I finally saw Social Network. Don't know why I avoided it for so long, but I did. Holding aside the bashing of Mark Zuckerberg (and the tech community in general -  including its attitude towards women), which I don't want to comment on (I am sure others have done a better job than I could), it seems to me that the plot was really driven by poor or, more exactly, nonexistent legal work. It turns out that this movie is a great case study of some of the things we are always counseling entrepreneurs on. I want to be clear that I don't have a view as to how realistic (or unrealistic) the movie was.

 First, agreements among founders. The notion that the agreement between Mark and Eduardo amounted to a conversation to the effect that I get 60% and you get 30% is flabbergasting. I have written too much about founders and vesting to repeat it all here. But, I routinely counsel founders to have some agreement in writing around who owns what and what happens when the founders come to a parting of the ways. In this context, I discuss vesting and its importance. For example, I often say something like,  "What happens when one of you is not pulling his weight? Or takes a job with some big company? Will he or she still own the same amount as you are now contemplating."

 Not everyone ends up deciding to use vesting among founders, but my clients have at least considered it. If even modest legal work had been done at the front end, the whole law suit with Eduardo would have been avoided. Note that Eduardo ended up with about 5% of the company. I don't know whether anyone thinks that was fair or not, but if there had been some sort of arrangement around vesting the deal would have been negotiated and agreed to. There might not have been a need for the sleazy dilution move.

 Well, with respect to the sleazy dilution move, the notion that a reputable attorney would put a bunch of documents in front of someone who is not his client (and to all appearances is unrepresented and unsophisticated) and does not give a stern warning that this person needs to seek his own counsel, seems over the top to me. On the one hand, there is no doubt but that it moves the plot along nicely. On the other hand, if the warning had been given and the advice taken, who knows where the story would have gone. It probably would have avoided the suit and ended in a fair place Ð or at least a place agreed upon by the parties not decided by a battle.

 Speaking of not seeking legal help, the beefcake twins top the charts. If they had intellectual property, they did nothing to protect it. When you hire someone to write code for you, you want to own the code --  thus an agreement that expressly makes the intellectual property a "work for hire."  BTW, Mark could have entered into an agreement to write the code and still use it for his own purposes. While it seems clear that the twins has some idea that was like Facebook, it is not at all clear that their idea was not a very limited directory for Harvard College students.

Anyway, all these problems worked out in the end because the massive juggernaut of Facebook overwhelmed them. As the lawyer said in the end, this is a traffic ticket. Having said that, not a lot of ventures have so much to divvy up that they can survive this sort of thing. A lesser business would have been sunk for want of competent legal work.