

Ask HN: Adding A Partner To A Bootstrapped Startup - jtesp

A couple years ago in the beginning I had a partner... he got married, had a baby &#38; stepped away so I took full ownership.  I kept going, bootstrapped and eventually got it off the ground and am currently generating a bit of income.  Problem is I'm wearing too many hats and can't grow.  Not only is it very stressful doing it alone, it's at the point where it makes no business sense because it can't grow.<p>I could afford to hire a developer part time, but I really want somebody on the team who's passionate about building something that is theirs.  Also, I want another brain to help in all areas of the business, come up with ideas, provide camaraderie and support.<p>Perceived valuation is currently $1M - $1.2M<p>I've known a particular candidate for about 6 months and we get along well, I have trust in his abilities, and have an overall good feeling about him. I presented the idea and he expressed interest but couldn't come on full time without pay.  I don't really need full-time right now anyway so that's ok.  I'm thinking paying a reduced hourly rate (or no pay) and he can build some sweat equity.  Does a "working interview" make sense in this situation?  Where he "earns" his equity over the course of a 3-6 months through actual work and proof?  The tricky part is coming up with the numbers.  Any advice greatly appreciated here.<p>I'm curious about the different scenarios and approaches that can be taken. Also, some do's and dont's and what precautionary measures to take would be greatly appreciated.<p>Thanks!
======
mchannon
If you agree on terms, put them down in writing (especially contingencies like
one of you dies, quits, or stops working hard), and have both of you sign it.

There is often a brief honeymoon period where people put aside grudges that
simultaneously build up; part-time pay to help a friend out is much easier to
justify at first but what are your plans 2 months out? 6 months out?. If your
candidate loses their day job what then? If they feel helping you puts their
day job at risk what then? What if they suddenly decide they are worth more
than their initial equity schedule? These need to be agreed upon in advance,
because people's senses of fairness oft go out the window when there's an
income and survival involved.

------
bsims
It is fairly common to have vesting schedules as someone earns equity of
usually 3 to 4 years. So if for example you were giving up 10% total on a 4
year vesting schedule, each year would earn 2.5% of the 10%. Some of these can
also be met with milestones.

I think your approach of bringing him on slowly makes sense from what you
wrote. I recommend reading "The Founder's Dilemma," before finalizing any of
your actions.

[http://www.amazon.com/The-Founders-Dilemmas-Anticipating-
Ent...](http://www.amazon.com/The-Founders-Dilemmas-Anticipating-
Entrepreneurship/dp/0691149135)

------
brudgers
Simple question.

Will a partner allow the business to grow to $5 million dollars in "percieved"
value?

If yes, then giving the partner half the business more than doubles your "on
paper" money.

If no, then why bother? Or rather, why bother trying to grow something that
won't grow quickly in lieu of starting something together or pivoting which
might?

Regardless, any equity should vest over time.

Regardless as well, hourly sweat equity is not conducive to creating
determination in your partner.

------
jtesp
Thanks guys! I think I may do a milestone based method. Each milestone reached
will earn him X% equity. That way he can earn his way in and the risk is low
for me.

