[Tips] Never sell half of your company for $1,000

Started by Xhanch Studio, April 13, 2011, 12:48:34 AM

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Xhanch Studio

April 13, 2011, 12:48:34 AM Last Edit: April 13, 2011, 10:07:23 AM by Xhanch Studio
This knowledge should be learned from Facebook - Ceglia lawsuit or you may regret your action/decision in the future.

Paul Ceglia may just be a con man, or he may turn out to be the greatest tech investor who ever lived.

After all, anyone who invested early in Facebook looks like a genius today. Peter Thiel turned his initial $500,000 investment in Facebook into a 10 percent stake that would be worth at least $5 billion today at the latest $50 billion private valuation. Facebook investor Jim Breyer of Accel Partners tops Forbesââ,¬â,,¢ Midas List. And now we have Paul Ceglia, a convicted felon who claims that Mark Zuckerberg sold him half of Facebook in 2003 for $1,000, and he has the contract and emails to prove it. He later put in another $1,000 for a total investment of $2,000, but if he gets anywhere close to what heââ,¬â,,¢s asking for (half of Zuckerbergââ,¬â,,¢s share, which could be worth as much as $10 billion), he could go down as the best tech investor in history.

The purported emails, which Facebook says are fake, look pretty damning. They paint a picture of a young Zuckerberg playing Ceglia for some extra cash to help develop Facebook when it was only a dorm room project (Zuckerberg was doing work for hire for another Ceglia project, and got him to fund development of Facebook as well, at least according to Cegliaââ,¬â,,¢s latest complaint). Facebook will either end up fighting this in court or settling with Ceglia for a princely sum just to take the risk of the lawsuit off the table.

Whatever happens, this incident holds several lessons for any would-be entrepreneur or engineer. In the video below, angel investor and Hunch co-founder Chris Dixon and I discuss what every founder needs to know before they give away any part of their company. The decisions made in the first 6 month usually end up being the most important. The biggest takeaway from this incident: Donââ,¬â,,¢t ever sell half your company for $1,000.

You may want to read more about Facebook- Ceglia lawsuit here
Best Regards,
Susanto B.Sc
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