What kind of partnership can i offer to a programmer?
I'm working on a start up project that'll offer a video based product. The product will be distributed via the web, so i need a programmer to develop the website for it
If you look at the project as a whole, since i'm the video director, producer, editor AND CEO of the upcoming company, i'll have way more work than the programmer - and the fact is that the website it self will not be complex at all (i'm a programming student, so i know what i'm saying - i just don't have the time to do all the work by my self)
So, i'm looking to offer the programmer some kind of long term partnership, but not one that gives him/her company's equity.
I want to share profits with him, not the company itself.
Frankly i'm a noob when it comes to deals and i dont even know if it's possible... so that's the question: there's a way to do that? To really make a partneship with somebody, sharing only profits not equity?
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Sharing profits in a startup is doomed, as most startups channel revenues into growth, so there are no profits early on. Share of revenue is better, but look out for gaming. Maybe best to just pay hourly rate for work done, then you don't give anything away, equity-wise. – Steve Jones 11 years ago
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So you want someone to do work for free but not get any part of the company? Sharing profits is not a "partnership". I doubt you will find anyone with useful skills or common sense to take you up on your partnership offer. They will have other uses for their time. Would you take the deal if the sides were reversed? – Tim J 11 years ago
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"I'm a programming student, so I know what I'm saying..." A word of caution: you might be right, but it's very easy to underestimate/undervalue other people's work. A talented and qualified professional may be able to list a large number of additional technical requirements. Areas like security, protecting user data, bandwidth and storage optimization, etc. come to mind. I'm sure you're better off than the vast majority of non-technical founders, which is good, but don't make the mistake of equating a few years of coursework with a decade or two of professional experience. – rbwhitaker 11 years ago
2 Answers
I've got some bad news for you C.Graco as a junior programmer you have a grasp of the basic work in "just setting up a site" but there is a lot more to it than that.
I get offers of work based on equity, profit shares etc on a regular basis and the one thing I have learned is to ask to be paid in cash. As a web developer I could put in somewhere between a few weeks to a few years of heavy duty development and marketing into starting a new site. A lot of what I do includes bringing together a team (freelance designers, secondary coders, SEO copywriters, and other folk) almost all of whom are freelance and none of whom want to be paid "someday" but want to eat this week.
I cannot afford to offer these guys anything but actual money. If I don't have money I have to do all the work myself. That's why I like to get paid a deposit and work to a schedule which includes when more cash is to be forthcoming.
I suggest that what you are currently doing, which is perfectly normal, is underestimating what an experienced senior web developer could be doing for you.
Your product is going to be web distributed that means that the web is not an add on but an intricate part of your business plan accounting for the lions share of the planning.
You have product but you still have nothing without distribution. In terms of daily business distribution and sales are what matter. The deliverable only means you can go on making sales without unhappy customers coming to your door.
The only deals I have considered these last few years effectively put me in control with the deliverable provided by a partner agency (the original business) at a set rate. This grants me the power over price, marketing and sales all of which I handle. Effectively I was saying that those people with the ideas could come and work for me with their idea. Some say yes some say no. Those that say no I walk away from because I know and understand that the "just a programmer guy" is the marketing department.
So short answer give the developer whatever he wants. The developer wants control or he wants money.
On the other hand if you think that you can cope without a sales guy and just want a junor to "make pages" go to a freelancing site and get some folks to bid on your project specs. Pay them what they ask - it's an investment. Of course without a tame developer/manager I'd wish most people good luck being sure the code is good quality... As you have studied programming I hope you could cope.
You strike me as an intelligent guy so I would direct you to sites like People Per Hour and "outsource" the "donkey work" to someone else for a small fee.
Hopefully there is enough capital in your start up fund to account for this. I've been a student so I know that money can be limited. I've met folk that have worked long summer hours to earn cash to get started in business. Sometimes doing so for a few years while the business grows.
I want to wish you the best of luck with your project. Starting on your own is hard but success is it's own reward. Just remember that the dev guys are important and very useful if you get the right one.
The best thing you can do is find a friend or family who believes in you and trusts you and is willing to loan some cash. Pay the programmer hourly or by things done, and you are good to go. (I assume you have no cash reserves), but only do this if you are confident, that you can manage the website maintenance.
Else:
If the programmer is going to believe in you and your dreams(which I
doubt by experience), only then is there an option to pay by
equity, but the way it will look is that you make him a technical
co-founder, vesting, etc.
Revenue percent, profit percent etc. are way too far and doubtful for anyone to believe(except for the founders of course)
The closest thing you can do is if the site is going to sell things (videos maybe?) you can treat him as a sales person, and pay him by percent of goods sold, that can work out really well.
But
Don't be that protective about those shares, most startups fail anyway, so it may end up the cheapest. 70% of something is more than 100% of nothing. Share-envy is more of a (common) psychological thing to overcome, not a strategy... No one can keep the whole of the company, except for George Lucas, and that was also a bank loan.
