I have a new app idea that I have invested roughly 1,000 hours of my time developing the content, marketing/biz dev plan and strategy, logo, and site map. It obviously will never see the light of day without programmers. I found a programming team willing to do it, but they want 80% of the company? They have access to both low wage programmers and future investors. What should I do?
You can follow the following path:
If someone tells you that they want 80%, first ensure that they haven't taken any self-defence classes and then punch them in the face.
John, I usually agree with you but on this one I would like to differ a bit. I am an entrepreneur turned coder, for exactly the reasons you state. But the problem for the poster is the value of his/her time. Consider it would take him at least 2 years to have a firm grasp of what it takes to code a good application. Sure he can learn HTML in a month, and CSS in another month, and PHP in another 3 months, but to really think in code it takes while.
To answer the question. Politely tell the developer to EAT YOUR @#$@#$. I would always be cautious, (EXTREMELY CAUTIOUS) to hire a developer that has ambitions of owning your company. What they are really telling you is that you are paying their development cost, and you get to keep 20%.
I would do the following: 1. Hire someone to create a PRD or SPEC for the APP 2. SHop the spec for contractors who are only interested in being contractors. Pay them the say low offshore wages (i recommend belarus for the talent) but retain 100% of your company. 3. To manage the project, have the same person you hired to write the spec (probably in the usa) to oversee the project on a weekly basis, while you oversee it on a daily basis.
Chances are your project is so simple it will only require 1 or two guys to develop. The more chefs you add, the slower a project can take if it is simple and really doesnt require multiple developers.
Plus with this model you learn the most. You hold 100% of the app, 100% of its profits to reinvest into growing it or your next venture.
Once you have the basics down (probably a year then), you will probably want to learn specialized skills such as MVC, MVP, AIR, FLASH, Silverlight, WPF, or whatever direction you think your company will utilize.
THe reason you want to know these languages is that you want to be able to Audit plans, think like your developers, and you gain a certain level of respect when a contractor understands that you can do the work, but you are hiring the contractor to do it more precisely, quicker, and based on a very specialized skillset.
Best of luck on your app. If you tell us what type of app, i can shoot you some recommendations of folks that can help you plan it, and maybe even some contractors you should consider.
I spent some years creating software before focusing on the marketing and commercial side of business. Once a year I let myself do one small bit of coding. I don't kid myself that I could create more than "Hello, world" these days, but I know what's involved in designing, delivering and iterating on software systems.
That combination of familiarity and distance has worked well for me. In particular, I can often tell when a programmer skilled with the hammer is attacking a screw like it was a nail. And I'm good at making choices, driving down from my grand vision to minimum viable product.
In your situation, I'd be thinking about two related but distinct questions.
Firstly, do you want this to be your venture or not? If you do, any proposal that costs more than 49% is a non-starter. If you don't, you may be better off with a junior stake.
Secondly, how big is the cash risk you feel is justified now, for yourself - and is that sufficient to deliver your MVP with a reputable developer? If so, a deal that lets you keep the cash in exchange for equity will make sense, as long as the developer is at least as bullish to you about the risk/reward character of the project. If not, you don't have a viable pitch, and you need to re-think.
I agree with John, except I would suggest to push for 60/40 your way so you still have the final call on any decisions that need to be made.
Every time I see this type of question (re programmers and non-technical founders) I give the same advice. Learn to code yourself. It's not hard, and it's totally worth your effort. This post at Hacker News makes a very good argument why.
Basically, you need to understand the development process in order to lead it. The only way to get good at this is to be highly engaged with code. There are very rarely examples of successful non-technical founders who've employed programmers and executed well.
That said, unless any software is built, I would argue a 50/50% split (or even split between founders who input time). You've spent 1000 hours developing the concept, but your programmers have spent the same time (or preferably more if they're any good) to learn to develop beautiful software. Since there is no way to tell from the start which is going to be more pivotal for success, splitting evenly is the only fair game.