Intellectual Property, e-Books, Contracts & a Lot of Rambling Thoughts

November 22, 2010

One of my clients wants me to join their company. I can't talk about the company specifically, due to a non-disclosure agreement (NDA), but I've done some work for pay for them that I'm just wrapping up. They want me to do more and rather than pay me, they're offering me equity in the company. I'm thinking about it. Sort of.

See, they offered me this at the beginning and I said no and they hired me to do the work pretty much at my going-rate and I did. Now they want more, plus they want me to come in as the executive editor. The company has a lot of potential. If anything, I think they're underestimating the market size (and overestimating their growth schedule). So it's possible if I went along with this that I could make a big chunk of money somewhere in the future.

But I'd have to do about 13 months of work without pay before any equity is likely. And I spent most of the weekend stewing over their contract. I finally highlighted all the issues I have problems with, their timetable, rewrote some clauses, add in a couple clauses, and sent it back to them telling them to look at it and get back with me. I'm not sure what'll happen, but I'm fairly certain they won't go for it. And by the same token, I won't go for the contract they offered.

One of the lines I have problems with is this: As an independent contractor, CONSULTANT agrees to provide maximum and satisfactory services and without limit of time and technology and determined by XXX.

There are other issues, primarily around their non-compete clause and their Intellectual Property clauses. The "and without limit of time" bothered me a lot because they put an estimate on the workload, then throw in "and without limit of time" which suggests that if their estimate is low (it is, very, in my opinion), I'm pretty much stuck doing the work on their timetable even if I don't make any money on it until the end of the year (if then).

These sorts of deals come up from time to time and for the most part I say "no thanks" and this time I tried to be open-minded. I also asked myself--if I turn this down and the company goes on to be enormously successful and you could have found yourself making $200,000/year or more but didn't, will you be kicking yourself for the rest of your life?

The answer is: maybe not.

It's not all about money. I ran into this problem a couple years ago when I took a gig that paid really well, but which made me feel like a wage slave, so I quit. It took me a long time to get to the point where I am now and I'm quite happy with it, for the most part. There are issues of control and ownership and flexibility. Any self-employed person, especially if they're running a company, is probably going to face the "sole contractor" versus "growth" issue, in which you realize you might have to hire somebody. Some people want to do that. I do not. And I'm old enough to know it. And I value my flexibility and the possibility that I can turn down jobs I don't like--which may be another issue I have with this. I also value that I can take a job I'm so-so about but pays well with the knowledge that I do it for a few weeks or few months, then I cash the check and go my separate ways. Putting a price tag on that option is tough, boys and girls, really, really tough. There's a termination clause that's very reasonable, but nonetheless, the concept behind this is that you buy in and stay in doing this job.

Another real pitfall is that the Intellectual Property aspects of the contract, which are quite typical and reasonable from the POV of the company, are, from my perspective, a potential straightjacket that could prevent me from making a living doing what I do (which is why they hired me in the first place, my expertise) until the company makes money. This freaks out my wife even more than it bothers me, and it bothers me a lot. Their IP clauses are very broad. I imagine they'll say, "But that won't happen," but I try to interpret contracts by how they MIGHT be interpreted by unreasonable people, not by how they MIGHT be interpreted by reasonable people.

Which is where I originally was going to start writing today, discussing IP and e-books and contracts, but I think I'll end this today and continue my discussion of IP and e-books and contracts tomorrow.

Thoughts?