As a guy specialising on developing MVPs for people with ideas, here is the general list of rules I use before taking on a project:
1. Are you willing to pay my normal rate?
2. If so, can you convince me the market is there and you know how to address it.
3. Can you convince me _you_ are the guy who's going to be able to bring it all together?
I know that after rule 1 I shouldn't care, but with so many potential projects out there, I like working on ones I think will amount to something rather than spending two months coding and then having it all thrown away. Call it a personal satisfaction thing.
Fundamentally, the rules amount to equity isn't tasty.
Having done this type of consulting myself, I could never work around the maintenance issue.
You likely setup the entire system so if something goes wrong, whether its you're fault or not, you're on the line. It's all about reputation. And if you tarnish that by leaving a paid client behind when their server catches on fire, it will be remembered negatively.
It's hard to do this type of contract work continuously. You build up a portfolio of apps that you have to maintain. Most of the time you're clients are out of cash.
Equity is great but it doesn't put food on the table today. On the other hand it puts you in contact with some really great ideas and you get to play startup founder several times and you gain enormous perspective on what works and what doesn't.
The other reason to choose projects that appear to have a decent chance of success is that the longer the project goes, the more work you'll have without having to go through the hassle of finding a new client, vetting their idea, doing the contract back and forth, doing the negotiating, and establishing a good working relationship.
There is also the excellent resume and street cred of working on a successful startup, possibly with name recognition, vs a 'failed' one.
Out of curiosity, why do you specialize in developing MVPs for people with ideas, and how did you get into that type of work as a primary focus? Do you find that the work is more interesting than doing consulting jobs for more established businesses? Assuming you've found plenty of projects that meet your rules, do you have opportunities to become a co-founder, and have you considered them seriously?
I've done consulting, startups, and free work on side projects. At this point, if I find people and projects that meet my requirements, I'd probably prefer to become a co-founder and make a real go of it. I don't think I've ever taken a small amount of equity as compensation for substantial unpaid development work. Under those circumstances, equity is not tasty. I'd rather do well-paid consulting work or find a great team and go all in.
You're ignoring a powerful aspect here: Founders are cash-poor, but equity-rich (almost infinitely so).
I don't know whether you have enough money to cover your costs (I assume so, you sound quite successful), but I think it would be interesting to seek out promising founders and take a little bit of equity, instead of another "bunch of money"(tm). That increase in money is not going to significantly change your life, getting an early in at a startup might though. And in addition to that, you'll probably enjoy building that umpteenth MVP a little more if you have the feeling that the quality of your work has a potential stake in your future.
There's of course a lot of my making assumptions here, but I think it's an interesting thought to consider.
"You'd be crazy to have me work on this for a few months for 50% equity when you could just spend 6-12 months yourself learning to code and doing it yourself and have 100% equity. Of course, if you don't think it is worth spending a few months of your own time why should I take a chance on it?"
6-12 months learning how to code? Good luck building a business on top of software written by a junior-level programmer. Even better luck expanding and scaling it if/when the time comes.
It takes years to reach a reasonable level of competence in software development and on the order of a decade to master it.
The problem with taking people's word on how much work they do when they are involved in marketing and the soft sides of business is that they have a disproportionaly (as compared to tech specialists) large amount of experience in marketing, negotiation and soft skills. Hence, they market themselves and over inflate how important their contribution is. In my experience.
> you could just spend 6-12 months yourself learning to code and doing it yourself and have 100% equity
Would you say that to a lawyer? To an engineer? To an athlete? To an artisan? So why do people say crap like that about programmers all the time?
Programming might be easy, but programming a product you can sell is hard alright. Let's stop pretending programming is sitting in front of an IDE and typing something that compiles/runs, in the same way we pretend anyone who operates a DSLR is a professional photographer.
"Teach yourself programming in ten years" by Peter Norvig for a hard cold reality check:
http://norvig.com/21-days.html
Some may do impressive things in a bit less than that but I wouldn't trust anyone with less than a few years of programming (or at least education related to programming).
If you're trying to recruit Swombat when looking for a developer to build your idea, then yes, you probably won't be very successful. On the other hand, if you're bringing something to the table, and try to contact developers who are.. well.. mainly developers (as opposed to expensive consultants with decades of experience), your success rate might be higher.
And by "something", I don't mean code (nor the idea, but there are things beside those). Seriously, I'm a developer, I don't give a damn if my potential cofounders could code or not, that's redundant. I would look for someone who has what I can't easily get. Someone having an accurate view of the state of an industry, or being nosy and/or well-connected enough to be able to get this view. Or someone some marketing/sales skills. Or someone with some proof that people (preferably people with money) are interested in the product.
I can value the skills of another developer. I can't value "well-connected" or "marketing/sales skills"
So if a developer comes to me with an idea, I can evaluate the partnership better- it is less risky then to go with a partner with complementary skills (not saying it's better to do it, it's just easier to figure out what you are getting into)
I think it really comes down to the initial monetary investment of the idea guy. For the idea guy to approach a developer with a $200 software package and $8/mo web hosting they've got very little vested. Asking the developer to invest what amounts to anywhere from $60-$150/hr of development hours is unreasonable. Now if the idea guy has invested thousands into data, a nice piece of co-located hardware, exclusive partnerships with reputable advertisers, etc. we might have something. The idea is worth very little in terms of investment. I think the equity breakdown can be broken down as such: 5% for the idea and the dollar for dollar investment by each party.
The antidote to this is a well formulated requirements document.
If you can define precisely what you want, then you will have much more hope in recruiting developers.
Why?
1. The lack of ambiguity of the scope gives developers the opportunity to determine their costs with some accuracy.
2. The requirements define the benefits of the project. Either the developers are convinced your logic is correct, and therefore will make money, or they do not. The former lot are those that you can convince.
Yeah I just realized that when Seth Godin mentioned it in a talk.
There is an unlimited amount of ideas out there, so these are not the scarcity at all. So they are pretty cheap.
Being able to execute them is the big thing. The ideas that sound really worth something, like patents are created by the Engineers themselves with an incredible amount of work.
Why should anybody care about your shower idea?
This also annoys me about the "idea guys", they are often incredibly simple. They didn't do any market research to validate anything, or thought about all the possible risks.
When somebody comes to me and says: "I had an idea and spent the last 2 months doing research about it. So I modified it and now have something where I am pretty confident there is demand for it."
Should note that another major issue not mentioned in this post (of which I am sure there are more) is what the idea guy brings to the table beyond the idea. Majority over estimate their abilities, skills, knowledge, background, and even work ethics to such a shameful degree...
This is the crux of it. In other industries, the "idea guy" would usually be an investor bringing $$$ to the table. A random hustler can't just approach a civil engineer with "an idea" to partner on a new bridge and expect the engineer to quit working and give up the next few years. They have to offer major value.
I think the best thing a non-technical founder can do is follow lean principles and bring actual data to the table. Show they've actually done the research - MVPs, letters of intent, etc - and make it clear they have a vision they can execute on. All of that is in the realm of possibility for someone who's not a programmer, and would help to make the case they're serious and capable.
Not only do some overestimate their ethics, but developers typically very principled. I've had people tell me straight up their business model is to leech out a database of personal information from Facebook with crappy apps and such. Even if you offer money good luck finding someone who is both skilled and evil.
A chicken tells a pig that they should start a restaurant together. The pig tells the chicken no. "Why?" asks the chicken. "Because you'd be involved, but I'd be committed."
Revenue share is a great idea, but there's no way I'm working on your idea for free while you just sit around and wait for me to make you money.
Love it. I'll keep this post handy, so I can link to it in my next reply to an "idea guy".
If someone comes along with a great idea and suggests a revenue share, reminded him about the old truism that the idea is 1%, while execution is 99%. At least that will give you a starting point to negotiate the percentages of the revenue share...
Maybe I am doing something wrong but I have never been approached by such an idea guy - the last closest was running an insurance brokerage and just got fed up with poor delivery from his current devs yet had a laundry lost of features needed in his site
Maybe if you are getting approached by morons a lot you might want to review where you are hanging out - just there mus be some reason
If you want such calls, but up a website with a title tag of "Ruby on Rails developer in <your local city> | <your phone number>". I'm not trying to parody anyone, that's what my website says and I get contacted frequently by idea guys.
So true! Almost every week an entrepreneur contacts me and wants me to come his Next Big Idea and that on equity basis. I usually ask: If it's such an awesome idea then why doesn't he get funding and pay to developers. Usually they have no answer.
the first point is the most matching.
"Ideas are easy, execution is hard."
I often get requests of ideas but they are so hard to execute that you would need a bigger team to do it and a lot more money then the idea holder has...
"The idea being proposed is often very unrealistic"
For some reason developers/engineers tend to be pessimistic while leaders/idea people tend to be optimistic.
In order to produce really great products you probably need both sides -- so don't dismiss the "idea guy" without giving the proposed idea at least some thought. Perhaps the original idea is too broad but can be the basis for a useful product.
Another good criteria is have you done something before? Doesn't matter so much if it succeeded or not, but what you're looking for is will you follow through. Someone who has tried and put real effort, past the initial first few months, is likely to at least be worth further investigation. This little criteria removes over 99% of ideas only people
It boils down to this: startups hardly fail because of technology (they do because of marketing). So no matter how good a developer is, he/she still has a very limited affect on success. Therefore taking equity, event a 50% stake is not a smart investment. Unfortunately startups can rarely afford to pay normal rates.
[+] [-] Swizec|13 years ago|reply
1. Are you willing to pay my normal rate?
2. If so, can you convince me the market is there and you know how to address it.
3. Can you convince me _you_ are the guy who's going to be able to bring it all together?
I know that after rule 1 I shouldn't care, but with so many potential projects out there, I like working on ones I think will amount to something rather than spending two months coding and then having it all thrown away. Call it a personal satisfaction thing.
Fundamentally, the rules amount to equity isn't tasty.
[+] [-] bbwharris|13 years ago|reply
You likely setup the entire system so if something goes wrong, whether its you're fault or not, you're on the line. It's all about reputation. And if you tarnish that by leaving a paid client behind when their server catches on fire, it will be remembered negatively.
It's hard to do this type of contract work continuously. You build up a portfolio of apps that you have to maintain. Most of the time you're clients are out of cash.
Equity is great but it doesn't put food on the table today. On the other hand it puts you in contact with some really great ideas and you get to play startup founder several times and you gain enormous perspective on what works and what doesn't.
[+] [-] lprubin|13 years ago|reply
There is also the excellent resume and street cred of working on a successful startup, possibly with name recognition, vs a 'failed' one.
[+] [-] dvo|13 years ago|reply
I've done consulting, startups, and free work on side projects. At this point, if I find people and projects that meet my requirements, I'd probably prefer to become a co-founder and make a real go of it. I don't think I've ever taken a small amount of equity as compensation for substantial unpaid development work. Under those circumstances, equity is not tasty. I'd rather do well-paid consulting work or find a great team and go all in.
[+] [-] kami8845|13 years ago|reply
I don't know whether you have enough money to cover your costs (I assume so, you sound quite successful), but I think it would be interesting to seek out promising founders and take a little bit of equity, instead of another "bunch of money"(tm). That increase in money is not going to significantly change your life, getting an early in at a startup might though. And in addition to that, you'll probably enjoy building that umpteenth MVP a little more if you have the feeling that the quality of your work has a potential stake in your future.
There's of course a lot of my making assumptions here, but I think it's an interesting thought to consider.
[+] [-] chrisbennet|13 years ago|reply
[+] [-] jrogers65|13 years ago|reply
It takes years to reach a reasonable level of competence in software development and on the order of a decade to master it.
The problem with taking people's word on how much work they do when they are involved in marketing and the soft sides of business is that they have a disproportionaly (as compared to tech specialists) large amount of experience in marketing, negotiation and soft skills. Hence, they market themselves and over inflate how important their contribution is. In my experience.
[+] [-] hcarvalhoalves|13 years ago|reply
Would you say that to a lawyer? To an engineer? To an athlete? To an artisan? So why do people say crap like that about programmers all the time?
Programming might be easy, but programming a product you can sell is hard alright. Let's stop pretending programming is sitting in front of an IDE and typing something that compiles/runs, in the same way we pretend anyone who operates a DSLR is a professional photographer.
[+] [-] martinced|13 years ago|reply
[+] [-] Wilya|13 years ago|reply
And by "something", I don't mean code (nor the idea, but there are things beside those). Seriously, I'm a developer, I don't give a damn if my potential cofounders could code or not, that's redundant. I would look for someone who has what I can't easily get. Someone having an accurate view of the state of an industry, or being nosy and/or well-connected enough to be able to get this view. Or someone some marketing/sales skills. Or someone with some proof that people (preferably people with money) are interested in the product.
[+] [-] amikazmi|13 years ago|reply
So if a developer comes to me with an idea, I can evaluate the partnership better- it is less risky then to go with a partner with complementary skills (not saying it's better to do it, it's just easier to figure out what you are getting into)
[+] [-] Hawkee|13 years ago|reply
[+] [-] cammil|13 years ago|reply
If you can define precisely what you want, then you will have much more hope in recruiting developers.
Why? 1. The lack of ambiguity of the scope gives developers the opportunity to determine their costs with some accuracy. 2. The requirements define the benefits of the project. Either the developers are convinced your logic is correct, and therefore will make money, or they do not. The former lot are those that you can convince.
[+] [-] kephra|13 years ago|reply
infinite ideas vs. limited time
[+] [-] sek|13 years ago|reply
There is an unlimited amount of ideas out there, so these are not the scarcity at all. So they are pretty cheap.
Being able to execute them is the big thing. The ideas that sound really worth something, like patents are created by the Engineers themselves with an incredible amount of work.
Why should anybody care about your shower idea?
This also annoys me about the "idea guys", they are often incredibly simple. They didn't do any market research to validate anything, or thought about all the possible risks.
When somebody comes to me and says: "I had an idea and spent the last 2 months doing research about it. So I modified it and now have something where I am pretty confident there is demand for it."
This is something I would take serious.
[+] [-] cassetti|13 years ago|reply
[+] [-] OafTobark|13 years ago|reply
[+] [-] mmahemoff|13 years ago|reply
I think the best thing a non-technical founder can do is follow lean principles and bring actual data to the table. Show they've actually done the research - MVPs, letters of intent, etc - and make it clear they have a vision they can execute on. All of that is in the realm of possibility for someone who's not a programmer, and would help to make the case they're serious and capable.
[+] [-] Apreche|13 years ago|reply
[+] [-] benjamincburns|13 years ago|reply
A chicken tells a pig that they should start a restaurant together. The pig tells the chicken no. "Why?" asks the chicken. "Because you'd be involved, but I'd be committed."
Revenue share is a great idea, but there's no way I'm working on your idea for free while you just sit around and wait for me to make you money.
[+] [-] patman81|13 years ago|reply
If someone comes along with a great idea and suggests a revenue share, reminded him about the old truism that the idea is 1%, while execution is 99%. At least that will give you a starting point to negotiate the percentages of the revenue share...
[+] [-] georgespencer|13 years ago|reply
[+] [-] lifeisstillgood|13 years ago|reply
Maybe if you are getting approached by morons a lot you might want to review where you are hanging out - just there mus be some reason
[+] [-] joshcrews|13 years ago|reply
[+] [-] sopooneo|13 years ago|reply
[+] [-] orangethirty|13 years ago|reply
- They cannot pay my rates.
- The client seems shady.
- The team/person will not agree to my terms.
- We have a chemistry clash.
- Red flags regarding the way they talk about people.
[+] [-] dhimes|13 years ago|reply
But good ideas are quite rare.
[+] [-] hcarvalhoalves|13 years ago|reply
[+] [-] pknerd|13 years ago|reply
[+] [-] gesman|13 years ago|reply
"...and i think it's not that complicated"
"...it shouldn't take more than ... to complete"
"...Joe Blow said it's simple and let's assume that"
[+] [-] radio4fan|13 years ago|reply
But then I think that nearly everyone has a tendency to think that anything they don't fully understand must be simple.
You don't have to hang around here or on Slashdot for long to see that programmers suffer from this too...
[+] [-] lampe|13 years ago|reply
I often get requests of ideas but they are so hard to execute that you would need a bigger team to do it and a lot more money then the idea holder has...
[+] [-] rwaliany|13 years ago|reply
I wrote a post covering 'Business Product Responsibilities' with a graph here: http://simplyryan.com/2013/01/19/business-product-responsibi....
I have found that I don't want to work with non-technical founders because they often don't take ownership of their responsibilities.
[+] [-] nimrody|13 years ago|reply
For some reason developers/engineers tend to be pessimistic while leaders/idea people tend to be optimistic.
In order to produce really great products you probably need both sides -- so don't dismiss the "idea guy" without giving the proposed idea at least some thought. Perhaps the original idea is too broad but can be the basis for a useful product.
[+] [-] FollowSteph3|13 years ago|reply
[+] [-] yoaviram|13 years ago|reply