
Apply HN: Hackinator – Allow hackers to invest in YC startups using code :-) - tarekskr
Every startup has very tight resources, and yet they often need to add really bright highly paid individuals to their team. Hackinator will allow brilliant hackers to provide code development (or other similar services) to YC startups in exchange for shares in these companies. Startups would be submitting posts such as: &quot;Develop our Android app for 0.1% shares of our startup&quot;. Since the startup has been selected by YC, the hacker will be somewhat confident that the startup has good potential.<p>Note: I am already involved with a startup of my own, but I am gladly offering this idea to anyone interested in pursuing it.
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nojvek
I would like to see a place where I can micro invest in YC startups. e.g $500
- 10k. If YC takes 7% for 120k. It seems 1k is worth about 0.05%. Its a bet a
lot of us are willing to take. e.g I don't mind spending 6k on 6 startups on a
year, which are YC vetted and are in the space I think is very lucrative.

Offering dev time is very hard, but as someone who has worked in industry for
so long, we can definitely help with guidance and advice.

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chatmasta
Startups shouldn't be handing out equity like candy. If you are asking for
0.05%, you better have a damn good reason to deserve it, because $1k is
definitely not enough. Startups give 7% up to YC for way more than just 120k
(network, brand name, etc). In fact if all you want is 120k, there are better
ways to raise that money than giving up 7% to YC. So your calculation does not
hold up, because the value of you as an investor is not the same as the value
of YC as an investor. All cash is _definitely not_ created equal.

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angersock
_If you are asking for 0.05%, you better have a damn good reason to deserve
it, because $1k is definitely not enough._

To be clear, that's an easy 2mm valuation. That's also an incredibly tiny
slice of the company, and that's also something that will get diluted to shit.

So, let's stop this meme that for an early-stage company that fractions of a
point are somehow a big deal. That's how a lot of early employees--who do the
_hard_ work--get screwed.

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chatmasta
The OP is not talking about employee shares. He's talking about advisory
shares, and maybe some 1099 work. What does a startup get out of that? Unless
you're seriously qualified with relevant knowledge, why would a startup give
precious equity to you? Sure it's "only" 0.05%, but it's still one more name
on the cap table. And this attitude of "it's only 0.05%" is exactly what leads
to the dilution you're talking about.

If a startup is valued at $2mm, they don't need your measly $1k. To make that
worthwhile they would need to get $1k investment from dozens of different
investors. And at that point they're no longer giving up "only 0.05%." Also,
if they need an advisor, they can find one. If they need a contractor, they're
not going to pay via shares, because the whole point of issuing options/equity
is to align the long term incentives of the startup and the investor/employee.
A contractor does not work long term, so there is no need to give away shares.

Also, the suggestion of the OP -- a place for investors to get advisory shares
in companies -- already exists. It's called Angellist.

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futhey
Love the idea. Would definitely participate, for the right startup.

However, I think successful projects would feel more like open source projects
on Github. "Develop our Android app for 0.1% shares of our startup" sounds
more like a non-technical team or something written by a PM.

"Collaborate with our dev team to help us improve the performance of our
Android app for 0.05% shares of our startup" sounds more interesting.

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qopp
What do you think about the past startup Assembly? [1] [2]

[1]
[https://web.archive.org/web/20140914042728/https://assembly....](https://web.archive.org/web/20140914042728/https://assembly.com/)

[2] [https://vimeo.com/80927859](https://vimeo.com/80927859)

~~~
sharemywin
I think they failed for a couple of reasons. 1. not enough respect for the
marketing side of things. 2. free labor only gets you so far need actual cash
to be contributed. 3. equity plan needs laid out early so people don't feel
like equity is going to be hoarded. 4. 3. needs to be more like a holacracy
and a benefits corporation.

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pink_dinner
This sounds like a pretty bad deal for the developer: Not only a really small
percentage, but worth pretty much nothing when and if it is ever vested.

It would be better to just donate to an open source project.

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akg_67
There are a few legal hurdles both from SEC and IRS. You will need to figure
out way around them.

There are limits on maximum number of stockholders in a private company (IIRC
500+). Once exceeded, private company is expected to do SEC filings similar to
public companies. Same issue with a private company accepting small
investments from lot of investors (even if investor is accredited). JOBS Act
might help here.

Any non-monetary compensation for services will be a taxable event from IRS
viewpoint and taxes will need to paid by service provider. As stock value will
not be much in very early stage, tax liability might not be significant unless
IRS want fair compensation for services as the tax basis (not a tax
professional).

~~~
sharemywin
I think you would need legal contracts and templates. Also, things could be
handled possibly by royalty payouts.

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BinaryIdiot
Interesting concept to help start-ups get essentially free labor but that's
also its biggest issue. Shares are good and all but until there is an event in
which a share holder can liquidate they're essentially worthless (there are
obvious exceptions but only a few). Since a vast majority of start-ups fail
this would amount to free labor.

Granted if the problem is interesting enough that could be okay but the
percentage is going to need to be _drastically_ higher. Like 50% in my
opinion.

> Note: I am already involved with a startup of my own, but I am gladly
> offering this idea to anyone interested in pursuing it.

I feel like this isn't really in the spirit of Apply HN

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kumarski
This wouldn't work for most startups. Product development in the zero to x
stage prior to product market fit has loads of abnormalities that require
bigger engagements.

As well handling the cap table these days is still troublesome.

The spirit of YC is embodied by founding teams that can build product and talk
to users. This suggestion might not be in line with that spirit by giving away
equity for product building without cash.

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matrix
Conceptually, I love this idea. A few questions:

1) How do you ensure that the work is valued fairly and that realistic
expectations are set for scope, etc? When working for cash, these questions
are resolved by market forces, but getting paid in something that is difficult
to value, I'm concerned there's a lot of opportunity for unhappiness.

2) How do you ensure that the value doesn't get wiped out by liquidation
preferences, or some future action dis-proportionally dilutes the value of the
shares?

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sharemywin
1) I would think things could be put up for bid? 2)I think everyone has voting
rights(plus legal rights think facebook co-founder). Plus you could have some
pretty "contributor" terms drawn up in documents.

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nslindtner
Using a lot of time of this concept.

It seems like the biggest hurdles are: 1: How do you messure the Development
has value ? 2: Will you trust strangers ?

reg 1: Assembly worked with a Bounty driven system.

reg 2: Looking into Coop Companies it seems to be very common, that people
knew each other in the beginning!

I would love to be part of a project doing expiriments with this thinking.

Note: Do you se any reason why salespeole couldn't be a part of this kind of
business model

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sharemywin
I think assembly used colored coins. I imagine some of it could be done
managed with ethereum or block chain. Another possibility is an escrow
service. As part of the base product.

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sharemywin
I think other resources need to be able to be offered besides work. Hosting,
domain names, marketing. Marketing specially. Look at Uber over the life of a
customer they probably make hundreds of dollars or more. They offer you $5.

~~~
sharemywin
I, also, think to solve a lot of it is supply and demand and dilution. put
tasks up for bid.

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stupandaus
An enterprising guy named Ali Hamed is pursuing this model with coventure in
NYC!

