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I have built the Proof Of Concept for my web app idea, and it's great although a few aspects need to be added. However our budget is completely out.

We have been looking for a development team who can flesh out the POC up to a Beta or even commercial launch. the problem is that good quality developers don't seem to be interested in equity payment and we still need to smoothen out the POC before I can take it on the road to look for investors.

My question now is: How and where can I attract good quality developers (preferably ROR) to come in as partners to finalize this project.

To describe the project I would say it's a Social Networking application.

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what is your plan for your application to generate income? – Adam Crossland Mar 29 '11 at 14:45
@Adam, I have a very good plan to generate income from the application from day one, but this is not the appropriate place for me to present my plan. It's not just a plan on paper I can demonstrate it. – user9003 Mar 29 '11 at 17:34
that's excellent, and that should be a big leg-up for you with recruiting developers. Most of us who have participated in startups have been burned by the "we'll worry about making money later" anti-pattern. – Adam Crossland Mar 29 '11 at 17:37
Thanks for that Adam, what a relief. I was beginning to think I strayed into a forbidden zone and asked the wrong question. Is the case that there aren't likely to be any developers interested in this business model or is it about what the application/plan is, If the latter is the case them let me meet the developers pls. – user9003 Mar 29 '11 at 18:17

8 Answers

up vote 4 down vote

For starters, I would say tone down your pitch a bit. A "Social Networking Tsunami"? The more you hype it, the less plausible it sounds. Just tell people you're working on a social app that has strong potential.

Maybe before people suggest to you how/where to find developers you add some comments on what exactly you think is fair in terms of equity. What are you expecting? A team member? A contract developer? A CxO?

The problem you are up against is that any halfway decent developer comes across offers like yours 10 times a month. The reason people don't get too excited about equity payment is because they can't do anything with it. You can't pay your mortgage or buy groceries with equity in some unknown startup, and many good developers are somewhat averse to working for free.

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Hey, thanks for the reply. We are open to discuss the offer in more detail with the prospective developer if they express an interest. – user9003 Mar 28 '11 at 17:37
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+1 for truth. In terms of equity that I've been given over the past 20 years, I'm a foolishly wealthy bastard. In terms of actual gain from said equity, I'm up a few thousand bucks. At this point, to me equity in a startup is akin to buying a lottery ticket. Yes, I do have slightly more control over the outcome, but only slightly. What I really want is revenue participation in a business that has a clear plan to generate money. Anyone who thinks that advertising or 'selling to Google' is going to make real money is going to get my back turned on them. – Adam Crossland Mar 29 '11 at 14:44
up vote 3 down vote

the problem is that good quality developers don't seem to be interested in equity

And that is probably a couple of percent. So, you look for idiots that are smart developers. Won't happen. 90% of the startups fail. Good developers either have their own projects, or work as freelancers for $$$$, or both. What can you offer? The chance for some money down the line?

The main problem is that you need to find someone who does not take the $10,000 - $20,000 he can earn per month (possibly more, depending on the field) for the chance of having a small percentage some point down the line. Won't work, statistically and financially. Why should such a person invest into you? What makes you different from all the others?

BAD developers find a market. GOOD developers can freely select whom they work for.

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Thanks for the lecture, NetTecture. I'm done with freelancers, I'm looking for someone who will have a stake in the project, I'm sure they're out there somewhere. – user9003 Mar 28 '11 at 20:42
Sure they are. But for how much? ;) As in: Ignore your point of view - what can you offer me as a freelancer to make up for the significant loss of money? A lottery ticket for the case you strike rich? Bad news: Any developer not stupid will ask for a LOT of equity then. – NetTecture Mar 28 '11 at 21:10
There's always two side to every transaction. I think it would be very stupid to ask for a lot of equity to develop what is basically a lottery ticket. On my side I'm not offering a lottery ticket so I'm not looking for those kind of guys. I'm looking for you to bring your bit so we can synergise. Some bring money and some bring skills, I'm bringing something tangible that ties it all together. – user9003 Mar 29 '11 at 11:53
No, you bring a lottery ticket, and in exchange demand the developer to bring in a LOT of money onto the table in terms of lost revenue. Startups fail, by the dozen. Takes a LOT of luck to strike it rich. You can argue all you want, the maths does not lie ;) – NetTecture Mar 29 '11 at 13:11
I think you should try and answer my question if you can and not try to force your preconceptions on me. Startups fail, big banks fail, in that context all of life itself is a lottery. I'm seeking to find developers who may be interested in being part of a new and exciting venture. When I find them I will make my offer, what I offer them will be between them and I. You will note I have a POC developed, its not a wireframe, its a light version of everything we want to do. It speaks for itself. I don't need a lecture on what it takes to 'strike it rich' I have an A* in that subject. Thanks. – user9003 Mar 29 '11 at 14:43
up vote 1 down vote

good devs will not be interested in the lowish (1-10%) equity percentage that startup founders with no previous track record and no revenue will usually offer. You need a 50% partner who can code and manage the tech stack, while you manage marketing, sales and investor relations.

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Agreed. Don't make the mistake of giving the developer(s) the impression that they aren't worth more than a few percent. It's insulting, and it is the opposite of how things actually shake out. – Adam Crossland Mar 29 '11 at 17:39
Thanks, I appreciate this. How about this scenario: Assuming we have estimated that it will cost about $100 to fully develop the app using top end talent, and we can show from a business plan backed with documented data that calculating from expected revenue 10% will be equivalent of $500 per month, do you still think the developer should ask for 50% – user9003 Mar 29 '11 at 18:43
then beg, borrow and steal the $100. More likely it will cost a $100K to build the app, and not make $500K a month, so let's talk real numbers. This is why developers run away... What are the odds the developers gets back his $100K of time? 10%? then he should expect 1 million of equity, which you do not have, so he can pretty much dictate his terms. – Tony BenBrahim Mar 30 '11 at 1:40
up vote 0 down vote

The problem with developers is they tend to be risk averse, you're unlikely to find such a developer. Also, if you're offering something like 5-10% equity (even worse over several devs), you need to remember who needs who more.

If the idea is that good then you should be able to convince an angle investor with your business plan and alpha application and use that funding to get the product to beta, to market and another funding round.

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I know plenty of developers who are not risk averse... – TimJ♦ Mar 28 '11 at 13:47
The only developers I know and are not risk-averse already have their own startups... I only wish I could hire them. – Dario Solera Mar 28 '11 at 14:28
I said they "tend" to be averse, please could we not have the usual reaction from this site where that gets replaced "they are 100% assured"... – David Mar 28 '11 at 14:32
I'm trying to find those of developers who are not risk averse. The Tsunami is an adjective relevant in the context of my sentence, I'm making no reference to recent events. It's just my way of describing what I've been building. If it's an offensive word to some I'll gladly delete it, but I can't seem to be able to. – user9003 Mar 28 '11 at 17:46
I understand you didn't mean offense, I've requested an edit. What percentage were you offering how many developers? – David Mar 28 '11 at 18:30
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up vote 0 down vote

I have to agree with NetTecture here. You have to make your proposition attractive maybe with a combination of compensation and equity if you really want to get good developers.

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Sure, what we have put on the table before is a combination of upfront cash and equity. If we find the right people the offer will be attractive. – user9003 Mar 29 '11 at 14:49
up vote 0 down vote

Great, experienced software developers who are high risk takers want to create their own startups or else be true cofounders with a share equal to yours in equity. Great developers with a medium tolerance for risk go to work for vc backed startups or startups that at least have a large angel seed round. There are two groups of developers who might be interested in your proposal: young people straight out of college who want startup experience and average devs who might be decent coders but know they lack the skills to take a concept and turn it into a product without supervision.

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James, this is the most objective advice I've received here thus far. The way things look, I don't think it can get any better so I'll take your words and check out from here. I promise to update the site if I succeed elsewhere. Thanks. – user9003 Mar 29 '11 at 20:37
up vote 0 down vote

No development teams that I know of is sitting around waiting for good ideas. They have plenty. Our development team has a sandbox of personal projects that they would love to work on. The challenge is finding a team that has the capacity , desire, interest to take your project on as a speculative venture.

I will tell you what our team considers when we are considering taking on a client that isn't going to pay cash to cover our bills but has dazzled us with promises of equity:

  1. Is this something that we know. Have we done it before. Is there something we can change/adapt/configure to get us there faster?
  2. Do we have a client right now that would pay for this if we offered them the vapor ware on a great deal?
  3. Is the prospective client for this solution overlap the client base of any of our other solutions?
  4. What is the cash value of the investment which we would be making -- if we had that cash would we invest it in this start-up? If not-- why is our time worth less than our money, and if so why don't we?

Based on the above criteria I would be looking for development teams that had paying clients that covered their overhead -- not someone who will focus on this until a paying gig comes along. I would focus on someone who has developed in a similar market space. I would focus on someone for whom your business would add value to their existing portfolio.

Something to think about:

If I was the development team that considered this project this is the question which would be on my mind:

What is the potential value of this project without a developer coming on board? What is the potential value of this project with a developer coming on board?

Since it sounds as though the answer to the first question is: nothing. (meaning if the project stays as a POC -- then it isn't generating revenue and isn't really worth anything.) And the answer to the second question is: something.

Then the value of the developer to the project is: everything.

A great idea is worth about 5-10%. I think it would be fair to expect to secure the "right" development team a joint venture where they are in the "everything" range (say 60-70+% ownership)

And as an "idea guy" that pains me every time I say it. :(

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@Joeseph, what a wonderful analysis. Since the value of the developer to the project is everything and the value of the project to the developer is nothing. Why do we waste our breath? :) – user9003 Mar 30 '11 at 0:46
up vote 0 down vote

I have writen about this here

Programmers Working For Equity

Yes you can get good developers for equity but you must be realistic espically about the equity. Recognise that your bringing an idea and they are bringing real tangable software.

Often it depends on the idea and how much work it will take.

I can't seem to add comments so I'll say this about the answer below where the worth is nothing to the developer. It's not nothing it's just low and speaking as a guy who isn't an ideas man. I'm not much without ideas. So a 50 50 split is reasonable.

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how does one contact you? – user9003 Apr 8 '11 at 10:33
You can email me on scott@barbary.co.uk – barbary Apr 10 '11 at 20:00

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