

Hacker and non-hacker partnership scenario.  Would you? - vik1211

Hypothetical scenario:<p>Non-technical working professional has business idea and wants Hacker co-founder to build a prototype.  Non-technical will put up money to develop prototype and compensate Hacker with salary + equity, or any mutually agreeable compensation structure.  Non-technical will provide rough cut of what the vision is and then step back and let Hacker work without interference.  The only product control Non-technical wants would be editorial&#x2F;final say.  If prototype gets traction and scales, Non-technical would concentrate on business, fundraising and hiring the best people for the business and product ends.<p>Non-technical&#x27;s motives: wants to invest in a great idea, company, and team but isn&#x27;t considered an &quot;accredited&quot; investor, is risk averse to the extent that Non-technical wants to keep their day job in case product doesn&#x27;t scale (has spouse, kids, etc), and is genuinely fascinated by startups and hackers and using disruptive technologies to punch bloated business models in mouth.  And to prove that passion is willing, initially, to use their own funds to launch a minimum viable product.<p>Is this a scenario that a hacker would be interested in?  Why or why not?  Are there any holes or issues with the hypothetical?  Looking forward to the commentary.<p>Update #1: Has anybody actually been a part of such a scenario?  If so, care to comment on the successes, failures, upsides or pitfalls?
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mchannon
The problem that most people have with this implementation is their salary
numbers are quite low, and their equity numbers are quite low or zero.

You have to be very careful to avoid falling in the "build this for me and
I'll share it with you" trap, because talented individuals get pitched this
way all the time. In fact, you're going to get lost in their mental spam
filter if you don't deviate from this stereotype immediately.

Whether you yourself feel this way or not, leading off with admitting you
can't do what they can do by yourself, that you're willing to pay handsomely
for their help, and that you bring a significant amount of value to the table
yourself (not just money, ideas, vision, and a sense of ownership but the
ability to raise capital, sell to people, etc.), will be the path to landing
the best cofounder.

~~~
vik1211
Let's say the product was based around a mobile services app. For discussion
let's say Uber for dog walking or Uber for X. What would you consider a
reasonable salary and/or equity stake for Hacker to be interested. Assuming
solid business model, marketing plan, all else equal.

~~~
mchannon
If I was a recruiter in the bay area, I'd guess you could find some B-grade
talent who could knock that out for about $80k/yr., and A-grade talent for
about $150k/yr. There's a whole litany of variables here, like where the
talent can live, exactly what you need and on what platform, how fast you need
things done, and how many more people they can bring on and whether they can
manage them effectively.

Mobile talent is extremely sought after in this day and age, particularly when
you start adding essential skillsets for a successful startup.

If you up things to 50% equity, you might be able to take a small amount of
the salary number away to attract the same pool of candidates, but not a lot.

Expect those salary numbers to drop significantly if you set up shop in other
parts of the country (and particularly the world).

~~~
vik1211
Roger that on the litany of variables. Super insightful response. Thank you.

Thanks to you I think the essence of this thread can be refined to: What
financial (and/or other) consideration would a US-based Hacker, with mobile
skill sets, require to team up with a CA-based Non-technical with an idea,
business and legal chops?

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shawnreilly
I've been in a similar scenario. I bootstrapped my first Startup. It failed,
and I lost a lot of money. We developed (in Stealth) an amazing product in the
"Ambient Discovery" space. We didn't call it that, but that's the buzzword
that everyone started using. Anyway, turns out a few other Startups were
developing in the same space (in Stealth). They executed faster than we did,
and they had better connections. We were too slow, and other Teams launched /
secured funding before we could. Ironically, it turns out that the Market
never truly embraced the idea, and it kind of flopped. The timing was off. The
idea itself was ahead of its time and the Market was not ready for any of
these Products. Some Teams got funding, but I never heard about them again.
One Startup made an exit (good for them!). Everyone was ahead of the curve.
Everyone failed. Doh!

I don't really have any input about the plausibility of your hypothetical
scenario (too many variables), but I do have some advice; Do not assume that
you know what your customer wants. This is a harsh concept. Everyone loves
their own ideas (myself included). But falling in love with your idea can
become detrimental to product development. When it comes to the product, the
Customer is King, not the Idea. If you can embrace this, you will become more
effective at building your product. This lesson could have saved me lots of
money on my first Startup. Instead of assuming things, validate with the
customers (or potential customers). Do not leave it up to chance. Why am I
saying this? You've laid out what seems to be a pretty "hands-off" approach to
building the Product. I would recommend defining a relationship with your
Developer that allows you to continually integrate customer feedback into the
development process. This will likely result in a product that is more aligned
with what the customers actually want, which should increase your likelihood
for success.

~~~
vik1211
Thank you. 100 pct agree. Hands-off was meant to convey respect for Hacker's
process and craft of building out a MVP. As far as customer acquisition,
feedback, service -- 100 pct hands-on. For some reason (most likely bad
writing) my original post didn't convey that.

The idea would solve a personal pain point. And the MVP would test whether
that pain point was felt by others. If not, failing fast is okay.

Relationship with Hacker is key to long term success. If Non-technical isn't
plugged into the Hacker community, compensating them is a way to demonstrate
seriousness. Skin in the game, so to speak.

Also, I'm speaking in broad terms -- Hacker and Non-technical -- for universal
discussion. This scenario could apply to me at some point but I also deal with
a lot of clients and associates that actively talk about similar scenarios at
barbeques, dinner parties and conference rooms.

I don't have a confident road map to advise them on such a course and I'm
genuinely interested in what this community thinks would be the best may to
make this situation work -- for the sole purpose of launching a MVP ->
shipping -> testing -> refining -> scaling.

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brudgers
" _If prototype gets traction and scales... "_

How is that going to happen if the business partner is working a day job and
waiting for Godot?.

Products don't sell themselves. Customers don't provide their own customer
service, etc. Having final say is just having a non-technical opinion, it's
not a real commitment. A founder who puts up cash is nice, but not a
substitute for sweat, and is best treated as a loan rather than exchanged for
equity.

I am not saying the roses won't grow, but I don't see the scenario as ideal
for either partner - the employee/employer relationship is well below ideal.

~~~
vik1211
It sounds like you're more of a proponent of Hacker doing a work-for-hire or
one off freelance project for a fee -- as a way to avoid the inherent
employer/employee antagonism from the get go?

~~~
brudgers
It's not so much that as that I don't see the structure of the relationship
being entirely consistent with the intended outcome.

There's no expression of trust on the part of the business partner when
putting up the money is the sole basis for having final say on technical
matters. Don't get me wrong, it might work out fine with the right individual.

But there are two other reasonably likely scenarios:

() A gung-ho technical person who becomes frustrated by having their ideas and
opinions overuled by a non-technical person. And in the original scenario, the
non-technical person is not working flat out to make the product take off.

() A not so gung-ho technical person who is mainly collecting a paycheck until
the money runs out. This may be a later edition of the first or someone who
comes onboard with that idea - keeping in mind that the business partner plans
on spending their time at another job.

It's not the money, it's the passive model of investment that to me makes
success look less likely. Or to put it another way, why wouldn't the sort of
technical person who can conjure up a product out of a text file want to team
up with a business person who will sell a million of them before a line of
code is written?

Or at least a business partner who is trying to sell a million of them before
any code is written?

Being in it together really requires being in it at the same time or a track-
record of trustworthiness.

Good luck.

~~~
vik1211
Awesome points.

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pjungwir
The non-technical founder can afford to pay his partner a salary, yet is not
an accredited investor[1]? And will also fund the business re server costs,
design, marketing, etc.? If I were the developer I'd be very suspicious. If
the non-technical person isn't offering time or skills either, I'm not sure
what they're bringing.

This also sounds like doublespeak: "work without interference" vs
"editorial/final say." Sounds like "final say" is still basically unlimited,
and I'd rather get approval _before_ doing the work than after!

[1] $200k annual income or $1m assets (sans house)

~~~
vik1211
What could make this scenario less suspicious for you? Strike the phrase
"final say." The intent was only editorial: "Hacker, everything looks good
overall, but how about dialing it up a notch here or dialing it down a notch
there." Non-technical wants to ship, not wrestle back and forth on minutiae.
The idea is to collaborate around a common idea and then recruit customers,
partners and investors. Collaborative not antagonistic!

Also, to clarify, Non-technical has savings and and investments and is willing
to cash out and spend to build a MVP. Non-technical wants to found a business
based on their original idea and then recruit talent to build out a company.

Is your take that such a scenario isn't possible? And that Non-technical
should wait out and accrue enough wealth to qualify as an accredited investor
and then just invest in a team to develop his or a similar idea? Would this
make Non-technical less "suspicious"?

~~~
pjungwir
Hello! By "suspicious" I didn't mean to imply bad intent, just my doubts that
you could offer a fair (i.e. competitive) salary (any benefits, or is it
BYOHealthInsurance?), and also that you were sufficiently well-capitalized to
fund the business. Underestimating the necessary capital is one of the leading
causes of startup failure. So if I were approached with an offer like this
one, I would not be getting my hopes up until I heard some numbers, and I
would be skeptical unless I saw a pretty thorough plan with budget and
expected revenue. But that's just me: I am fairly risk-averse.

Re "final say": Ultimately if you're business partners with someone you both
need to be happy. And you both have an incentive to balance polish with
shipping. Still, if you were a client and not a business partner, and you were
paying me on a fixed bid, I'd want a spec up front, not at the end. (If you
were paying me hourly you can have all the revisions you want.) If we were
potential partners, I'd be asking myself what the risks are if you prove
difficult to work with--for instance, what am I giving up to join the venture?
And do you have a history of managing software projects that would reassure me
you're capable and reasonable? (Any recommendations from developers you've
worked with?)

In any case, I wish you good fortune on your venture!

~~~
vik1211
Your points are duly noted and your insights are much appreciated.

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makerops
Yes, this is probably one of the few scenarios I would partner up with a
business guy (salary and equity), the others being a proven track record, or
equity in a profitable co.

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tlb
It's not a recipe for success. Ditch the uncommitted non-technical guy, find a
fully committed partner (technical or not) and build your own thing.

~~~
FurrBall
Whether the non-technical guy is uncommitted depends on how much money he is
sinking in. Ponying up the cash is an important and legitimate contribution.

If someone drops 1 mil to build an app I would say they are committed.

~~~
vik1211
I'd offer that $1M would qualify Non-technical as an accredited investor. I'm
more interested in the person who can offer up, say $100k, give or take, to
support the development and launch of a MVP.

