needs a few caveats to be explicitly stated)
Yes. Do the best you can. Especially if they use something like paper_trail on Rails or other soft deletes. Maybe ask to the vendor to search/purge databases/files and overwrite free disk space manually too.
For certain types of data and with experise, it might be wise to run your own servers (colo) and encrypt the drives. After surviving to a certain scale, you'll want to save money by running hybrid bare metal+cloud anyhow. Then, you'd have control to nuke your servers (DBAN), local snapshots and encrypted backups. Hybrid infrastructure should allow pinning systems to prevent migrating to or sending snapshots to third-parties.
Aye. While guaranteeing the information is absolutely gone is often impossible, you should at least do what you can make it more difficult to retrieve or be accidentally revealed.
> and encrypt the drives
If you are using VMs then full disk encryption within the VM will work just as well, and most cloud services can offer effectively the same thing with their containers.
You just have to be very careful with key management, which in some cases may be inconvenient (blocking restart until you intervene to provide keys, if you don't want them stored on or directly accessible by the same provider) depending on how paranoid you feel the need to be. Of course if you are truly paranoid, by character or by contractual necessity, keys in memory on shared infrastructure even temporarily could be an issue at which point you need "dedicated cloud" resource or colo/self-host for the affected parts of your apps/infrastructure.
I'm a little confused because this doesn't seem to answer the question OP is asking: how to sell the code he's been left with as a part of the wind-down.
You should note that OP actually asks three questions: #1 What now #2 Should OP contact the startups #3 What to do first, while also adding they don't know what's involved in selling a resource like this.
If they wanted a detailed question of what to do AND WHY, they could pay a consultant. A consultant would go over around the same points as duelingjello, but also explain why. As an Internet forum answer, it honestly goes above and beyond.
The answer basically strips into two -- first get rid of any and all 'ball and chain' from the old company, existing customers setups and data. Then put the IP to work, making money.
The answer does skip over the general unasked question of "Can I just sell the code?" to which the answer is generally "no." You'd need an existing enterprise or source that knows the code, wants the code and can use the code, which in the modern age is just not going to happen: Startups come and go and everybody wants to make their own solution. Most engineers I know would look at "existing code" as bloat or a hindrance in general, and would look at it as "a sales team problem." If anything, you'll get peanuts for selling the actual code itself.
Building a new enterprise that has a technical team to handle the code and a sales team to sell the code, potentially with an existing customer base sounds like a much better plan. Does it involve risks? Yes. Does it still answer OP's question of wat do? Absolutely.
Sad to say it, but a bunch of code from a failed startup is probably nearly valueless without context. I think that motivates an answer based on extracting value from it combined with the context on it that a founder has.
It costs $500/yr to run an LLC (Incorporation/renewal fee, registered agent, and a P.O. Box), unless you have no assets and don’t plan to have any assets in the next 2 years then I would strongly recommend incorporating before you have any sort of liability.
All it takes is one oops at a client to have a $1m judgement hanging over your head. LLC (in your state, don’t get fancy) sooner than later. Business insurance is typically another $500-800/yr for software startups, but I wouldn’t recommend that until you have something to protect (like money in the bank)
Your advice to register an LLC is very good. I’ll add:
1) Costs are very state specific. And if you register in the state you live in you can act as your own registered agent and eliminate a lot of the yearly fees. In my state I can register directly for $90 with the Department of State (of my state, not federal) and there are no recurring fees.
2) Follow the rules by keeping all finances separate or you might as well not have registered the LLC.
Do not skimp on your llc. I said $500 to protect yourself. You can go the cheap route but then your name is associated with your business and scams come out the woodworks. Plus it’s hella unprofessional and You may miss out on contracts because you don’t meet their vendor reqs
You also need to maintain out-of-state business registration in the state you reside. I would not get fancy until you can afford a CPA to ensure this is all up to date
Unless you’ve studied it, you might be surprised to learn that as a principal an LLC is not offering you the kind of protection you imagine. It basically protects investors. IANAL but was surprised myself when one explained it to me.
Maybe you misunderstood? The LL in LLC stands for limited liability after all. Other than your capital contribution, and assuming no fraud or incompetence, there will be personal liability protection.
I don't know about LLC but in Germany there is something very similar called GmbH. Which does provide you with limited liability for many _but not all aspects_. So always consult a lawyer with specialization in that area about liabilities not covered.
I have heard about startups which founders did run into some of the non covered liabilities leaving them with a large amount of dept which they could have partially avoided as far as I heard.
The core of this is financial liability. Whether that is extremely helpful, or just somewhat helpful depends on the context. I can't think of many cases where you wouldn't want to have an LLC, or Limited Company (UK), or whatever the equivalent is.
Creating one can help enforce some separation too: different bank accounts, different AWS accounts, etc. This feels pretty good, unless the company is some tax dodge which also places increased transparency on some things.
Whatever someone does, they can make a fair attempt at running their business professionally and it will limit significant risk and liability. This means taking boring paperwork and bureaucracy seriously. It means recognizing mistakes and fixing them before they get serious. Good companies don't generally get sued and lose. You can also seek outside advice so that you make better decisions. When you take reasonable measures these will get recognized when you are in a situation.
Ok, I’ll google it for you. But I do encourage you to talk to your attorney so you can pay for her bad news like I did.
“ Personal Liability for Your Own Actions
There is one extremely significant exception to the limited liability provided by LLCs. This exception exists in all states. If you form an LLC, you will remain personally liable for any wrongdoing you commit during the course of your LLC business. For example, LLC owners can be held personally liable if they:
personally and directly injure someone during the course of business due to their negligence
fail to deposit taxes withheld from employees' wages
intentionally do something fraudulent, illegal, or reckless during the course of business that causes harm to the company or to someone else, or
treat the LLC as an extension of their personal affairs, rather than as a separate legal entity.
Thus, forming an LLC will not protect you against personal liability for your own negligence, malpractice, or other personal wrongdoing that you commit related to your business. If both you and your LLC are found liable for an act you commit, then the LLC’s assets and your personal assets could be taken by creditors to satisfy the judgment. This is why LLCs and their owners should always have liability insurance.”
That makes sense though, and is what I always thought. Proctects you as an honest and competent employee of the company from liability, assuming you're acting in good faith, from the actions of the company. Why on Earth would anyone think it's a blank check for any behavior?
This is not just about breaking the law. Being negligent can cause personal liability. This is the kind of liability people often think the “LL” protects them from.
Piercing the corporate veil is a thing, though. I don’t know the details as I’m neither a lawyer nor a company owner, but my understanding is that you have to keep your and your company’s assets and activities completely separate, which requires a level of discipline that many people don’t have.
Similarly, as a single-person company, any action that could cause liability was presumably performed by you, personally. That makes it much easier for a litigant to sue you personally instead of/in addition to your company.
If none of the more complicated strucures will provide the liability protection that you're going to need, there's also the possibility of doing business as a sole proprietor/DBA. You get no protections at all, but the reporting requirements are much reduced (in some cases, just filing a 1040).
> First employees should get ~1% equity, more if it's an employee-owned co-op.
I would be interested if anyone knows more about how the co-op idea would work, also assuming you took investment. Would a corporation be formed as well as a co-op, and the co-op would be a shareholder in the corporation?
As far as I know, if your company has 10 employees, everyone owns 1/10 of the company. If you hire someone else, everyone, even the new person, owns 1/11 of the company.
The idea is: shares aren't devided by capital, but by heads.
But you can usually add some clauses to the contracts, that people have to work for some kind of period, before they are considered "comrades".
- Decide who gets the data: users, you, someone.
- Sanitize servers and services by trying to overwrite data with junk values before canceling.
- Cancel monthly services and free services.
- If it was good, don't let the team relationship go to waste. Talk with whoever's left / worked-with previously about doing something else.
---- Then and only then ----
- Do "consultingish" work or solve a problem you have to find a problem worth solving.
- Sell something good people want before you invest too much time/money/mental health building something too much.
- Keep it real: building "your amazing idea" without a feedback loop gathering critical data from paying/potential customers is #fail.
- Someone though will have to step-up to be the sales/buzz builder or one will need to be found (hopefully, someone you've known for some time or a friend-of-a-friend). No useless "idea guys" allowed.
- Sales/buzz person or someone will need to be the captain of the ship ultimately in-charge of everything.
- Iterate fast, executing based on feedback and sales numbers. Prefer the best one you can get into if you can. (YC, hihi.;)
- Everyone at the beginning gets equal equity vested over 3-5 years. First employees should get ~1% equity, more if it's an employee-owned co-op.
- Don't pray for funding, sales/profit cures all.
- Raise funding only if you could definitely grow faster with more money.
- Skip accelerators unless you need a network and/or are relatively inexperienced.
- When you get big enough, incorporate (California or Delaware C-corp). If it's s consultancy, LLP or LLC. https://clerky.com