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Too little to offer for bootstrapped start-up?
54 points by c52Andy on Nov 22, 2011 | hide | past | web | favorite | 43 comments
We're a super early bootstrapped start-up with 2 founders (husband and wife) trying to build a community online marketplace. We're also very new to HN and loving the lost hours of reading.

We live on Maui and while we're cash poor we're "location rich" and started thinking we have the perfect 'incubator' to work on the project. Our daughter left for college and we converted her room into a guest room. Our son lives in the 'ohana' (in-law) downstairs where my office is along with kitchenette and bathroom.

We work at home and suddenly thought... "aha! what if we offer to move a pair of talented hackers into the ohana to work with us until launching an MVP and/or acquiring seed capital?" (airfare, room, meals, small per-diem and equity in the company)

The question is, does an offer like this seem totally slave-labor lame and offensive, or does it sound like a unique opportunity to work on a project that we plan to take national and then global from a groovy location? We think the latter, but then we live here, so we wake up on Maui every day regardless.

Frustrated by a lack of skills (I'm a designer and wife is a writer; we've both 'dabbled' in tech for years), we're just trying to find unique ways to solve our lack-o-hack problem.

Aloha for your replies, we're grown-ups so we can take a flame or two :)




Personally, I would feel weird living in the same house with my boss. I would also want to have a real legal eagle go over the equity agreements, because I'm a paranoid git about stuff. =)

However, it doesn't seem like slave labor. It does seem like a situation which could turn sour from interpersonal relations. I would advise care in selecting hackers, ideally meeting them in person first.


Good point! We're early AirBnB adopters so we've had our fair share of awkward experiences - and you're right, the 'fermentation factor' is potentially high; but at least space is somewhat separated (downstairs/upstairs). Skype can be decent, but one never knows. Same feeling re. legal eagle - we're crucial on bullet-proof arrangements prior to any execution.


What are your house rules regarding bringing over friends, playing guitar, staying up late, fapping, etc? :)


I wouldn't mind (if I were looking for a work). It's a startup - it's supposed to merge with your private life anyway :)


Heres my take. No way.

Well, 23 year old me says sweet, older me says no way. But at 23 I wasn't near equipped to build a product from scratch.

What you really need is a CTO that gets founder equity. But you already have a CTO and it sounds like they don't bring much to the table besides you being comfortable with them. Which is important no doubt about it.

So you've got all the founders you need, but still don't have a means to build the product. Building a product from the ground up for non-founder equity and room and board is ridiculous. If you are competing for people with the skills to build a product from zero to MVP and beyond on a global scale, you must realize these same people have the opportunity to do the same thing somewhere else but for an equity share matching their contribution.

I see you have a few options:

* Pay your hackers market salary minus local COL. (2 month contract I'm guessing would be about 20k per head)

* Outsource the job (Guessing somewhere around 50k)

* Replace your CTO with someone who can commit and build the product. (Free)

* Roll the dice with some go getter looking for an adventure.


Super informative, and noted on the 23 yo "me," djb. I've had similar experiences in music (touring the country in a van post-25 years old starts to look pretty aggravating).

I'm about to supplement this thread because I feel the information shared has gone beyond the scenario question (which wasn't meant to carry any ulterior motive but simply help us ascertain what value that might hold in trying to hire a team).

That said, because of some of the talent that has responded with a 'I want to know more' proposition, I want to address that as a blanket comment.

-Aloha


To answer your question, while it's not an offer I'd likely take up, I don't think it's slave-labor lame or offensive, so long as you make things clear as to the exact terms of the arrangement. Nobody is forcing anything to do anything, so IMO the only time you'd be in the wrong was if you misled anybody.

However, I'd like to encourage you to "shop local". While it doesn't appear to be the case, there are a lot of talented devs available locally. I'm part of a fledgling makerspace on O'ahu, and in the past few months I've met a ton of developers that came out of the woodwork. Did you know we had a startup weekend here? Our makerspace also had two teams participate in node knockout.

I can't speak for Maui, but I'm sure the situation is the same (and you guys have a more mature makerspace, why not join up and start networking?).

If you need any help networking (I can get you in touch with alohastartups.com), or are open to an alternate proposal, feel free to contact me (contact@freelancedreams.com)


Mahalo Shuzchen, the CTO I mentioned in another reply (a Rails guy) is on O'ahu. We've been working with him to try and find local hackers to work with; no cash is the prevailing 'fail' but we'd love to hook up with locals - I grew up on Kauai and our daughter (who's empty room is mentioned) was born on Maui. Was telling a SCORE guy here (also on TechHui) that we'd love nothing more to keep it local and stay brick and mortar here too. Any help appreciated; I'll email now.


Most people including myself care most about _what_ it is we are building and why. Working on meaningful and/or technically or socially interesting problems will go a long way for most here I think.

I personally despise freelance work. Yet I spend countless hours working on my own projects which don't net me a dime.

So with that in mind, what do you want to build?


Thanks Jade. "Yes I spend countless hours..." Exactly how we got here! Just emailed you at gmail.


It is not offensive, as long as you offer meaningful amounts of equity (it sounds like you are at the idea stage and are basically looking for cofounders, and you should probably offer cofounder-size stakes and use the same care you would take in selecting a cofounder.)

Good people have an enormous number of opportunities right now. The risk you run is that you'll attract only people that aren't very good, and not realize it, since it doesn't sound like you have a strong enough tech background to put them through a solid tech interview. So my advice is to find a friend of a friend who has been through the full cycle of hiring engineers and shipping a successful project, and have them vet your choices.


Thanks Geoff, solid advice.

Forgot to mention in post that we have an acting CTO/senior advisor that has held that role at several other companies (and currently employed as such) that would help us identify/vet the pair. He's interested but unwilling/unable to leave his job and he already lives in Hawaii! ;) But, he's going to basically 'donate' an hour a day to review code and help shape strategy, and is interested in coming on board for salary/equity if we can find seed.

We're still struggling with what constitutes fair equity. Obviously x% of 0 is still null. So on the one hand giving over founders share is attractive; on the flipside, we're trying to offer some cash/benefits up front to hackers while bootstrapping; wouldn't founder equity also include founder 'stakes' (no pay, doing it for the love/risk, etc.)?


"But, he's going to basically 'donate' an hour a day to review code and help shape strategy, and is interested in coming on board for salary/equity if we can find seed."

My beef here is that the people who do the least amount of work or, in the case of you and your wife, have the least amount of tech-related skills, would be running the show. If I'm working all day on your startup, the last thing I want is to have that day end with a CTO looking over my shoulders and criticizing my code, especially when that CTO obviously lacks the same amount of commitment that I have. It'd be even more grating if that CTO would then come on full time and essentially jump over me and my colleagues who have done all the work, both in salary and title.

Also, you'd have to be able to prove that you are actually an interesting founder to work with and have skills (if not coding, something else) that will be an asset for the company in the long run. Nobody wants an "idea man" as his/her boss.

Lastly, if you work 12 hours a day, whether you do so in Hawaii or in Siberia doesn't really matter all that much. If you only expect your coders to work for 4-5 hours a day, now that's something else.

Coding-for-space isn't offensive, it just isn't all that appealing.


This feedback is exactly why I posted - and thanks for the scenario. We def bring a lot more to the table than ideas (UI design, proven branding and marketing knowledge/experience; enough skills to jump in wherever needed and whenever needed - "Hey, write me some CSS for that page while I tweak xyz..." "OK, done.") - and the site is admittedly more of a marketing play then a tech play (words of another hacker that's reviewed materials to date). That said, super valid points re. someone 'hopscotching' and well spotted on 12hour days in Siberia. That said, I work about 16 on average and still enjoy the view (and weather) a lot more in those down hours - so surely environment carries some equity. No mai tais in Russia... good Vodka though!


"the site is admittedly more of a marketing play then a tech play" — that could actually be an advantage if it means you chiefly need coders for a couple of months to get things started, rather than a multi-year commitment. Makes it look more like a vacation.


"Makes it look more like a vacation." True assuming an MVP in exchange for a short vacation sounds fair; and effectively that was our thought - spend the time to get it launched here, then go home.

BUT, equity in exchange would be restricted stock options with vesting clauses - so longer commitment required beyond an MVP. If we had e.g., 1/2+ the cash to pay a team for 6 weeks full-time that might be fair w/no equity and a 'paid vacation' on reduced salary; but I personally wouldn't go for that... not without an extra month of no-work live-in included anyway!


You're not really offering significant benefits to the hackers. We're talking about a few thousand dollars cash value. Salaries in silicon valley for sharp engineers are easily six figures. And someone who is relocating to join a startup with no funding or traction is definitely "doing it for the love/risk". I mean, if you can get someone to take those terms, awesome, you rock. But most of your applicants are going to be people who can't get jobs elsewhere, or who just want vacations in Hawaii (what incentive do they have to work hard when they get there?) -- so buyer beware.

I would focus on getting one engineer who is committed for the long term, and that you are 100% comfortable with -- someone that you could share good times and bad times with, for the next 3-5 years. I'd give this person a founder's stake with 4 year vesting (and I'd take impose the same vesting on myself.) I'd wait as long as necessary to find this person, and if I couldn't find them, I'd try to raise enough money to have competent consultants build a MVP at market rates (after vetting said consultants very, very carefully.)

Also FWIW, you are definitely breaking US law if you don't pay them minimum wage and possibly overtime, and the penalties for this are severe (personal liability of directors, treble damages, all kinds of nasty.) You will be in a precarious position if they sue you, because there will be a clear paper trail from your intellectual property assignments.


Very solid advice Geoff - thanks (for) giving. :) Finding 'the one' is what we'd prefer. The talent vs. availability thing can be tough. We have a friend and talented RoR hacker who's busy pulling a healthy 6 figure salary on account of his skills. He's been helpful in 'networking' to other hackers, but has no interest in leaving the comforts of his paying gig; it's the catch-22 that I imagine plagues a lot of startups.

I think you're right though - holding out for the one that's going to not only put in the time, but be rewarded with a fair founders share and (more importantly) see the product through to it's natural conclusion is the way forward. One more road block seems to be finding someone that wants to go from hacker to team manager.

Either way, and your FWIW is noted, we'd have to create a situation that either sets up a barter contract, an IC agreement that leverages a valuation on time, or create founders agreements that track the input toward future payout (basically what we're already doing) if we invited people over. I think any of those paths would forego any US lawbreaking since they'd be non-employees. It just seems like a lot of legal review (fees) and hassle though vs finding the one engineer and knowing that the partnership and mutual expectations are aligned.

Aloha~


Actually I think this is a fabulous idea. Obviously hackers would need to believe in what you two are doing, but I am under the impression many hackers just like some freedom. They like to live in exotic and beautiful places (ahem..Maui), they are comfortable with living expenses paid (ahem..airfare, room, food) and a bit of cash for the rainy day fund.

There are a lot of freelance hackers and a lot of people who would jump at the idea. Naturally, it depends what your idea is and how big the pay and equity are, but this is cool and creative.

I have been to Hawaii and if I new how to properly program I'd be on board! Good luck


Thanks for the validation 'doc' :) We're hoping to find that right pair.


Have you tried to learn basic web development? If you have time, invest a few weeks either way. I don't think you're being unfair if you're offering free housing, fair equity and free food. It is more than what most cofounders offer one another. However you have to find people who are passionate enough about your idea to make it their own and have a good working relationship with.


totally agreed abbasmehdi "find people who are..." and thanks for the comment.

regarding basic web development: we've built several sites over the last 10 years, but have never learned to hack in a language (e.g. RoR); just bits of code as needed and lots of 'wysiwyg' manipulation.

we're basically trying to build a web application and think given our current jobs and lives it would take us a year or longer (much, much longer!) to acquire that sort of skill set, so we think best handled by experts (or experts in training).


Depending on the details of the offer, it's reasonable.

Please make sure there are clear written agreements drawn up by a startup-experienced lawyer before any work starts. The right lawyer will be able to help you figure out correct amounts of equity and proper vesting for this unusual situation.


Thanks wpietri, and excellent advice. Have some beginning docs and trying to schedule meeting with a couple Hawaiian start-up lawyers


The question is, does an offer like this seem totally slave-labor lame and offensive, or does it sound like a unique opportunity to work on a project that we plan to take national and then global from a groovy location?

Heh, I am already an underpaid slave. And in perennially-grimdark Sweden to boot. I get no vitamin D outside of pills and the main high point of the week is paying out your ass for overpriced alcoholic painkillers on Saturday night.

Maybe to overpaid snotty Americans your offer sounds bad, to me it sound totally bad ass :)


You would be very interested in the TropicalMBA.com || They've done something fairly similar with several talented people. Not necessarily developers per se, but they've had some really interesting success stories come out of it. I think they're on their 9th intern in about 2 years. Good stuff.


This sounds great to me! That said, I'm a 20yo finance undergrad who merely dabbles - like yourself - in tech and web technologies and probably am not a useful hacker per se (at least as far as programming goes!).

Your offer appeals to me as a great opportunity, but I'm obviously not who you're after.


Though it may or may not be intentional, it would probably help a lot if you updated you HN profile to include your email address (the email address used to sign up is never shown). I'm not sure I can really help, but if you want, contact me through email (address in my profile).


Sounds interesting, but what is it that you're looking to build. I'd be interested if and only if I knew what I would be doing. People need to believe in what you're looking to build, and that would directly influence their choice. Visions need to be aligned to build a company.

Good luck though!


Building a marketplace is hard. You'd want to prove that you are capable of being scrappy and still build a community. Once you've got that, then you will have a better pick of developers because at least you have some proof of traction.


Thanks teyc. By scrappy do you mean it could be cobbled but the idea/marketing would trump poorly executed code?


For a marketplace, you have an advantage doing it this way. Initially, there wouldn't be a lot of users. So badly performing code wouldn't necessarily matter so much. If you happen to have a Twitter style growth, FailWhale is a good kind of problem to have.

Look for some of the PHP marketplace scripts. Actually, Dating is a typical marketplace (for people). If you have design skills, you can replace the graphics and text and you should have a semblance of a starter site rather quickly.

Whatever you do, only offer equity on the basis of people delivering working code. Otherwise, you'd have a ton of free lodgers.


super helpful teyc, and duly noted. thanks again! =)


I know I personally would consider that, but it really depends on the project and it relies on the fact that I do not have a family to support. Definitely feel free to email me.


You would fly someone in from Sweden and pay for their room & board + equity?

Doesn't sound so bad to me. I might know a few people interested in this. Contact me :)


[deleted]


just sent.


After posting this last night, I've been positively (literally) overwhelmed by the feedback both on and off HN. Discretion on some 'harsher' emails definitely appreciated :)

I wanted to revisit and expand on the original topic. I'd posted literally to ask the question hypothetically (no ulterior) of whether the scenario sounded equitable - not to actually try and source talent or 'fish.' That's one reason I was being vague on description... didn't see the need to go into it.

I now see the error of my ways. This is a community for hackers and while we are "idea people" on one level (not hackers), we're not just that... we're also (perhaps) misguided enthusiastic idiots who've also grown a couple profitable businesses along the way... "lifehackers" if you will (problem: earn money, feed family. solution: whatever it takes).

Since there's been a recurring "what's it about" thread I'll expand on this. Firstly, we have someone on board to start protoyping based on my designs; he plans to do so in Rails using an existing framework he's built. He's not in our basement. We're planning to pay him for that service, and are working with him on another job (not the start-up). In other words the post wasn't a 'hacker wanted' plea, but more of a "would it seem out of line" as we consider the prospects of how we could move from payment toward a push (on limited cash) to get something released in exchange for some kind of equity. A potential perk to building a team on limited resources.

One reason we need to consider it is that this guy, like every talented hacker on this board, has other irons in the fire and a career of his own to manage. So start-up may not be his bag, baby.

Who's bag might it be? Tough to say, but a lot of the feedback has been 'get personal already'. So, my name is Andy Johnson, and my wife is Michelle Blaine and we have a start-up company called Chef 52, Inc. Here's a bit about it from the late YC application we submitted if you're interested. It ought to give you the basic overview of the business, name our potential partners (disclaimer: nothing signed in blood yet) and give you a view of both our living room, and 'us' as people.

http://chef52.posterous.com/chef-52-described-for-ycombinato...

Don't let the bad hair and casual dress fool you. We bring a lot more to the table than an idea. We have 8 kids (yes, 8) that are alive, healthy and prospering in this world. Food was a critical component to that equation, and we're both passionate 'foodies'. Michelle is a stellar cook and has spent years working in the food industry; initially to support her habit spending years working in the film/TV industry - which she did so very successfully. She's also worked in music licensing and managed to build real value and equity for clients. She's a shrewd business woman, and a loving mother (more of the latter seen on video).

I was a touring musician 'in a past life' and have been passionate about food and cooking since I was a teenager. First because my Dad was an excellent cook so I grew up thinking a man's place WAS in the kitchen. Then in my early 20s as a necessity because my health went down the tubes... rock'n'roll lifestyle perhaps or luck of the draw. But either way, I used food and nutrition as the singular means to regain my health and well-being. Successfully! It was a total trip and changed my lifestyle forever. As a result I've been a vege/pescetarian coming up on about 19 years now.

About 11 years ago, having taught myself several 'creative' software apps and blagged my way into some print-production gigs, I took a job at one of the largest branding agencies in the world, Landor Associates. I spent 4 years forming the foundation to become an expert in digital production as it pertains to brand... This mostly meant font management and consultation, building logo suites for global brands based on initial designs, extending design into brand guidelines and stationery/presentation 'packages' including print mechanicals and digital equivalents (Word/PPT templates), creating interactive PDFs, and very rarely getting to do a little hand coding on HTML 'comps' for clients.

Since leaving Landor I've managed a freelance career as a designer/producer, continued to tour as a musician, wrote a few short film scores, had another baby, moved our family back to Maui (we've been in/out of the islands all our lives), skirted death in a motorcycle accident (and 'mostly' walked away), and hacked together a number of websites with Michelle as a passionate pursuit - sometimes for money... maybe even more than we should've been paid (see "shrewd business woman").

Since leaving film/TV and music licensing, Michelle has continued to raise our family, helped me grow my freelance business into what has become Johnson Beesley (we're a branding agency compiled of free-agents working cooperatively), built a mom-blog following and become a writer for food-buzz (which incidentally came on the heels of her deciding to write about food exclusively). She's also developed a modest following on twitter (@mControl); far more than I have (@johnsonbeesley).

We're friendly, astute, and staunchly creative people. We follow our hearts wherever they take us and let our brains catch up. We love people that surprise us with their kindness and intelligence and often loathe people that fail to surprise us by reaffirming our occasional desire to join what Bill Hicks coined as the "people who hate people club."

Our project, Chef 52, aims to be a culmination of our collective life experience. It represents something we know a lot about - people, friends, family, food, health and self employment.

The latter two are critical to our vision. We believe there's a behavioral change opportunity in this idea that would help people get 'out of the drive thru and back to the table.' We've watched childhood and adult obesity, diabetes, heart disease and all sorts of other nutritional fails claim people's lives. Some who were loved ones. So, we now have an idea that if effectively produced could put a dent in our declining eating habits as a culture (yes, we're doing market research on that too). The self-employment part is obvious. We've been 'without boss' and also location-independent as a result for close to 8 years now. We appreciate the freedom while never forgetting that we've actually been at that "oh crap we've got $7 to our name" point - with kids to feed, clothe and house. But we choose that lifestyle because we believe it's the best path in this single life we have.

<segue> "Single life we have" - we're not religious people, but to call us 'spiritually motivated' would be fair. Not 'crunchy' but a bit hard around the edges. You could call me an enthusiastic aethiest and I'd say that's pretty close to accurate. </segue>

So, that's us in a nutshell, and I felt like it was fair to post this given the personal feedback and time people have taken to express an interest in what started as hypothesis.

Now for some hacker comedy entertainment... Here's a collection of sites that Michelle and I have designed and/or built over the past several years... no 'web applications' but you'll get a sense of both our strengths and shortcomings in this domain. We're not clueless - but certainly not as thorough or knowledgeable as the people we'd like to help us execute the platform to deliver our vision and business:

www.johnsonbeesley.com (WP, not updated in ages) www.halblaine.com (WP with Thesis) www.mommysalad.com (WP with Thesis) www.everkaeo.com (WP with Thesis) www.laurapickering.com (flash, so no iPad ;) www.9fishsurf.com (flash)

We cobbled together a few sites in Joomla for a while around 2007 - but I think they've all gone the way of expired domains. It's safe to say they were crap (more so than what you may think of the above) but were a learning adventure nonetheless.

Thanks for reading, and if any of this makes you think "damn, I might want to work with these people" you can drop a line at ajohnson at johnsonbeesley and mblaine at johnsonbeesley.

Aloha~


I am very interested. I've always wanted to live in Maui. Send me an email. Contact info in my profile.


email sent.


Also, I'd be interested in hearing what you guys are up to fwiw.


Do you have an email address that we can contact you through?


sure - ajohnson at johnsonbeesley dot com


Sounds interesting. Drop me a mail. Good Luck!




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