

Win 5% Startup Ownership by making a Kick-ass Design - getp
http://kakuteru.com/design

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vlad
I don't think you want random entries. Why not interview respectable designers
and offer 5% to the the one who agrees as well as has the best portfolio,
references, and ideas you like? That's a much more sane thing to do
(considering somebody mentioned here at least one law firm in California
offered to incorporate some companies in exchange for small ownership of the
new entity, and small independent game developers often offer game royalties
to artists in exchange for artwork.)

But the best plan, and one most congruent to advice you would get from both
the programmers (successful game developers, business-savvy hackers, etc.) as
well as the artists themselves (designers: www.no-spec.com) is this:

1) ask around for recommendations on designers who've done related work before
and how they were like to work with

2) establish what you are looking for, together with the designer, and let him
or her create the art, of course making sure to have a contract that
stipulates what is to be done and allows for a couple of additional levels of
iterations

3) pay an agreed upon amount, not stock options. Yes, although I mentioned
that some indie game developers go the route of offering royalties to artists,
the real advice is to pay a flat amount to contractors for art, sound, and
music and then keep full ownership of the game, and save lots of time and
money managing royalties for the entire lifespan of the game, worrying about
trust and tax issues, creating contracts with others, and more.

As well, on the hacker side of the equation, the author of the submission
mistakingly equates "offering a few lottery tickets that might win five to
seven digit figures" with "attracting the best designers." If you want to have
a good design, you will have to do the leg work, and not throw it to chance
and then say, "well, I tried! Let me offer 5 or 10 more percent."

And here's a new submission that design contests might not even be legal:
<http://news.ycombinator.com/item?id=443758>

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wheels
This is going to go over really well in due diligence.

Edit: This might make more sense if you created a special class of stock
without voting rights. If you're essentially giving away 5% of a potential
exit someday that's one thing. Giving away 5% of control is another.

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pclark
5% is a ridiculous amount. What does this show to potential investors? You
either value 5% of your company at ~$1000 or you're insane.

~~~
charlesju
5% is not a ridiculous amount.

You have to think about the expected valuation of the startup. What are the
odds that this particular startup is going to exit. As a lifestreaming
service, I'd say the odds are around .01% (sorry, lets be realistic, web 2.0
doesn't have that many exits).

Given an exit of about $1M, we're talking about an expected valuation of the
company at about $1,000 at its current state.

Then the question is, will giving up 5% of the website at its current state
increase the expected valuation by more than 5%. I think that with a "kick-ass
design" we can raise the success rate to 0.05%. Which increases the overall
valuation by more than 5% of the stock given up, which increases the overall
expected exit price, ergo 5% is worthwhile.

~~~
pclark
it's one thing for founders to pluck valuations out of the air, and an
entirely different thing for _us_ to value the company.

You're quite correct. What if they don't exit? Whats 5% of nothing?

I'd take the cash, thanks

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old-gregg
I wonder who got the first 5% for coming up with such terrible domain name?

~~~
atarashi
I think it means cocktail in Japanese.

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calvin
Why would somebody give away 5% of a company when they can pay ~$175 at a site
like 99designs for a design?

Granted, you get what you pay for, but 5% is a massive overpayment even for
"sweat equity."

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tptacek
Everything about this plan is crazy talk.

(1), a professional design job for a template costs $1000-$3000. You're
setting your valuation at 20-30k?

(2), the equity you're offering isn't worth anything. In practical terms, all
you're offering is the opportunity for a designer to work on contingency. They
don't like that.

If you really want to give up almost as much equity as a CEO takes 2 years in,
or almost as much equity as YC takes up front, don't trade it for a design;
find a partner who can do solid design.

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Dilpil
"Kakuteru is an experimental lifestreaming service that pimps up your online
activity"

Also: "Web 3.0 Enabled"

If anyone can figure out what they actually do, please reply to this comment.

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bkbleikamp
In general, good designers will not participate in contest as it is spec work
which is always a bad way to do design work (or coding work, or anything
else). If you value good design, pay for it. This is why there is controversy
within the design community over sites like 99designs or the Sitepoint Design
Contest forum.

It creates an underlying feeling that design is less important than the coding
of the app - if you want a designer, bring them on as a co-founder and offer
them equity. If your app requires a good user experience, you need a
professional, not someone who spends a "few hours" to win a contest. I put
"few hours" in quotes because that is a very low estimate for the amount of
time it takes to create a great user interface.

Holding a contest is just a way to look at a bunch of free work and only
reward one designer.

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rantfoil
Contracting is a date. Salary is going steady. Equity is getting married.

You can get out, but not without a lot of pain and legal fees. Be careful who
you give equity to.

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daleharvey
Seems to have missed a trick here, if you have a good application, but lacking
an area (design), and its a small startup without many resources.

why not have the contest worded more to attract a design orientated co
founder, 5% is a reasonable chunk of the company, for a template that can be
knocked up in a few hours.

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ojbyrne
I love the serendipitousness of HN, this link is currently the next one down
from this: [http://www.thelogofactory.com/logo_blog/index.php/logo-
desig...](http://www.thelogofactory.com/logo_blog/index.php/logo-design-
contests-legal/)

Summary: bad idea.

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bprater
Interesting idea.

5% of any company is a huge chunk, especially for just a few hours of work!
(In one company I founded, I only held 10%.)

If you win and these guys exit, you stand to make a few dollars.

~~~
run4yourlives
Conversely, 5% of nothing is nothing. :-)

This is a great idea though overall. For one, it's an easy way to get a good
design for "free" for the owner. From an up and coming designer's POV though,
it's a great resume/portfolio addition that could actually have a payoff in
future years.

Me, myself and I take note.

~~~
vlad
Equity should not be a prize in a contest. When a company gives up equity, it
should be for a specific purpose to get something one cannot otherwise, such
1) in exchange for investor money (YCombinator), 2) in exchange for a
professional service from a top firm to file articles of incorporation,
trademarks, and advice on setting up bookkeeping, and, 3) for a key hire. I
hope somebody who's done more than run a shareware company chimes in if I'm
wrong.

~~~
run4yourlives
Equity in a company though is only worth what a company is worth. He's open in
saying that this is a part time project with no real focus/push behind it,
other than his desires. In other words, it isn't worth much at this point.

So, to relate:

2) in exchange for a professional service from a top firm to file articles of
incorporation, trademarks, and advice on setting up bookkeeping,

I'd put website design on that list, as I'm sure you would. Of course, top
firm is only relative if you can get a "top firm" to consider your company
worth the investment. In this case, I think the owner realizes the value of
his company, and just wants to present an option to someone who may find it
acceptable.

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dominiek
@vlad @run4yourlives @wheels Your comments make good sense. Reading up on the
contest laws now.

Perhaps I should start a 'Help me out with legal issues' contest ;]

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volida
you think you need a graphic designer when in reality you need a user
experience/user interface expert.

