Sharing workload between partners when I am the only developer?


6

I have been dipping my toes into a web-based startup idea with two others.

They approached me with the original seed of an idea, but neither are developers. So I would be building the (fairly large and complex) product entirely, while they handle everything else (all the "business stuff", marketing etc.).

  • Is it realistic to expect our three workloads to be similar/fair?
I could imagine if there were two developers and the third partner was handling all the business/marketing stuff it would work, but with two of them doing all of that I am struggling to see what they would be doing on a day-to-day basis while I am investing hundreds of hours of my time into this endeavour.

The concern is, if the project fails, I stand to loose a lot more time and energy than the other two, yet our equity shares would still be the same.

  • Is this a reasonable concern? Or am I underestimating the amount of effort involved in the marketing/accounting/"business" part of this endeavour?
  • If I slack of, it will be obvious, as the product will not progress. But if they slack off, how could I tell? (I don't expect them to, this is all hypothetical)
  • What should they be doing for the first X months while I am developing the product/there is nothing to show?

Clearly they will be involved in the development as much as possible, but beyond running ideas past each other there is nothing technical they can do to assist me.

  • Is it uncommon for someone in this position to be paid up front as well as their share of equity?
(E.g. figure out how much time I will be spending, work this out as a $ amount, and call that my up-front investment/contribution, and ask the other two to make the same contribution)



edit:
Here is a quote from this answer which summarises what I am saying:

I'm a Software Developer myself and starting entrepreneur. Every week I get 3-4 offers from business people who 'have great idea and just need a coder to implement it'. When people say "I'll give you 5% if you build this app for me" my answer is "What do you bring to the table that makes you own the rest 95%?". Most of them have nothing to say except for "Well I think I have a great idea". Guess what? The idea is worth nothing. The implementation - that's what really matters. And guess who's going to implement the biggest part?

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asked Mar 12 '11 at 16:23
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Elwyn
131 points
  • Ahh how to pick one 'answer' when they are all so thought provoking and raise many valid points?! Thanks guys, great advice so far – Elwyn 8 years ago
  • What do they bring to the table? What is their background? What domain expertise do they have? Why do you need *two* of them? How replaceable are you? How replaceable are they? – Joseph Turian 8 years ago

8 Answers


3

We typically have a few standard metrics we use to run through how much a share is worth:

  1. Idea: 3% - 5% - ideas these days are cheap, everyone is having them its execution that counts.
  2. Technical: 15%-35% - all developers (including myself) think its worth more but if you don't have the rest in place then its just a cool thing that sits on the shelf being worthless to everyone. That said you want the developers to have a good stake in the product so they are suitably focused in the end result.
  3. Marketing / Sales: 15% - 30% - This is pretty important, if nobody knows about you, your nowhere ... but put KPIs against it - X new customers / sales in a timeframe.
  4. Business: 20% - 30% - The leadership and vision, this is typically one or two people and they will make or break the company on its own, set the direction.
  5. Finance: the remainder, depending how much they put up, others adjust accordingly.

Again for all of them it is to be qualified ... everyone should have a 1-2 year "buy-in" period where they have to perform at their role in order to receive the shares ... its only but everyone pulling together that you will get anywhere.

Really these are pure guideline or a starting point for negotiation.

answered Mar 15 '11 at 16:48
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Robin Vessey
8,394 points

2

I have been there.I was the only developer in a startup and what i realized is that the so called partners handling the marketing part will always over rate their worth,although they will never tell you this.

When the marketers tell you they will give you a certain percent,there is always a trick on their side.Once they get the product they will sell it, resell it and get another developer to handle support and future improvements.They will aim to make sure they continue earning even after you 'decide' to leave.

I have listened to great ideas and they appear to have lumps of pounds lying somewhere but they mostly operate on credit with some "temporary" office serving as their work place.The solution is to demand in writing their commitments to splitting the income from the product fairly.

answered Mar 14 '11 at 21:24
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Boot Baby Boot
121 points

2

I have been in the same boat a while back, so trying to answer some of your concerns:

  • I think it's particularly hard to estimate fairness in any organization, especially with startups, when the end product isn't even 100% blueprinted.
  • I think your concern about your loss is totally legitimate. To better help you and your teammates assess each other's contribution, you should probably try to understand more about their work, while trying to help them understand yours. Doing a startup needs everyone to share responsibility and understanding of the product and business strategy. If this is a problem, call it off early.
  • It's sometimes easy for us technical types to say that without us there won't be a product, but doing business/marketing probably requires personal/social skills, mindset and time that we don't have. Take time to ask questions about the business side of things will not only help you evaluate if they are slacking off, it will also show your dedication to the team and teach you something new. Win-Win.

HTH

answered Mar 12 '11 at 17:25
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Individual101101
131 points

1

What should they be doing for the
first X months while I am developing
the product/there is nothing to show?

You should ask your partners this question. If they don't have an answer or think they can't do anything until you've built the site, reconsider their qualifications. Search this site for similar questions and answers regarding building a website before you've developed a market.

Now let's turn the tables. You say it's a complex website, but how do they know? You say it took you 100's of hours, but is that true and/or are you being productive. They don't know how much work to expect from a competent developer. For all they know, you paid some high school kid a few dollars to build the site and you got 1/3 of the equity. You're value will get recognized if you actually get something built (and it doesn't have to be the full site.).

Who is going to pay the expenses going forward? You will need to incorporate. Get a lawyer. Pay hosting fees. Create a logo/hire graphic designers.

The more upfront salary or guarantee of payback you require, the less equity they should give you. Ideas are nice, building a site that works is great, but that's not enough.

answered Mar 14 '11 at 21:55
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Jeff O
6,169 points

1

It's quite common for founders to get paid for what they are doing, for example I've got partners however they work only 1-2 days per week and I work 5-7 days per week. My salary from the company is much higher than theirs.

However in the beginning there is no salary generally and even though your workload is much higher right now in the long term (hopefully when your business picks up) their workload will increase as well (although need to note yours will almost never gonna go down :) )

answered Mar 14 '11 at 22:37
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The Dictator
2,305 points

1

It is a valid concern. Here is what I would do.

  1. Track your time with Freckle or something similar
  2. Set up specific goals (with deadlines) for your marketing biz people, and you - it's harder to measure biz productivity than developer productivity so you want to push that back as long as possible.

That's not a total answer, but it's something you can do right now.

answered Mar 15 '11 at 00:31
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Steve French
621 points

1

This is kind of a bullshit answer, IMO

Most of them have nothing to say
except for "Well I think I have a
great idea". Guess what? The idea is
worth nothing. The implementation -
that's what really matters. And guess
who's going to implement the biggest
part?

It takes two to tango. You can't do one without the other, but the truth is developers (well, run of the mill) are a dime a dozen. Not to discourage developers, I love them and am learning some coding myself... just that ultimately whether a business succeeds or not has a surprisingly small factor on the product ("the code") itself.

That said, you really should take a few things into consideration here:

  1. Are they putting any money into the business
  2. Describe the workload. I would put together a business plan that says what every partner is responsible for. If you expect it to grow fast and you have one general business manager and one sales person, that's a pretty fair breakdown.

In the end it's really gut instinct. You have to be comfortable with the arrangement, and it sounds like you are not, so I would be careful with how your proceed. I'm in the middle of launching a new startup and we are split 50/50, myself doing the busienss plan, projects, marketing material while my partner is doing all the design and coding. We are both happy with our arrangement.

answered Mar 15 '11 at 04:18
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Nick
1,171 points

1

It's a reasonable question but there is no one, set answer.

Vizzini

It's their idea, not yours, perhaps they should have a bigger share of the pie than you.

But the market is full of failed companies, or even failed inventors with great ideas who couldn't execute them, while you're a stellar programmer about to create the next killer app so perhaps you should have a bigger share of the pie than them.

Do they really bring only their idea and nothing else? Perhaps while you are slaving over gdb, they are using their marketing skills or finances skills to actually sell the service you create, so perhaps they should have a bigger share of the pie than you.

Who is determining what the user requirements are, who is determining what the user is finding of value, what will actually sell for $money? Is that you? Perhaps you should have a bigger share of the pie than them.

Who is creating the spreadsheets and the marketing materials and talking to potential investors and working out the legal issues while you determine if you're going to use Ruby or Python? Is that them? Perhaps they should have a bigger share of the pie than you.

Who is creating the value in the actual implementation that keeps your customers with your solution and not some newcomer's product? Who determines what new features there should be, who determines how to keep customers from switching, who owns the interactions with the customers? Is that you? Perhaps you should have a bigger share of the pie than them.

Build a better mousetrap, and the world will beat a path to your door

Do you find this to be true? As a programmer, is building a better application necessary or sufficient to make you successful?

Many people believe there are lots of other required functions to that someone will have to provide. Money to invest to pay the bills before sales are sufficient. Leadership in the company and leadership to outside investors, suppliers, vendors, customers. Sales. Marketing. Accounting. Hiring. Renting an office. Determining how much money you need.

The inventor who builds a better mousetrap who lives in the middle of a thick forest surrounded by wild beasts, cliffs, and rapids may sell nothing. The guy who figures out how to get his product to market, and make it well known, and make it's value accessible to customers, he may get all the money and deserve all the money for being the true "innovator".

Is the software market filled with the best applications being the best sellers, or the applications whose companies were best at selling their somewhat okay applications?

At least, that's the crap they tried to convince me of when I was getting an MBA.

You may also wish to google Michael Porter's five forces, or how to value a startup company, or spend a bit of time learning about startups before you agree to invest your time in one, or agree on how you folks should divvy up the booty.

answered Mar 13 '11 at 04:58
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Jerry
171 points

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