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Me and my colleague friend were working on a development (coding) idea for quite a while. We explored tools, possible services and created several prototypes of our idea.

Eventually we became confident that from hobby this can become a professional occupation for us and the product is something interesting for companies. Our current jobs in the same company have nothing to do with that idea we developed. But the company itself falls into the niche of those who definitely would be interested.

So we approached high management people from departments which might need this and they all loved our product and want to start working on it.

But - we are facing now a dilemma:

  1. We ask to change our job responsibilities, assign us to that project and we work full time to develop this product for the company we are employed by.

  2. Make our own startup company and offer our services as an external party. This might require us quitting our current jobs though.

  3. Keep our jobs as they are and work on this as an extra project.

So. #3 - is impossible. We just wont' have capacity\resources to cope with both lines of work.

Number 1 Has all the securities of having a job, being employed, having the big company already backing you up and so on. But we worry that this project then fully belongs to that company. And in general the decisions can be made later against our will and we won't have any weight to say anything rather than to just follow.

Number 2 Has all the fears of leaving the stability and betting on your product and idea. But this makes you keep the ownership of your IP.

We can't at this point imagine any other structure.

Are there?

Did anyone do anything like this?

What would be the best approach?

closed as too broad by Jim G., Dawny33, gnat, Philipp, The Wandering Dev Manager Jun 25 '16 at 16:13

Please edit the question to limit it to a specific problem with enough detail to identify an adequate answer. Avoid asking multiple distinct questions at once. See the How to Ask page for help clarifying this question. If this question can be reworded to fit the rules in the help center, please edit the question.

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    Since you already presented the idea to high management, you may have already selected Choice #1. A lawyer could tell you for sure. – Dan Pichelman Jun 24 '16 at 15:43
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    Have to agree with @DanPichelman. SInce you are "coders" and this brainchild of yours is coding related, company may come out of the woodwork, after you decide to quit and setup your own startup, saying you developed it, using company resources and time. Right now, you don't really seem to have a Number 2 plan neither. – MelBurslan Jun 24 '16 at 16:06
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    @teego1967 Your optimism is infectious :) If you make enough money as a startup and become profitable enough to cover the lawyer expenses, believe me, not only your employer, but people you briefly discussed this product with, who gave you a brief idea or two, will come after you. Of course 98 out of 100 startups close doors but if you are in the lucky 2%, you may not be so lucky with this situation in your past. – MelBurslan Jun 24 '16 at 16:44
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    @GeekSince1982: computers are not the only resources. Since you both work for the same company, the position of the company might be, you discussed this during business hours, made plans, wrote code on notepad, saved it to USB drive to test it when you get home, etc. are the things the company might come after you for. Unless the industry is totally different, which is NOT in your case, it is very hard to prove separation of company work and extracurricular work. Especially considering you thought the company might be interested in your developed product. Sorry... – MelBurslan Jun 24 '16 at 16:52
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    A "startup" within a company doesn't make sense. What you want is your own product, and to convince your company to pay you to develop it. After it is done, they will own all of it. That is what you should sell them on. – Brandin Jun 24 '16 at 19:36
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First we need more background on your product and how it relates to your company.

Second we need to know if there was any work done on this project that used company resources, used snippets of company code/ideas/technology, or company time. My gut tells me this is a FAT YES.

Third is you need to assess your relationship with your management. And I am not sure you will be accurate enough.


Since this idea benefits your current company and you have half assed everything so far (haven't separated work from work, brought it up to company too soon with no clear plan, and so on) the best option would be to write up a contract to work for the company like this:

  1. You will solely be working on new product
  2. You will retain a percentage of the rights of the new product.
  3. You will get a percentage of the net proceeds of the new product.

This doesn't have to happen right away but could be a slow transition.

Really the only other option that you have is to quit and solely work on the new product. Know that your employer then may sue your company at some point in time. Also know that your employer will scare potential investors and loaners.

I am not saying breaking away is a bad idea. I am saying it has inherent risks. Do you think your employer is cool with two employees starting a competing business, and those two employees used company time and knowledge to do this? Do you think your employer doesn't have 20 times that legal staff and budget to snow you under? Just saying. This is worst case scenario. They will loop you into so much legal melancholy that no one will want to touch you with a 20 foot pole. If going down this road you are best to live poor as possible until you have a completely finished product.

If I were younger and could live for 6 months without work/pay I would go this route if it were a million dollar idea. One of the first things I would think about doing is talking to employer and offering it to them for free for a period of time (5 years) given they don't sue/ask for money.

If I wanted to mitigate risk and liked employer I would think seriously about signing a contract with them. Note that at first the employer has a lot of the risks - they are paying for building, staff, and all of the little extras that you aren't thinking of. Until your "product" hits a certain level I would think the company would get at least half the profits. Also note that if your company has a good reputation their name being on your product and your product bundled with yours could save you tons on sales/marketing. You have a million things to think about before you make a million.

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Whatever intellectual property rights you may have signed away with your employment contract notwithstanding, the choice between 1 and 2 is less a business decision and more of a personal one. Do you have the savings to go 3 months without a paycheck? 6 months? A year? Are you willing to risk that safety net for the chance at greater success? Do your partners have the same ambitions?

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Check your contract carefully, you may well have signed away all rights to anything you do already. Your biggest mistake was taking it to higher management, they are now aware that you have a product, and that you've been developing it while working for the company. So there are potential ownership issues. If you hadn't mentioned it to them, then it's all murky and harder for anyone to make trouble.

Your second biggest mistake was not having a finished product before talking about it. I left a job and a week later was negotiating with my former employees to sell them a product. Did I make it in a week? I'm not saying. Point is I never talked about the idea until it was actually for sale.

So in this case you've stabbed yourselves in the foot a bit and pretty much given your idea away already. It's a bit late to do anything much about it in terms of running your own business and expect it to go smoothly. But if you're prepared for potential issues, then give it a shot.

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