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I'm a software developer and co-founder of a start up that's in a sprint to launch a web app the next 2 months. We have about 3 months of burn time we have before we need to get some funding. By that time, we want to have a product with active users, and ideally some revenue. I'm fairly confident that I can accomplish the task by myself, but I have also never launched a project of this magnitude. The better product we can build in this timespan, the faster we can grow our user base, and the better our fundraising options will be. So I'm looking to bring someone onboard to hack with me. Maybe more than one person.

Good help is hard to find, as we all know, and while I'm willing to share equity, I also want that to be contingent on a productive fit. What is the best approach to a trial-type framework for hiring another developer? Something where the other person feels that their work will be rewarded if they do well and that they can't be left empty-handed at my whim, but where I know that if it turns out not to be a good fit, I can pull the cord without significant loss?

Edit I've alluded to it in other comments, but my situation is that I don't anticipate a critical need more development help, but it would definitely be advantageous, and I've found people who are interested, in principle. We haven't talked short-term or long-term yet, let alone compensation. I'm just trying to make sure I know enough to do a proper deal, if the fit is right on both sides. For argument's sake, let's assume fit is right and I've got a person that wants to be on board for this 3 month period, and then from there it would be a new deal if both parties are want to make a new arrangement. So I'm not so much asking how to attract talent or how to prioritize--I'm interested in the mechanics of such a deal.

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This question came from our site for professional programmers interested in conceptual questions about software development.

    
How long have you been working on it thus far, and what percentage would you say is complete (or how much is left to do)? –  BZink Sep 27 '12 at 18:51
    
We've been working on strategy, business plan, and overall design for over a year. I'd say the overall implementation of the minimum viable product is about 25-35% complete –  acjohnson55 Sep 27 '12 at 19:07

5 Answers 5

Here's what I have in mind, because I want to see how it stacks up against other ideas. I'm thinking something like a short-term vesting scheme.

  • We agree upon equity share at the end-point of the project.
  • For a short-term period at the beginning (maybe two weeks), there is no equity, accounting for the time it takes to ramp up and the trial period.
  • Then a fixed scale of equity per week until a mezzanine point.
  • The remainder of equity is given as a large grant, upon public launch or significant fundraising event.
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Short Answer: Your offer should be very attractive to catch interest.

Good and professional developer of a high quality is hard to find. Thus, most probably you need to clarify what you promise to give back on successful roll-out.

To keep your product and idea safe, you may for sure, get from him signed agreement of non-disclosure even he would decide to leave in couple weeks.

In addition to above there are very interesting posts to look:

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I'm not so worried about attracting a good developer, as I am about how best to structure a deal. I kept my answer intentionally vague, because the actual percentages and timeframes would be subject to negotiation. For me, the biggest variable would be whether the person could contribute across the whole project or on specific tasks. I'm open to either, but the terms of the deals would look different. –  acjohnson55 Sep 27 '12 at 19:12
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if you don't look for a substantial technical contributor and have all your ideas and technical decisions made, and what is required is just a coder, then try a new grad :) –  ElYusubov Sep 27 '12 at 19:28
    
We're probing that route as well. I'm less concerned about structuring that sort of deal effectively, because the stakes would be lower. The same basic question does apply though. –  acjohnson55 Sep 27 '12 at 19:52

Are you hiring another developer or bringing in a partner? The difference in terminology significantly affects the legal documents now and the dynamics later - a Hire expects to get paid, is subordinate and has limited risk - A Partner accepts the risk (of not being paid) and expects to be a peer. A hire (depending on jurisdiction) has employment rights under law, a partner does not .... the list goes on.

It's not as simple as "I'm prepared to give up equity", and in reality, good help is smart enough to see though most of the empty promises start-ups make. A few really smart ones will do it anyway - they love it and understand enough to know and willing accept that others will profit from their efforts while they do not, but most of them are contributing to FOSS these days.

You need to find a partner, or get lucky......

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Please have a look at the new edit, I think it might clear up what I'm asking about –  acjohnson55 Sep 28 '12 at 9:08

Let me offer my feedback after having been on both sides of similar exchanges.

As a Developer

I'm sorry, your idea probably sucks. Looking at statistics, the vast majority of start-ups fail, and yours is likely to as well. If I'm going to join, it's going to take a lot more than some equity to donate a large portion of my time.

It really takes a valuation of the opportunity to make an educated decision. If I typically take 100k as software developer, and I'm willing to only take 30k, then that means my investment is 70k (or per year). Now, if I'm investing 70k, and only being offered 5% equity, that means that your opportunity is valuated at 1.4M.

It took a while to develop this attitude... however, you're more likely to find people who are willing to free and who don't really value (or know the value of) their time.

I look for:

  • Interesting product
  • Interesting problems to solve
  • High growth opportunity
  • PEOPLE I WANT TO WORK WITH

I avoid:

  • People with no money
  • People I don't beleive in
  • People who don't value my time
  • People who think they can find another developer easily

For fun, let's rephase your pitch: "Come work for me on this cool idea. I can't pay you, and I can't give you equity, but if you prove your worth for 6 weeks, we can talk about it then." I'd run away.

As a Business Owner / Start-up

Money is tight. The company is the best opportunity ever. Therefore, people should work for free, right?

Even if you could rope people in that way, the relationships almost always turn sour, and you are diluting your equity. Try and find an arrangement where both parties win. Don't give away equity lightly. Offer vested equity (x% per year until it hits the max). People come and go - you don't want 40% of your company owned by the guy who had the most free time, but moved away a year later.

So you want to attract developers?

  • Fair pay
  • Fair equity options
  • Interesting domain / technology
  • Some say in the technology moving forward

--

Try and work out some sort of trial arrangement. If your opportunity is truly amazing, then you could have them buy their way in with their time with no obligations. However, that sucks for the developer, so you'll likely want to pay them so there are no strings attached.

The hardest part of succeeding as a start-up is finding the right people. Don't create bad relationships by cheaping out. Spend a bit of money to earn their trust and to protect your assets. From then, arrange some sort of mutually beneficial agreement. If you can't afford contracts, do your best to get your terms on paper and signed. As things progress, legalize them.

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Great advice, I like it a lot. Unfortunately, we really don't have money to be able to offer at this point. But on the other hand, we do have an idea and strategy that's not hard to pitch. I've learned a lot in this process. How does your business advice change for someone who might just be looking to pitch in for the short term, but who might be able to make a pretty solid contribution? –  acjohnson55 Sep 28 '12 at 2:52
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+1: Great answer. Your second point as a developer is the one reason I have never joined a start-up when offered. They can't afford to pay me and don't value my time as much as I do. –  Deco Sep 28 '12 at 3:15
    
I'd +100 this answer if I could. –  GrandmasterB Sep 28 '12 at 3:44
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@acjohnson55 cut scope like crazy so you can get it into the market faster. Your end goal should be market feedback and penetration. Everything else is noise. If you can't attract a developer knowing what they (we?) like, then it sounds like you already know the answer. –  Adrian Schneider Sep 28 '12 at 4:26
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@Deco They don't value my time as much as I do., well they don't value my time as much as others do. –  AProgrammer Sep 28 '12 at 4:31

Quick Answer: Try to explore option on part-time help.

Having a tentative agreement that has dependency on short-term success of the project may not attract good developers. Thus, making a deal with experienced person who will put his effort after regular business hours or in weekends is what sounds reasonable.

It would be better to get a local developer as it be easy for management and communication. Where you may get this people? is a different question. A good option to start would be local user group of software professionals.

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