So what's the lesson here? Don't be careless. I don't care what the idea (startup) is - get the details on paper. True, 99% of startups fail, but you don't want to be in that 1% that's making the lawyers rich.
This a thousand time.
My first hard earned rule of thumb? Don't do business with your friends. Lost relationships, bitterness, and great financial loss is never worth it. I got burned really bad and spent the better part of four years trying to get my money back.
Since then, it's just something I live by.
But I've been in business with my spouse for over a decade now.
I think it partly depends on the definition of friend. I don't start companies with acquaintances, I start them with people that I love and respect.
When you do that, starting a company becomes a really special endeavor.
This is very relevant for me at the moment because I am starting a new company and the person that I am hounding to be the founding CTO is a "newer friend" (we have only known each other for 4 years or so) but I am convinced that we will be a great team.
My advice is to start companies to work with people you love vs. trying to make a bunch of money. It's such a great way to "work" and greed will have a hard time breaking that.