The Good Guy (or Honeymoon) Trap: Avoiding Common Pitfalls When Launching or Joining a Business.
When you're starting something new, whether joining an existing company or launching your own venture, it's easy to get swept up in the excitement. Everyone’s aligned, energy is high, and the possibilities feel endless. That optimism is natural. Our brains are wired to suppress risk when opportunity feels close at hand.
But that “honeymoon” mindset can also be a trap. Too often, founders or early team members rely on good intentions instead of proper legal safeguards leaving themselves vulnerable when things shift (as they inevitably do).
Scenario One: Joining an Existing Business
In this situation, the company typically sets the terms. That doesn’t mean you have to accept them as-is. You bring value, and it’s important that the structure reflects that.
Key protections to focus on:
Be clear and confident in your value. You’re not just filling a role, you’re shaping the future of the business.
Document your contributions. Make sure your work, responsibilities, and expectations are reflected in your agreement.
Have a lawyer review the documents. Pay close attention to equity vesting, exit rights, and dilution mechanics. These are often the most consequential (and overlooked) terms.
Scenario Two: Starting a Business with Partners
When you're co-founding a company, the early days can feel like a dream. Everyone’s on the same page—or so it seems. But alignment today doesn’t guarantee alignment tomorrow. That’s why you need to plan now for the hard conversations later.
Foundational legal steps:
Set up corporate formalities from the start. Choose the right structure and create a clean cap table.
Define roles, responsibilities, and equity. Even (especially) among friends or longtime collaborators.
Address IP ownership early. Make sure any intellectual property developed is properly assigned to the company on Day 1.
These aren’t just “legal” to-do’s, they’re critical tools for protecting relationships, time, and money down the road.
Bottom Line: Whether you’re joining or building, it’s never too early or too late to protect yourself. Don’t let optimism take the place of structure. Being proactive doesn’t signal mistrust; it signals maturity, foresight, and respect for the business you’re building.
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This post is for informational purposes only and does not constitute legal advice.