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  1. #1

    If Only 1 Person Owns the Domain, How Can Strangers Be Partners In Hosting?

    So I'm wondering, if you meet a stranger here at WHT that lives far away, and you want to create a Hosting business together, how can you ever trust that all the work you do may be wasted if he owns the domain? Should you even try something like this or only partner with someone that lives close by or that you know? How can this be done without the risk that the person that owns the domain someday moving all the clients to a new server and ignoring me?

    I realize my partner will read this but that's ok as I've expressed the same concerns to him. A while back I met a stranger here on WHT, we developed a hosting brand and website together, built our site, and started selling hosting (under a different brand than my username). We seemed to work well together, so we formed an LLC, and signed a contract. Things are going great so far, we split the responsibilities 50/50 and we've met some early success.

    However in the back of my mind, I realize that there is nothing stopping him from one day moving all our clients to a new server in the dead of night, and all my hard work will be for nothing. He owns the domain, he is not yet 18 so is not bound by any contract he signed with me, and he lives a million miles away in Africa, while I'm live in the US. If he did that, there is nothing I could do but kiss a year of work goodbye. He seems very nice and we work great together, each bringing different skills, but he told me recently that he spent the last 2 years of his life as a hacker breaking into people's sites for fun and injecting his code. How ethical/moral can a person be who spent 2 years as a hacker ruining people's lives?

    The only way I can think to rectify this situation is if there is a way to put the domain in the trust of a 3rd party company like Escrow.com and pay them to hold it for us? We could open a new domain account in the name of our LLC and put the domain their, but if we both had the password, what would stop him from moving it one day? Does anyone know of such a service that would hold a domain in trust and not allow either party to move it without the signature of both parties? Or maybe I should start my own brand on my domain and we run should run separate websites but work together on serving the customers from both sites? This way if he decides to leave one day, at least I will have half the customers?

    Please give me your opinion on what to do in a situation like this and if you would ever try to run a hosting business with a partner you didn't know who could screw you so badly one day.
    Last edited by DeluxeHost; 03-02-2011 at 05:39 AM.
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  2. #2
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    Typically, any assets owned by the company (domains, servers, even printer paper) should all be in the business name, not in the name of a single partner.

    If a partner decides to take assets without majority permission from the board of directors (In this case you) then he could be prosecuted. Though this is UK Law, I'm not sure how it works in the US - My advise would be to consult a law professional.

    To be blunt, it sounds like you don't trust the partner; which is never good when going into business with someone. On the other hand, what's to stop you running away and leaving him with nothing?

  3. #3
    Join Date
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    Hi DeluxeHost,

    It seems when you started (partnership) with your partner you had trust for him, but due to some reasons (indicated by you, actually) that trust is shrinking. Since you don't feel comfortable anymore towards your partner, I think it's time for you to separate from him. Don't wait until you totally loose that "trust".

    I hope your partner remains trustworthy, though
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  4. #4
    Thank you for your valuable reply.
    Quote Originally Posted by SercoNetworks View Post
    Typically, any assets owned by the company (domains, servers, even printer paper) should all be in the business name, not in the name of a single partner.
    If I asked him to, he would agree to put it in an account under the name of the LLC with both of us having the password. But knowing Enom, where we have our domains, it only takes a couple of minutes to "push" a domain from the LLC's account into a private account.

    Quote Originally Posted by SercoNetworks View Post
    If a partner decides to take assets without majority permission from the board of directors (In this case you) then he could be prosecuted. Though this is UK Law, I'm not sure how it works in the US
    Yes, it would work the same way in the US, but with him living in Africa, I'm not sure any ruling by a US court would affect him too much. But maybe I'm wrong, maybe if I had a lawyer draw up a good Operating Agreement that detailed how the domains were owned by the LLC, maybe the court would be able to return the domain to the LLC.
    Quote Originally Posted by SercoNetworks View Post
    To be blunt, it sounds like you don't trust the partner; which is never good when going into business with someone. On the other hand, what's to stop you running away and leaving him with nothing?
    Great point. And I should add, he's been very trustworthy and fair, he's given me no reason to doubt him. My concern began when he told me he had spent a couple years as a hacker and were intensified after I watched Mark Zuckerburg rip off Eduardo Saverin in the Social Network. And those two were both friends, lived in the same dorm, and were under US law.

    Has anyone here started a hosting partnership with a stranger that turned out good or bad?
    Last edited by DeluxeHost; 03-02-2011 at 09:15 AM.
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  5. #5
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    Quote Originally Posted by DeluxeHost View Post
    Great point. And I should add, he's been very trustworthy and fair, he's given me no reason to doubt him. My concern began when he told me he had spent a couple years as a hacker and were intensified after I watched Zuckenburger rip off Eduardo Savrin in the Social Network.
    Would you believe him even if he swears by his Bible/Qur'an/Torat/Whatever that he won't disappoint you in the future?
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  6. #6
    Quote Originally Posted by GSalam View Post
    Would you believe him even if he swears by his Bible/Qur'an/Torat/Whatever that he won't disappoint you in the future?
    I'm not sure that I would, I would always have a lingering doubt in my mind. I've been scammed one too many times in life so maybe the problem is actually my lack of trust in humans at this point.

    I'm wondering if the best course of action is for us to agree to work together on our own brands, two separate websites. That way we can still use our different strengths to help each other with customers, and yet still have the confidence that if something goes sour, we each have our own website to walk away with.

    But let me throw a question back at you guys, do you think it's wise to take a risk like this to partner up with someone in a different country who you don't know?
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  7. #7
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    Quote Originally Posted by DeluxeHost View Post
    I'm wondering if the best course of action is for us to agree to work together on our own brands, two separate websites. That way we can still use our different strengths to help each other with customers, and yet still have the confidence that if something goes sour, we each have our own website to walk away with.
    I'm not sure if that'll work down the road either because what happens if one of you is extremely profitable and the other is dog years behind?

    Best solution, is create a contract, write the terms and conditions of the partnership. Although you "plan to purchase the domain" your partner will "move 50% of the cost into the cash account" etc. Then you can also stipulate ending terms of the partnership that when all is said and done the split is 50/50 no matter what.

  8. #8
    Quote Originally Posted by Techy View Post
    I'm not sure if that'll work down the road either because what happens if one of you is extremely profitable and the other is dog years behind?

    Best solution, is create a contract, write the terms and conditions of the partnership. Although you "plan to purchase the domain" your partner will "move 50% of the cost into the cash account" etc. Then you can also stipulate ending terms of the partnership that when all is said and done the split is 50/50 no matter what.
    Good point, I should have more faith in the US legal system and I will visit a Lawyer to draw up a contract with explicit language concerning the domain.

    Is there anyone that has gone down this road and had a good or bad experience with a partnership they can share?
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  9. #9
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    Personally I would not want to partner with someone who spent the last 2 years hacking and injecting code in sites for fun, typically I wouldn't buy hosting from that person either.

  10. #10
    Join Date
    Feb 2011
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    I think what you need to do is sit down with a lawyer and talk to him about how you can protect your assets so that neither of you can screw each other over. Because there is no doubt in my mind that if your company becomes bigger and there is more money involved money DOES change people and can cause them to do weird and maybe unfair things.

    I haven't personally gone down the path of a partnership YET, however, my father has been in a partnership for years and years. They were strangers at first and then just decided (not knowing eachother very well but knew both of each other were good at the business they were making) to become partners. Each developed their own LLC and would invest in properties and split 50/50 or whatnot. They HAVE ran into disagreements, and there have been times where my father trusted him and messed up a deal and visa versa, BUT they got past it and it worked out. And even now they are still working together. So, I definitely see partnerships that WORK, BUT you have to make sure that you sit down with a lawyer and go over the legalities so that you and your partner don't get screwed over.

    Although this isn't an example of a web hosting partner, nonetheless, they shared certain percentiles of property they invested in, but created it so that neither of them will get screwed over. But, they have never been really worried about that (maybe in the beginning) because partnerships are built on trust. You can't just give your trust right away they have to earn your trust.

  11. #11
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    Quote Originally Posted by DeluxeHost View Post
    He owns the domain, he is not yet 18 so is not bound by any contract he signed with me, and he lives a million miles away in Africa, while I'm live in the US.
    Being under 18 isn't the problem, the problem is that he's another country. Essentially this means that you're never going to sue him because the cost of litigation will vastly outweigh the damages you could possibly recover, and even if that weren't the case it's highly unlikely that you could recover anything from him anyway (what assets do you think he has?). Effectively you have no legal recourse if he decides to screw you over.

    One thing you haven't mentioned is what do you have that he doesn't (i.e. why are you good partners)? This may be the reason he sticks with you.

    I'd say get the password from him and change it, but all that does is shift the problem from you to him.


    Quote Originally Posted by DeluxeHost View Post
    But let me throw a question back at you guys, do you think it's wise to take a risk like this to partner up with someone in a different country who you don't know?
    No.

    Quote Originally Posted by DeluxeHost View Post
    Is there anyone that has gone down this road and had a good or bad experience with a partnership they can share?
    I haven't, but incidentally a business partner of mine has, and now I'm helping him deal with the fallout. They had a great relationship for about seven years. Then in year eight, he finds out that some of the material his overseas partner supplied him with over the years was owned by someone else.

    To make maters worse, he had been licensing that material to his clients for their use. Now the copyright holder is suing his clients, and he is having to settle with them. The overseas partner originally claimed to have the license to the material, but says he doesn't. Very messy.

  12. #12
    Quote Originally Posted by MikeJohnson View Post
    Being under 18 isn't the problem, the problem is that he's another country. Essentially this means that you're never going to sue him because the cost of litigation will vastly outweigh the damages you could possibly recover, and even if that weren't the case it's highly unlikely that you could recover anything from him anyway (what assets do you think he has?). Effectively you have no legal recourse if he decides to screw you over.
    Thank you for your advice, I needed to hear that.

  13. #13
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    I know this is a little late, but next time, only become partners with someone you know, met and more importantly, know where they sleep at night in case things go sour. :]
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  14. #14
    Join Date
    Mar 2004
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    Business partnerships function largely on trust and a bit of protection. If you don't have the trust or are lacking the protection, the contract is simply too risky to enter.

    A partnership with someone you haven't personally met, in a different country, with aspects that cause that person to not be able to be held responsible to a contract (aka under 18), poses huge risks. The best answer is simply to politely decline the partnership because of the risks.

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