

Ask HN: How would you start a Fortune 5Mil company with friends? - rschmitty

Fortune 5 Million, from 37signals @ Startup School, meaning not trying to be the next Silicon Valley company with a big exit goal, just something big enough to maybe someday quit the day jobs or "worst case" just have some extra income.<p>Over the past year, I've had some weekend projects that are coming to a boil.  I've reached out to a couple friends to see if they wanted to help push these along and get them finalized.<p>Here are my concerns:<p>1) All 3 of us are slightly older than (at least what seems to be) the younger HN crowd.  We have families and kids.  Quitting our jobs, living off our girlfriend's couch and ramen noodles isn't an option.  So we are limited to time when we get home from work/travels and weekends.<p>2) Additionally these projects aren't at the point of generating money.  However I believe, and so do they, that they have the potential to make money.<p>3) I've done these projects in Rails, they are respectively very experienced in .net and the other in php, neither with any rails experience.  I guess this isn't a real concern because I enjoy teaching Rails to others and they are the kinda coders who like to learn.  They know they wouldnt be entering at the level of pushing code live and would have me review it.<p>I've got a pretty good start, but need their help to increase my code bandwidth and finish up (or its going to take me many more weekends than I'd like).  So I was thinking of just doing % based profit sharing.  I want this to grow from: "cool it is paying for servers" to, "hey an extra $500 a month!", to "this has enough traction to quit and focus 100% on this project"<p>Are there pitfalls with this way?  How do you decide what % everyone gets?
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tagabek
If everyone is doing equal work, go 50/50. If you are spending 30hr/week while
others are only putting in 10, you may want to take more for yourself. The
best solution is to talk to everyone about what they feel is fair. If you're
already friends, this can be an easy or an awkward conversation. It's best to
get it out of the way immediately.

As far as pitfalls go, you will endure most of the same stresses that startup
founders go through. This is a difficult but rewarding process, so best of
luck to you and your team!

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mindcrime
_However I believe, and so do they, that they have the potential to make
money._

Every entrepreneur "believes" that his/her project has the potential to make
money. They're probably even right that it has "potential". But you can't pay
the bills with "potential".

My question(s) would be: Have you done any market research? Have you talked to
the prospective customers for this thing? Do you have any low-cost way of
validating your gut-feeling about the demand for what you're building?

I don't want to sound like Debbie Downer, but it would be tragic to burn a
pile of time and energy building something and then find out that there's
actually no market for it. Or, that there _is_ a market, but that it's not
large enough to sustain a business in the long-term. Or that there _is_ a
market, but that you can't serve it profitably.

I'd try to make sure I had this stuff nailed before even getting into the
equity splits and profit sharing discussions with your friends.

~~~
timmm
Or alternatively instead of testing the market with the mindset of absolute
consumer naivety.... and the fact that in this industry it's much easier to
make a bet that your comfortable with and then just putting it out there and
see. No amount of market research will tell you that an iPad was a good idea
for a product. Likewise I don't need any market research to know that a
teleporting machine would be a good idea.

Learn how to understand what has value. Build things for yourself that you
find valuable and sell those things.

I've never done market research and I sure as hell don't ask my customers for
feedback. I just build things I want and it turns out I'm almost never alone,
the question then becomes a matter of just how much other people want it. But
again this is all predicated on the idea that you actually know what is a good
idea for a product (which I believe many people do know).

~~~
rschmitty
Thanks, but ya I've already spoken with people and they are asking to start
paying for this.

I was more focused on how you might go about equity splits

