What would be the appropriate share?


1

I'm a software developer in a East European country working for a tiny software firm with only few developers. Our owner is also our manager; he lives in the North America and makes arrangements and gets specifications for our projects which are mostly smaller web-based apps for internal usage. Our two biggest clients are from the financial industry, although from time to time we simply make a website for some company.

I was the first employee in our firm and for a couple of years I was designing, developing and updating all the projects that we worked on. All of our clients seemed to be very happy. I never talked to or met any of them but I noticed that they only kept asking for more of what I did. My boss was also happy. I don’t know how much custom software development costs in the developed world, but I assume that it’s well over what I cost him (around $1500 with all taxes/month).

Over the time he decided to hire more people so he hired few developers more, but they don’t have any experience, nor they had to pass any test. I had vast experience in different companies and different technologies prior to this job and better education. We ended up in a situation where I’m doing most of the work, basically all of the work for all larger projects and most of the work on simpler ones. I probably have the largest salary, but that’s certainly far away from being proportional to my productivity.

Now, our boss got a chance to sign a very lucrative contract with a very large North-American company, kind of deal where we’ll charge them per transaction. Expectations are that during next year that deal alone will cash us between half a million and a million dollars. It is very unlikely that they will succeed developing that without me, especially since the quality requirements are pretty high and deadline is only 6 months. With me the project would be done within that deadline, and I would do at least 80% of it. After the initial start (in 6 months) there will be a lot of development on that project for years to come.

Now, I feel that I deserve some share of that deal; however I need my salary as well. So my question is: is it fair to ask for a percentage of that deal (while keeping my salary) and what is the appropriate percentage to ask for?

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asked Mar 3 '11 at 09:08
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James Blunt
8 points

4 Answers


1

Let me first be the employer in this senario. So far I have taken all the risk, if it all went bad it was my head on the chopping block, my ability to negotiate the deals, my drive that got the company there.

You have done some good work, and been paid a good rate (for your area) for it. There hasn't been any issue with the arrangement till now.

If the company had gone badly instead of good, you would have just changed jobs and continused on your way. Depending on the country your in the owner of the business is liable for all sorts of things, here in Aus you run the risk of being banned for up to 7 years if your business fails ... That is the perspective / mindset your likely to be facing.

That said, your a key asset in the business and if your as good as you say you are then I would be interested in keeping you around (and personally I would have given you shares at the beginning).

What you need to do is offer to take a higher role ... just just "another developer" good though you may be. I started out as a developer and my company is all developers, they all think they are awesome and indispensable ... but there are some skills a growing business needs more.

The offer I would want to hear from you is to become the CTO Chief Technical Officer or equivelant. To look after the strategic technical side of the business, work out what is likely to need to be developed and arrange / lead all the other developers to do it.

You are in the perfect place having developed across all of the systems, worked for nearly all the clients, you understand the needs and goals they have, you have delivered to all of them.

If you came to me and said "I believe in this company, I am excited by the prospects, I have some great ideas, I'm ready to step up and do this for you and take on a larger role".

This is changing the game, offering more, showing your position and unique and valuable against everyone else.

The next question then is ... So what do I ask for? If you had done that before the contract was landed, it would have been higher ... now that everything is going well and safely ... I would be a little put out.

If there is only him owning 100% then I would ask for around 20%. If they already have investors and a split then I would suggest working out what that is first and seeing where you fit in. He may be down as low as 51% himself already in which case your approach and amount should balance ... your wage can probably increase a bit as well without worrying too much.

What do you know about the company?

Oh and the other thing ... if you take on this new role its no longer "BOSS"/"EMPLOYEE" its "US" in this together, its a very different mindset and a very different approach you need to take.

answered Mar 25 '11 at 16:12
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Robin Vessey
8,394 points
  • I'm marking this as an answer because this is the only answer that's actually proposing what would be the 'fair share'. Thanks for the answer. – James Blunt 8 years ago

0

If you have this conversation with your manager, I suspect you will hear the following:

  1. The reason this deal is so lucrative is because I have spent years cultivating the contacts that made it possible. That is what is so valuable here, not the programming effort.
  2. For years now I took all the risk and you took a paycheck. You got yours in the form of security. I am getting mine in the form of opportunity. That opportunity is now paying off but I'm the one that went without the security so as to have the opportunity. It is my time.

Ok, so what to do? You could take a chance that he really can't do it without you and you can force him to to pay up. That won't make for a very friendly relationship going forward. Furthermore, you could be replaceable. (Hint: EVERYONE is replaceable.) Then you would have no friendly relationship and no job.

By your account, you sound like a talented and experienced programmer. Staying in business for years is no simple feat, so we can also assume your manager is a capable one. You will both likely have some difficulty replacing the other. So go to him with this note in hand. Tell him you recognize his contribution and appreciate his shouldering of the risk. But what would be a small piece of the new revenue stream would be of huge value to you. You want to stay with him and you want the relationship to remain strong. Then ask for a number. Don't give him a range. If you want $3,000 a month, don't say "two to three thousand". Then shut up. Whoever talks first loses. If reality is even close to what you are describing, I say you have a good chance of making this deal and keeping everyone happy. Now if you ask for $30,000 a month, I don't know.

answered Mar 3 '11 at 13:11
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Kenneth Vogt
2,917 points

0

Hindsight is a wonderful thing... Ideally, this is a conversation that you should have been having before this specific situation. Because it would be very easy for you to come across as holding your boss to ransom, and that is unlikely to end well.

From what you say, it's possible that you are being treated as a commodity on purpose. And it's also possible that he values your role and contribution highly and you and he have just never had a serious conversation about how to develop that over time.

The bottom line right now is - you are employed on specific terms. You almost certainly don't have any right to demand a unilateral change of terms. But nor are you bound beyond your contract - you have skills and experience that would position you well for another job, or to start your own development company.

You need to judge which situation you're actually in, and in any case you need to invest some time and thought in seeing things from his point of view - as ultimately you are hoping to come up with a win/win arrangement where you both benefit. Cash isn't the only possible benefit for you - expanding your role at the front end of the business might be rewarding and valuable, for instance.

Keep in mind that first and foremost, this is a positive situation - new business to service, that will enhance your reputation. It's brought some concerns you already had to a head. So use the situation positively, and don't make the mistake of assuming the worst interpretation.

answered Mar 3 '11 at 18:38
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Jeremy Parsons
5,187 points

0

We all naturally over-estimate our contributions. Steve Covey said, "We judge ourselves by our intentions and others by their actions." Obviously, your employer is doing a lot of things right to get a company to pay big money. With that said, it sounds like you helped him get there. If you helped build the company, you should get something beyond an employees wage. Just be earnest. Tell him that you're not like the other employees. If he's smart, he'll keep you happy.

It sounds like you're willing to hold this deal over his head as ransom. That's very Eastern European of you ;) Don't do it. This guy isn't a dummy. He'll sniff that out pretty quickly. Good luck.

answered Mar 25 '11 at 14:25
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Sparagi
346 points
  • No, I didn't want to blackmail anyone ;) If I did I wouldn't be posting this question (and I'd probably end up with _some_ share of the company ;))Thank's for the answer. – James Blunt 8 years ago

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