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Proposition HN: I will pay $8000 for you to build your side-project/MVP

news.ycombinator.com

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Re: Proposition HN: I will pay $8000 for you to build your side-project/MVP

#121

Post by rdl »

The big question here is how many of these will you do, and will you be able to be a real co-founder to them. Doing one would be great. I could maybe even see up to 5 or so, since there's going to be an attrition rate on the people getting to MVP -- maybe a deal where if you decide not to go forward, they keep the $5k and 98% of the business?

I have no idea who you are, but if someone who seemed to be a credible cofounder offered to do a startup, front $5-8k, and do sales/dev/etc., that could be an entirely reasonable deal for some people.

Re: Proposition HN: I will pay $8000 for you to build your side-project/MVP

#123

Post by emidln »

danielweber wrote: post #19
a3camero wrote: post #15

Earlier quoted context omitted.

Or they live in a second/third world country, or they're a student, or...

$5000 to spend a month working on something you love isn't that bad for many places in the US, even. I wouldn't take this deal, because stopping / starting employment isn't that easy for me, but I can see other people rationally taking it. And if other people think he's underbidding, I would encourage them to bid him up.

A couple years ago I would have been all over this. I've done several ventures similar to this resulting in modest exits as well as couple resulting in being simply paid for working 4-12 weeks on something I want netting nice contacts.

It's okay if you don't hit a home run. It's even better if you don't starve or get evicted for your troubles.

Re: Proposition HN: I will pay $8000 for you to build your side-project/MVP

#124

Post by dude_abides »

This proposition will work IFF the OP has street cred. Why did you choose to go anonymous? Founders want a backer with street cred more than they want money. Most founders will gladly give 90% equity for a pittance if the investor is in the league of Ron Conway or a16z...

Re: Proposition HN: I will pay $8000 for you to build your side-project/MVP

#125

Post by chiquitabacana »

ChuckMcM wrote: post #117

This discussion is awesome! I would never have believed such a simple conjecture could provide so much illumination around the myths and realities of startups. First, its a great deal, both for hmexx and folks who take him up on it. Frankly I think it could be revolutionary. My reasoning is as follows; Many "products" over the last couple of years have been fairly straight forward web "apps" built on top of existing…

In the days of 1912 that was how we did it. That ol'good web app world.

Re: Proposition HN: I will pay $8000 for you to build your side-project/MVP

#126

Post by hmexx »

JaneLovesDotNet wrote: post #2

Pre-emptive FAQ: Isn't this a horrible deal? Incubators typically inject more money for far less equity! I earn $10K a month, I could easily save up $8K in a few months, and do this myself for 100% equity. True. If you can get into YCombinator, for example , you should obviously go for it. I can't compete with that. If you're earning $150K+, or you've already been working on your side-project for a year, this may not…

To those who responded by email. Please give me a few days. I may need to set-up a mailing-list/blog/twitter to broadcast info before getting to you individually as the response has blown past my expectations.

Re: Proposition HN: I will pay $8000 for you to build your side-project/MVP

#127

Post by loceng »

nkohari wrote: post #10

Wow. I'd rather go on fucking Shark Tank. If someone is willing to take $5,000 to do the heavy lifting up front (therein taking most of the risk) for only 50% equity, their idea is either terrible or they aren't committed to seeing it through.

And they're putting their idea they've spent a lot of time thinking about and are passionate about, and that OP thinks is quality enough that it could work; He's not going to put money into simple hobby projects.

Re: Proposition HN: I will pay $8000 for you to build your side-project/MVP

#128

Post by absherwin »

brudgers wrote: post #109
JaneLovesDotNet wrote: post #2

Pre-emptive FAQ: Isn't this a horrible deal? Incubators typically inject more money for far less equity! I earn $10K a month, I could easily save up $8K in a few months, and do this myself for 100% equity. True. If you can get into YCombinator, for example , you should obviously go for it. I can't compete with that. If you're earning $150K+, or you've already been working on your side-project for a year, this may not…

The time commitments which come from an incubator are related to why YC's stakes are in the range they are, and why it consists of partners. How many investments are you making? One or two, maybe 50% equity is fair for your efforts at building traction and growing the company. Ten, probably not. A hundred, no way. On the other hand, a 100 investments is probably what is needed for the chance at a real payday. On Grah…

If this were a one time game you'd be correct. Assuming, he can quickly filter out a significant portion, it's possible to be very involved and have a significant chance of a large exit. This, of course, assumes that he's good at what he does which is an underlying assumption of this whole proposition.

Rationale: Let's assume a home-run rate of about 3% which is my rough estimate of what it is for YC startups. That means that funding 75 startups yields a 90% chance of at least one home run.

Now one might ask how long this will take. If we assume that 50% of the companies can be marked as failures quickly, he will only need to invest substantial time in ~37 companies. If he can focus principally on 3 at a time for a period of 6 months, it will take approximately 6 years to achieve a 90% home run probability. Of course, he'll almost certainly have had some modest successes before then.

Again this is all predicated on hmexx being good at selecting and advising startups. For most people, the odds are much worse.

Re: Proposition HN: I will pay $8000 for you to build your side-project/MVP

#130

Post by drelihan »

Just one point: the 50/50 split can just be a starting point for profit sharing. Companies can be structured for that decisions/voting are handled independently from ownership percentages. 50/50 splits aren't forever either. Additional equity can be issued at certain milestones. There are a lot of ways something like this can be setup so its fair for everyone and it seems like hmexx is open to suggestions to make that fair.
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