Advice needed - business opportunity

[Etrain]

I was recently offered the chance to be the VP of Marketing for a new start up a friend of mine is creating. I have found following my gut instinct is usually right, and my gut is telling me not to accept the offer, but for some reason I feel uneasy.

So I was looking for some input from my MacRumors friends. I will run down the basics of the company and if you can let me know what you think of the idea.

The business will be a LLC. As VP of Marketing I would own 22%. The planned company is a website which would host high definition network content and movies for on demand viewing. Basically we would talk to the big networks like HBO, CNN, CBS, ABC, NBC, Nick, USA, etc. and try to get them to agree to lease us their content on the website so our visitors can watch their programs. They would get money by advertising revenue, and the company paying for the rights, and we would get money also from advertising.

The HUGE problem I see is competition. Think about everything out there that would be competition. First we would have Apple Tv, Tivo, and alike. Then we would also have competition from the actual TV shows airing on TV, DVDs, iTunes TV store, and You Tube.

Steve Jobs got the music industry to allow him to distribute music through iTunes, but that was only after YEARS of negotiation. Hell, that was with JOBS! Not some 20 somethings from Ohio who nobody ever heard of.

I mean if it doesn't work I'm not out anything, except time. He is working now to secure venture capital money. If he can get the beginning funds, he has guaranteed me a salary of $90,000 and $10,000 to relocate to Cali.I'm 22 and about to grad from college in marketing, and no other offers are flooding in for $90,000.

If I don't do this I have other ideas for my future. I would LOVE to be a college professor and own a marketing company on the side. So let me know honestly.

I appreciate your input!

 

[JNB]

If the VC comes through, take the money and change of scenery, let the company flame out, and add Vice President to your resume'.

I know it sounds cavalier, but at your age, now is the time to take some risks professionally, even if they're a bit stupid (I have my share of those), get some experience and exposure, and learn a hell of a lot.

Downside? Biggest one is that you're a corporate officer (I'm assuming, because of the position and limited size). Even as an LLC, there's some exposure. Other than that, ask yourself what else you'll do for the next year or so.

 

[Sun Baked]

Also have competition from the network's own sites, for their own streaming content TV which is paid for via ad revenue.

Sort of a pain in the ass to watch with different ways they ad in advertising, but the HD full show previews look great for free -- and worth a few ads.

 

[r1ch4rd]

Worth a punt for $90k. Has he actually got any customers yet though? I think that will be the biggest hurdle. Tendering for business from those sort of companies will not be easy. I hope he has a good VP of Marketing

 

[GoCubsGo]

If the VC comes through, take the money and change of scenery, let the company flame out, and add Vice President to your resume'.

I know it sounds cavalier, but at your age, now is the time to take some risks professionally, even if they're a bit stupid (I have my share of those), get some experience and exposure, and learn a hell of a lot.

Downside? Biggest one is that you're a corporate officer (I'm assuming, because of the position and limited size). Even as an LLC, there's some exposure. Other than that, ask yourself what else you'll do for the next year or so.

First I would take $80k a year and $20k relocation bonus/pay. The reason why is I honestly believe you have it right in saying that there is not enough positive on the horizon for you to believe this will work. You may not ever see even 50% of that annual salary so why not ask for more up front? Not to mention you are correct, a well established company (Apple) still had to sit around for years negotiating the whole iTunes store deal. What makes this kid think he'll be able to survive a year. Most start-ups fail in the first year. In California an LLC limits you from most but not all liability. I would also second guess the whole idea of owning 22%. Does your friend want to give this ownership interest to you or did you ask? Perhaps you can say you'd like to be VP but you'd like to hold off on having ownership interest. The downside, if the company takes off you're left with your $80k a year and probably a sour look on your face.

I would seek some legal advice on how liable you can be if an LLC fails and venture capitalist want their cash back. I would also want to ensure your friend is seeking the assistance of an attorney. Not a friend fresh out of UCLA of Chapman Law, a real life experienced in Corporate Law attorney.

As others have said though, do it! At 22 having the title of VP on our resume increases your earning potential. While it can hurt you for those entry-level jobs that you may be more suitable for. I do not mean a min. wage job, just the jobs that you need to have that will help you learn the ropes of the corporate world. That is stuff you can't be taught in school...trust me I know. Either way, it really can't hurt and if you're ok moving from Cleveland (at least I think that's what your profile says) to Cali then go for it. Now is the time because you have only yourself to consider. No wife, kids, baby mama's from drunken nights out...you get the point.

Good luck to you.

 

[eRondeau]

Getting involved with network television is swimming with the sharks. Wal-Mart just bailed-out of a similar business plan because they couldn't make a go of it. Wal-Mart! Unfortunately your content licensing, marketing/advertising, and bandwidth costs will probably eat about 99% of your fees, just to get people to try clicking on your website. So bill $1,000,000 -- write checks for $990,000, keep $10,000. Seriously, how much does Apple actually see of your $0.99 iTunes songs? And they've got a sweet licensing deal that nobody else will ever get, and even Apple couldn't get again if they sat down to re-negotiate.

I'm usually very pro-startup, but this is one area that just isn't ready for the little fish (or the big fish) yet.

 

[Etrain]

Thanks for your advice everyone!

He has no customers or content contracts yet. It is all very speculative.

As for ownership, he offered it to me but I can reject it. He has an attorney that one of the initial investors paid for. So far he got $10,000 for it, of which he paid for the contract to be drafted by an attorney.

I'm all for the change of scenery and the challenge. I'm just worried about it actually working out. I guess even if it doesn't, I'm not out anything.