

Ask YC: How can you recruit and reward non-founder programmers at early stages? - netherben

I constantly run into situations, where it would be useful to recruit additional non-founder programmers to help out on a project.  However, I am not sure what compensation should look like for these non founders.  I.e. We have been working on a project part-time for over a year, but could use another rails developer to help out on our front-end work.  We'd like to pay with equity, but I am not sure what that normally looks like.  Ideas?
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m0nty
My own experience of working in a startup (Bubble 1.0) was that (as techies)
the web designer and I were completely ignored and counted out of the
decision-making processes, even for deeply technical matters. I think this
stemmed from the insecurity of the boss, and his second-in-command who was
supposed to be "a marketing genius" but somehow never achieved his full
potential ;)

Anyway, we were excluded from meetings, and even when we were invited it was
only for show and we were told to leave whenever the grown-ups had to make
real decisions. The boss started showing people around the office saying "This
is our accounts person, Jo. And our support person, David. Oh, and we've got a
couple of geeks out the back but I won't bother introducing you to them."

This was an extreme example but it's often similar to that wherever I've
worked: techies are viewed with a mixture of suspicion and contempt. If you
can get over that and allow all your people to engage in decision-making (not
always possible, but desirable, I believe) you will find it easier to retain
them, despite lower salaries, etc. You probably know much of this anyway but
it's worth keeping it in mind and using it to "sell" the job to potential
applicants.

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emmett
You're obviously not working at companies dominated by engineering (cough,
Justin.tv, cough).

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m0nty
In that specific case, I was. It was very strange... I mean, there were about
three or four business plans, each of which centred on the Internet. When I
finally left for a contract at double the money, the boss held another secret
meeting where he told everyone not to talk to me for the duration of my
notice, because I had been "disloyal". One of the office monkeys habitually
referred to me as "Spacker" after that. Looking back, I have a headache ;)

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wheels
In my opinion, if you don't have money to pay them yet, they're a co-founder,
even if you've already been working on things for a year. General rules for
finding co-founders apply.

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cabalamat
And these rules are...?

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wheels
I'm not sure there's a reasonable compendium, but Paul's written a lot on such
in his essays. There's some here:

<http://www.paulgraham.com/start.html>

For me it's pretty simple, though finding and verifying is the tricky part.

\- You have to be able to put up with them. A lot of them. Really a lot of
them. It's kind of like getting married there.

\- They should be able to do something essential to the company's survival.
And they should do that while "getting" what you're doing and thinking it's
special.

\- You trust their judgement. Enough to bet a few years of your life on it.

"Art of the Start" also has some decent info there.

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vaksel
well right now the ball is in your court. There really aren't that many jobs
out there, so you can get a decent programmer who'll take the pay cut just to
have a job.

But you do have some other options.

You can give out different titles, lets say someone is just starting out, and
you start calling them senior developer on paper, no impact now, but for their
next job they'll be able to ask for a lot more money .

The stock options etc have been mentioned, so I won't cover it.

Office space, stay away from the cubicles, and have a relaxed policy.

Workhours, instead of working 9 to 5, offer them to work 10 to 5. + have
general flexibility, better to have a good programmer for 4 days, than have
someone crappy for 5.

Basically use small stuff like this to make yourself appealing to a certain
niche of programmers. So that they'll be much more willing to take a pay cut
and work for you.

~~~
cnu
Wouldn't you like to have first few programmers to be interested enough to
work for 12 hours a day, all days a week than to let him think that getting a
low pay means I can do a crappy work for 4 days?

~~~
vaksel
A good programmer will do more work in 4 days, than a crappy one can do in 7.
So its a net gain overall.

And the shorter work week will help you attract the higher quality of talent
who are willing to take a paycut in order to get more free time.

If someone is good enough, why would he want to work his ass off for 12 hours
a day for someone else. That type of workload is co-founder territory.

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anamax
> We have been working on a project part-time for over a year, but could use
> another rails developer to help out on our front-end work.

The fact that you've been working for a year isn't all that relevant. In fact,
what you've got now isn't all that relevant. The important thing is what goes
into the next step. If all your work is a small part of that, the folks doing
the rest get the big piece of the pie.

Think of it from the other side. How much would someone pay you for what
you've got now if they have to do the rest?

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patio11
1) Achieve revenues.

2) Hire freelancers for well-defined specific tasks targeted at increasing
revenues, aiming at the low-hanging fruit first.

3) Repeat until you have your own private island.

This works for other skilled workers besides programmers, too. I don't make
nearly enough from BCC to hire my writer full time (she has a masters degree
and has commitments that make full time impossible at any price) but I get an
awful lot of bang out of $100 per month.

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geoffc
5-10% depending on the quality of the developer is what I have done in the
past and as soon as we start making cash they start getting paid. Also I only
do this deal with folks I know well as it is so much more complicated than
standard hiring.

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dazzawazza
So much more complicated is an understatement. Complications with IP, firing
and sickness spring to mind.

If you know the person well you still need to be careful with the contract but
you should be less likely to fire them and get into an argument about equity.

~~~
rs
To think about it, knowing the person well might even be worse if you end up
in a sticky situation. Not only have you just lost a friend, but your
reputation as well. Moreover, chances are high that he/she will be in the same
social circles as you - which ends up getting even more messy

~~~
geoffc
To clarify when I say know well I don't mean friends I mean people who I know
have the coding chops to be worth the equity and pitfalls. I'm never had any
luck telling how good a coder is without working with them for 3-6 months,
after that it is obvious :-)

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ahpeeyem
As a developer, something I worked out with a startup trying to save some cash
was that I would work for about half my normal hourly rate up-front.

Then I would take a share in the startup's revenue (not equity - say 20% of
gross income) until the other half of my hourly rate was made up for - this
could take a year or two years etc, or if the startup is very successful it
could only take 3 months; but it is capped to the total 50% of the hourly rate
* number of hours worked.

I also would take an extra share of revenue, say for the first year, as a
potential bonus for taking on the risk of possibly not earning my full
developer rate if the startup fails. This extra could be 5% or 10% of the
first year or two years' revenue but is not capped and so if the startup is
very successful the developer could do quite well, but the founders have not
sacrificed any long-term equity in their business.

I thought that was a nice way to give the developer a share of the business'
success without actually giving up equity, and also without asking the
developer to take a total risk that they could have wasted their time and
never receive anything for it.

~~~
cmos
This is creative, but the problem with clever 'backpay' solutions and startups
is that often they are starved for cash, so the extra 5% or 10% is valuable
money that they could be using to grow the business.

From an owner's perspective, I would never spend future revenue today. What if
your not making enough money to pay the bills, yet have to give a percentage
of revenue to a developer? They aren't going to stick around if things get
tough.

It would be slightly safer to agree to a percentage of profit, but much better
to just give a percentage of the company. The same could be said for replacing
the lower salary. When you go to work for a startup there is a reason you get
paid less: cash in the early stages is extraordinarily precious. This can not
be said loud enough. I would not work for a company that didn't understand
this.

It's a battle to start a company, and you really need everyone "in the same
boat". If it sinks, everyone loses out.

~~~
anamax
> From an owner's perspective, I would never spend future revenue today. What
> if your not making enough money to pay the bills, yet have to give a
> percentage of revenue to a developer? They aren't going to stick around if
> things get tough.

If they developed the product that's producing said revenue, why does it
matter whether they're still around?

Suppose that your product required an expensive piece of equipment and you
didn't have enough cash to pay for it. (Or, you didn't want to pay cash.)
Would you object to paying over time? Does the answer depend on whether the
payments go to the manufacturer or a third-party?

Yes, you might well prefer terms with a fixed cost but there's a considerable
risk that they'll get nothing and it's unlikely that they can reuse the code
elsewhere. (Besides, you probably insisted on an exclusive license.)

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moe
We're in the same boat here and found equity share plus an adequate (although
not exactly "market level") honorary a good balance.

It lowers the barrier of entry for the would-be partner because he'll at least
get _something_ out of it immediately which is still better than working on
promises alone. It's also attractive for us because we obviously don't want to
give away too much of our equity early on. Remember: equity can only be given
out once, cash will hopefully be a regenerative resource.

Btw we're looking for flash devs, drop me a line if interested.

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andrewparker
The equity slice in compensation depends on the salary and the stage of the
company.

When the company is just a drawing on a scrap of napkin and no way to pay
salary, it may require as much as 10-30% of the company to convince someone to
come code for you. Based on this equity slice, the person would be essentially
a founder.

When your company is a small prototype and can only pay enough salary to cover
food, rent, etc, then you're probably looking at 2-8% of the company based on
experience.

When the company is a couple thousand man-hours of code and you can pay a
basic intro-level salary, then you're probably looking at 0.5-2% of the
company, depending on experience.

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GiantCrayon
Not to sound simplistic, but I think most any coder would work for a modest
salary if the work were meaningful or exciting to him/her. My first job
(coding) was for a company that made special software for financing insurance
premiums. No offense to anyone in that field, but to me, it wasn't a terribly
interesting subject matter.

On the other hand, I regularly see offers of people willing to volunteer on
iPhone game projects just so they can learn the ropes -- it's just that
interesting to them.

So, perhaps you should only offer the equity/money/bennies after you've found
someone who's passionate.

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pclark
How much equity have you set aside for non-founders in total?

Are you intending on hiring other developers? Is the developer you're hiring
permanent?

