Hacker and non-hacker partnership scenario. Would you?

#1

Post by vik1211 » Fri, Aug 16, 2013, 5:17 PM UTC

Hypothetical scenario:

Non-technical working professional has business idea and wants Hacker co-founder to build a prototype. Non-technical will put up money to develop prototype and compensate Hacker with salary + equity, or any mutually agreeable compensation structure. Non-technical will provide rough cut of what the vision is and then step back and let Hacker work without interference. The only product control Non-technical wants would be editorial/final say. If prototype gets traction and scales, Non-technical would concentrate on business, fundraising and hiring the best people for the business and product ends.

Non-technical's motives: wants to invest in a great idea, company, and team but isn't considered an "accredited" investor, is risk averse to the extent that Non-technical wants to keep their day job in case product doesn't scale (has spouse, kids, etc), and is genuinely fascinated by startups and hackers and using disruptive technologies to punch bloated business models in mouth. And to prove that passion is willing, initially, to use their own funds to launch a minimum viable product.

Is this a scenario that a hacker would be interested in? Why or why not? Are there any holes or issues with the hypothetical? Looking forward to the commentary.

Update #1: Has anybody actually been a part of such a scenario? If so, care to comment on the successes, failures, upsides or pitfalls?

Re: Hacker and non-hacker partnership scenario. Would you?

#2

Post by makerops » Fri, Aug 16, 2013, 5:30 PM UTC

Yes, this is probably one of the few scenarios I would partner up with a business guy (salary and equity), the others being a proven track record, or equity in a profitable co.

Re: Hacker and non-hacker partnership scenario. Would you?

#3

Post by mchannon » Fri, Aug 16, 2013, 6:59 PM UTC

The problem that most people have with this implementation is their salary numbers are quite low, and their equity numbers are quite low or zero.

You have to be very careful to avoid falling in the "build this for me and I'll share it with you" trap, because talented individuals get pitched this way all the time. In fact, you're going to get lost in their mental spam filter if you don't deviate from this stereotype immediately.

Whether you yourself feel this way or not, leading off with admitting you can't do what they can do by yourself, that you're willing to pay handsomely for their help, and that you bring a significant amount of value to the table yourself (not just money, ideas, vision, and a sense of ownership but the ability to raise capital, sell to people, etc.), will be the path to landing the best cofounder.

Re: Hacker and non-hacker partnership scenario. Would you?

#4

Post by beat » Fri, Aug 16, 2013, 7:09 PM UTC

mchannon wrote: post #3

The problem that most people have with this implementation is their salary numbers are quite low, and their equity numbers are quite low or zero. You have to be very careful to avoid falling in the "build this for me and I'll share it with you" trap, because talented individuals get pitched this way all the time. In fact, you're going to get lost in their mental spam filter if you don't deviate from this stereotype i…

Co-found with a division of ownership on a vesting schedule. That way, if either of you bails, the other isn't stuck with a non-productive co-founder making money off your work.

And make sure both sides are bringing plenty to the table. The business/tech co-founding team is a great model (beats the heck out of most tech-led startups), but it should be fair.

Look at it this way... if you're willing to work on these terms with this business founder, could you work on the same terms with a different partner for better financial terms or chance of success?

Re: Hacker and non-hacker partnership scenario. Would you?

#5

Post by brudgers » Fri, Aug 16, 2013, 7:27 PM UTC

"If prototype gets traction and scales..."

How is that going to happen if the business partner is working a day job and waiting for Godot?.

Products don't sell themselves. Customers don't provide their own customer service, etc. Having final say is just having a non-technical opinion, it's not a real commitment. A founder who puts up cash is nice, but not a substitute for sweat, and is best treated as a loan rather than exchanged for equity.

I am not saying the roses won't grow, but I don't see the scenario as ideal for either partner - the employee/employer relationship is well below ideal.

Re: Hacker and non-hacker partnership scenario. Would you?

#6

Post by vik1211 » Fri, Aug 16, 2013, 8:40 PM UTC

brudgers wrote: post #5

" If prototype gets traction and scales..." How is that going to happen if the business partner is working a day job and waiting for Godot?. Products don't sell themselves. Customers don't provide their own customer service, etc. Having final say is just having a non-technical opinion, it's not a real commitment. A founder who puts up cash is nice, but not a substitute for sweat, and is best treated as a loan rather…

It sounds like you're more of a proponent of Hacker doing a work-for-hire or one off freelance project for a fee -- as a way to avoid the inherent employer/employee antagonism from the get go?

Re: Hacker and non-hacker partnership scenario. Would you?

#7

Post by pjungwir » Fri, Aug 16, 2013, 9:45 PM UTC

The non-technical founder can afford to pay his partner a salary, yet is not an accredited investor[1]? And will also fund the business re server costs, design, marketing, etc.? If I were the developer I'd be very suspicious. If the non-technical person isn't offering time or skills either, I'm not sure what they're bringing.

This also sounds like doublespeak: "work without interference" vs "editorial/final say." Sounds like "final say" is still basically unlimited, and I'd rather get approval before doing the work than after!

[1] $200k annual income or $1m assets (sans house)

Re: Hacker and non-hacker partnership scenario. Would you?

#8

Post by vik1211 » Fri, Aug 16, 2013, 10:22 PM UTC

pjungwir wrote: post #7

The non-technical founder can afford to pay his partner a salary, yet is not an accredited investor[1]? And will also fund the business re server costs, design, marketing, etc.? If I were the developer I'd be very suspicious. If the non-technical person isn't offering time or skills either, I'm not sure what they're bringing. This also sounds like doublespeak: "work without interference" vs "editorial/final say." Sou…

What could make this scenario less suspicious for you? Strike the phrase "final say." The intent was only editorial: "Hacker, everything looks good overall, but how about dialing it up a notch here or dialing it down a notch there." Non-technical wants to ship, not wrestle back and forth on minutiae. The idea is to collaborate around a common idea and then recruit customers, partners and investors. Collaborative not antagonistic!

Also, to clarify, Non-technical has savings and and investments and is willing to cash out and spend to build a MVP. Non-technical wants to found a business based on their original idea and then recruit talent to build out a company.

Is your take that such a scenario isn't possible? And that Non-technical should wait out and accrue enough wealth to qualify as an accredited investor and then just invest in a team to develop his or a similar idea? Would this make Non-technical less "suspicious"?

Re: Hacker and non-hacker partnership scenario. Would you?

#9

Post by vik1211 » Fri, Aug 16, 2013, 10:36 PM UTC

mchannon wrote: post #3

The problem that most people have with this implementation is their salary numbers are quite low, and their equity numbers are quite low or zero. You have to be very careful to avoid falling in the "build this for me and I'll share it with you" trap, because talented individuals get pitched this way all the time. In fact, you're going to get lost in their mental spam filter if you don't deviate from this stereotype i…

Let's say the product was based around a mobile services app. For discussion let's say Uber for dog walking or Uber for X. What would you consider a reasonable salary and/or equity stake for Hacker to be interested. Assuming solid business model, marketing plan, all else equal.

Re: Hacker and non-hacker partnership scenario. Would you?

#10

Post by mchannon » Fri, Aug 16, 2013, 11:00 PM UTC

vik1211 wrote: post #9

mchannon wrote: post #3

The problem that most people have with this implementation is their salary numbers are quite low, and their equity numbers are quite low or zero. You have to be very careful to avoid falling in the "build this for me and I'll share it with you" trap, because talented individuals get pitched this way all the time. In fact, you're going to get lost in their mental spam filter if you don't deviate from this stereotype i…

Let's say the product was based around a mobile services app. For discussion let's say Uber for dog walking or Uber for X. What would you consider a reasonable salary and/or equity stake for Hacker to be interested. Assuming solid business model, marketing plan, all else equal.

If I was a recruiter in the bay area, I'd guess you could find some B-grade talent who could knock that out for about $80k/yr., and A-grade talent for about $150k/yr. There's a whole litany of variables here, like where the talent can live, exactly what you need and on what platform, how fast you need things done, and how many more people they can bring on and whether they can manage them effectively.

Mobile talent is extremely sought after in this day and age, particularly when you start adding essential skillsets for a successful startup.

If you up things to 50% equity, you might be able to take a small amount of the salary number away to attract the same pool of candidates, but not a lot.

Expect those salary numbers to drop significantly if you set up shop in other parts of the country (and particularly the world).