
Should I “outsource” my startup–yes, the whole thing? Contractor equity? - pyang6641
I&#x27;ve been running a little startup since February, and I&#x27;ve committed—and continue to commit—the &quot;cardinal sin&quot; of outsourcing development for my product. Despite all the hate around outsourced development, I can only say that I&#x27;ve been extremely satisfied with my experience. I work with an awesome team of outsourced developers, designers, etc. and get along really well with the co-founders.<p>In light of this, does it make sense to outsource all of the other major functions of an early tech startup as well, providing I can find similar partners and still take the helm as CEO—e.g., marketing, accounting?<p>Should I consider offering these outsourced workers equity, signalling an even more serious relationship?
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greenyoda
If your workers are independent contractors, you may be deluding yourself if
you believe that you're in a "serious relationship" with them. If they find a
client that pays them more, they'd be stupid not to dump you. You can't demand
that they work exclusively for you, work extra or unpaid hours to meet your
deadlines, etc. (If you could do that, they'd probably meet the legal
definition of "employee".) Offering someone like this equity seems like a
strange thing to do. When equity is offered to employees, there's usually a
vesting period to give valuable employees an incentive to stick around.
Contractors, on the other hand, tend to be short-term.

Also, statistically speaking, equity in most startups is worthless, since most
startups will eventually fail. The chances of your company becoming the next
Facebook and making its shareholders rich are tiny. So your contractors would
not be smart to accept any less payment, no matter how much equity you offer
them.

Finally, there's all sorts of tax law that grants favorable treatment to
"employee stock option plans" that probably wouldn't apply if giving equity to
non-employees. You'd really need to figure it out with a lawyer and/or a CPA.

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EnderMB
There's nothing wrong with offering a contractor a full-time position. I've
worked with CTO's that started out as contractors, who turned down the extra
money to work on a project and business they believed in.

If they say no, you've got nothing to worry about. Use them as a contractor,
as you do already, but ensure that you're prepared for them to walk away if a
better offer comes along. It's shocking how so many businesses are not
prepared for the day when a contractor gives in their notice, and ultimately a
contractor should be handing their work off to an available employee to take
over.

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pyang6641
I guess the problem, however, is that it's a large commitment/risk for the
contractor to give up on their own business in favour of yours, right? Could
you expand a little more on your experience with those CTO's, how you got them
on board, etc.?

~~~
EnderMB
That's true, but I guess you'll get a feel of what that person values after
working with them for a while, whether it's money, freedom to choose their
projects, the ability to work on tricky sub-problems, etc.

In my experience, it's always been down to what that person values. At my last
company my "boss" was a contractor, and although he was given the ability to
build a team however he saw fit, he didn't want to sacrifice his freedom.
Before that, my CTO took the role because she believed in the team and the
projects we had - and we did some fantastic work. The roles were almost
identical, but the people were different.

My hiring experience is limited to developers, so I've never been a part of
the actual hiring process, but I've bonded with a handful of people that were
offered the role, and it's always been down to belief in the long-term vision
and whether they'd value that role over what they value from their current
role as a contractor.

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mfbx9da4
I think offering equity is a good idea. I have been on the other side of the
table multiple times. Often the temptation to guide the client into more work
is hard to resist. Having equity can reduce this conflict of interest.
Agencies can be damn good at what they do and product development isn't
everything. Sales, marketing, fund raising etc play a huge part in execution
too!

I can recommend [https://www.crowdform.co.uk/](https://www.crowdform.co.uk/)
\- Disclaimer I work for them!

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new_guy
The more you outsource the more disposable you make yourself. Make sure
someone can't just cut you out of it and take your business for themselves.

~~~
pyang6641
Agreed! I never signed an NDA with my current contractors, mostly because I
felt that doing so was unnecessary. I still don't think there's any reason to
since we have complete trust in each other. But what do you think—just to be
safe?

~~~
greenyoda
What incentive would your contractor have to retroactively sign an NDA?

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relaunched
There are lots of stories and 'silicon valley truisms' that we are told are
the right way to do things. However, if what you're doing is working for you,
keep doing it.

We're seeing all sorts of un-conventional wisdom becoming conventional. Remote
workforces. Paying market. Direct offerings. It was all wrong, before it was
right.

If you need motivation, google duckduckgo's history. Good luck!

~~~
codnee
Or better yet, duck it.

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cm2012
I run a marketing agency that serves b2b start-ups. At least 25% of the time
we're managing all the marketing - that is, it's outsourced to us entirely. So
it's not crazy for marketing at least.

~~~
pyang6641
Yeah, I was thinking about hiring a growth hacking agency. Would you be
willing to share the name of the agency you run? What's your experience with
doing all of the marketing for a startup?

~~~
cm2012
RightPercent.com. Normally we manage the top marketing layer of paid ads, but
if you have the budget we can manage everything. Normally we charge 15% of ad
spend with a minimum fee of $6500 a month (but no minimum time commitment),
which covers all ad stuff and assistance downfunnel. We would put another
person on the project to manage all of your internal marketing work (landing
pages, etc.) on an additional hourly basis.

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100-xyz
What does your startup do? If interesting, I could be interested in working
for equity. leisenming AT protonmail DOT com

~~~
pyang6641
Hey, we're a UGC software specializing in product reviews. Basically, we
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2\. Discount points can be spent at any store connected to our catalogue,
creating a global points system no other software has.

