Hacker News new | past | comments | ask | show | jobs | submit login
Proposition HN: I will pay $8000 for you to build your side-project/MVP
1088 points by hmexx on Jan 10, 2013 | hide | past | favorite | 377 comments
Premise 1:

Investors/Incubators over-estimate their ability to pick good ideas/startups.

Premise 2:

An MVP built by a lone, but talented techie is almost as likely to turn into something 'successful' as a startup on angellist that has: 4 founders, 9 advisors, 13 press releases, 600 followers, etc

Premise 3:

Most freelancers will not build and/or follow-through with their ideas, because they perceive their opportunity cost to be too high.

Premise 4:

HackerNews has a decent number of talented freelancers with good ideas.

Based on these premises, I present The Proposition [Version 1.0]:

I'll pay you $5000 to build the MVP of that idea you've been kicking around in your head for the last year. Once you're done (ideally within 2 months), you can go back to earning your full potential. At this point, I'll take over and spend an additional $3000 to acquire enough users/customers for us to evaluate the project's likelihood of success. We split the resulting company 50-50, as equal co-founders.

Pre-emptive FAQ:

Isn't this a horrible deal? Incubators typically inject more money for far less equity! I earn $10K a month, I could easily save up $8K in a few months, and do this myself for 100% equity.

True. If you can get into YCombinator, for example , you should obviously go for it. I can't compete with that. If you're earning $150K+, or you've already been working on your side-project for a year, this may not be for you. On the other hand, if you're just getting started and you need a little push, both financially and emotionally, this could be right up your alley.

Who the hell are you? Why would I work with you?

I'm also a techie. Have had one moderately successful venture so far, which has given me a comfortable life (but not quite retirement amount). I want to reduce my coding time and instead help people get their ideas to market using my resources. Hopefully we can build a few success stories along the way. You can find out more during our first Skype chat!

Will you fund everyone and every thing?

No. I'll still need to like your idea, and feel that a positive long-term return is possible. But my belief in Premise 1, combined with the favorable structure of the proposition, means I don't need to be that picky. I'll also need you to commit to working on the MVP full-time until it's done. Evenings + Weekend work is something this structure is actively aiming to avoid. Sign up, ship it, then go back to earning a steady income.

Just to counter some of the negativity in here,

As a partner in a consulting shop just starting out, this isn't a bad proposition. It nets you rent money to work on scratching a pet peeve; if you're between clients and you've got something really simple you can wrap up in a month at a discounted rate this is a great idea. HN is filled with "passive income strategies" blog posts that revolve around short projects like this.

Back in October I might've taken you up on it.

Completely agree. I'm a consultant and this is very intriguing. Sure, the money is low and the equity is high, but I have a ton of side projects that never get finished. If this offer was what it took for me to finish something, I'd say 50% of a company and rent money for a month is worth a lot more than an idea that's just languishing.

Yeah but doing this without:

A NDA, a No-Compete Clause in a contract, and even nothing written down and signed and witnessed by a notary public just rings alarm bells in my head.

What stops him from taking your MVP project and doing it with someone else? What stops him from telling others about your project so they can copy it or do it better?

> What stops him from taking your MVP project and doing it with someone else?

Nothing whatsoever. But then again, since we're talking about ideas that would be on the shelf anyway not a whole lot would be lost.

And the OP would be outed and burned beyond recovery. Anybody stupid enough to risk that on a forum as widely recognized as this one would be seriously out of their mind.

> What stops him from telling others about your project so they can copy it or do it better?

Again, absolutely nothing. What stops YC from doing something like that when you apply to YC?

This all boils down to basic trust, and at some point in the business game you're going to have to extend yourself far enough that you can get burned a little if you want to up your game.

This guy is extending himself far enough that he'll get burned a lot if he abuses the trust he's getting here. That alone should count as some insurance.

Imagine how many upvotes a post along the lines of "That hmexx dude is XXX YYY in real life and screwed me over" will get. Probably even more than "That hmexx dude is XXX YYY in real life, we did this thing and have just picked up follow on investment".

I agree. Ideas are a dime-a-dozen, especially ideas that are the type to languish on a shelf indefinitely.

Startups are all about execution. It's with this in mind that I find the OP's proposition interesting. In my opinion, the more important part of the proposition is not the money or the marketing work, but the kick-in-the-ass that he's providing to someone who would normally fear taking the leap to execute.

Having someone to whom you are accountable (i.e. a cofounder) is huge for executing. Being accountable only to yourself makes things incredibly hard to continue to execute through all the difficulties of starting a company.

"A NDA, a No-Compete Clause in a contract"

A valid point of course but in reality anyone needing this type of arrangement wouldn't be in a position to sue to enforce the contract. Unless the idea turned out to be so super successful and if that were the case I'm sure money would be forthcoming to avoid any problems.

If interested, drop me a line at hnproject2013@gmail.com

If you have questions or HN-style critic on the structure/proposition, write below and help me build proposition version 1.1!

The fact that some are offended by the deal you made the anonymous internet tells me you are on to something. Thank you for experimenting and being creative.

A couple thoughts:

* If you have a month to work on a project, consider taking this offer. Nothing helps motivate people (myself included) like a deadline and a partner. Don't get hung up on the equity split or other boring details -- just go do it. And be thankful you have the free month to work as you will; not all of us are so fortunate!

* I am skeptical using 50-50 as a basis for a partnership in general, much less with someone on the internet I've never met. You are probably a chill dude, but I had similar optimism for too many girls I met online... :) Everyone claims to be funny and open to new things. If I had goals to work on this project fulltime, I'd be very concerned that the two of us might not work well together (I have no reason to believe this, but this is a risk based on past experience). I'd prefer some way to break ties. Either 49/51 split or something. If I had goals to work on this as an anonymous internet side project like my github work that happens to generate income, then rock on with 50/50 because it's simpler and anything else gets in the way of the product.

* Would you mind documenting the outcome of this experiment? PG often cites YC's internal data as influencing their decisions. Not having access to that data and believing I see a large number of survival biases on HN, I'd be curious to see someone as honest as you document what actually happens. If anything, I imagine the outcome from the experiment will better inform you of improvements than any comment from HN.

* Best of luck! I love creative experiments. No one here knows how this will turn out, but I know we all are interested to follow along.

I'd take you up on the offer, but for a couple things. Maybe it just means this isn't for me.

1 - That 50 - 50 split is a killer when I'm doing most of the work. 2 - You talk about taking a month or two and full time working on this project until completion. Trust me when I say I'd love to do that, the issue is I can't just go jump back into the same job as if I didn't ditch everyone here for two months.

Like I said this is probably just not for me, but those are two things you may want to consider for version 1.1.

You're asserting that customer acquisition is easy and low cost. It's not.

For a product that can be built in 2 months (per the guidance here), it is going to take much more time to develop the sales and marketing and acquire enough customers to make it profitable.

I think this underscores why this may be a great deal for a (young?) developer with limited business experience. I learned a lot of hard lessons like this once I stepped away from an editor.

I see where you thought I was asserting anything, when I said the 50 - 50 split was a killer for me doing most of the work. I hadn't really meant it like that but since your right in that customer acquisition isn't easy for people that have never done it then I refer you to a comment I posted below. That this is really for someone who has a crummy low wage job and would stand to gain a lot out of the deal.

As for me personally (which I said off the bat was the kind of answers I was bringing. Personal opinions on why I myself wouldn't do it.) I feel comfortable with my ability to sale to people and gain good traction and growth.

you're right - this is not right for everyone. I wouldn't do it either - but 10-15 years ago, this would have been great for me.

But this is a killer opportunity, especially for someone younger who can live on the 5k and is not worried about family and mortgages yet.

This could be better than an MBA for many people who want to bring a real product to market.

Note: I have no context at all on the OP, so I'm making the jump that they have a strong business background and would not be flailing around once it was time to execute.

I dunno - you're doing most of the technical work. Looks like OP is doing all the marketing. That sounds like a sweet deal to me; if I had a convincing MVP lined up in my head I'd probably go for it. (After due diligence on whether OP is a flake or not, of course (no offense intended to OP)).

If I were OP, $5000 for a -in my opinion- promising application delivered within a month? Sign me up!

Honestly, I'd probably pay $5000 just for some good ideas if disclosure didn't ruin the concept.

I like the 50-50 split (although another poster's suggestion of 49/51 makes sense to me as well, a clear owner of the project if they need to split up). He's not giving you a job offer. He's giving you investment money to make a project, and promises of royalties after he has marketed it.

Think of it this way: would you have made $8000 in a month or two without his investment? Would you have potential for continuing income on that project afterwards? If the answer is yes, then this isn't the deal for you. If the answer is no, then what's the harm? If you're in position to negotiate this as a deal breaker, you're likely in position to find something more flexible. If you're unemployed and want some money while you work on a project you've been dying to work on, you've just come out ahead. There are plenty of job offers for freelance/contract programming that don't offer 50% royalties, or royalties at all.

For me it's not the split, or the lower rate vs what I'd normally earn. But I'm like you in that I can't just ditch existing clients for a couple of months and expect them to be there when I get back should this not work out.

You might consider that "building the product" is not really "most of the work" here. There are three things:

- Product

- A Market for said product (solving a problem for a customer who has money)

- Getting your Product to that Market and convincing customers you solved their problem

In reality, you are probably doing about 33% of the hard stuff (and the other 66% is hard too, making sure you have the correct MVP and promoting it)

Until you've put a product out there, you don't really know how hard the other two are and how critical they are to the success of your venture. hmexx is offering to do that part for what I consider a reasonable cost to test the waters.

YMMV, of course, and you're free to take on 100% of it all, but reducing risk is how you get a product launched. I personally like hmexx's approach here.

You must not have read the rest of my comments...

That said, reducing risk isn't what hmexx is doing. Since the risk of quitting your job and starting on your own product is failure to create a good enough product and NOT have a job to go back to. He's not made any warranties about you being able to resume your previous job (nor could he, or should he.)

Again, look at my other comments, where I plainly state this is not for everyone, like people who already can market and recognize an MVP. And it's best for younger people who have crummy jobs and little marketing and/or business experience, and little to lose (like a nice good current job.)

> the risk of quitting your job

Premise 3 was:

> Most freelancers will not build and/or follow-through with their ideas, because they perceive their opportunity cost to be too high.

I wouldn't quit my job for this (if I had a job), but as a freelancer I'd consider taking a month of no client work and building it at what amounts to a reduced hourly rate.

>Since the risk of quitting your job and starting on your own product

Software developers who don't intend to go into management should not be permanent employees. You should be working as a contractor so you don't have to worry about things like this. As a contractor, you don't get paid for days you don't work so no one cares as much when you're gone (so long as it's not negatively impacting a project). I usually take 8-10 weeks off per year, so taking advantage of this offer would be easy for me and have no impact on my "day" job.

US resident only / Europe / rest of the world ? Payment terms ? (upfront / milestones / finished) Future company as a delaware C/S-corp ?

Still need to iron out the details but...


Upfront will be small (possibly nil) to prevent time-wasters. We can agree milestones based on nature of project. Once code is flowing onto a shared repository for a couple days, I'll feel comfortable starting the money drip.

C/S corp in Delaware sounds reasonable. A yet to be drafted, founder's agreement to be signed at project start also to protect both parties.

Good. I still have 3-6 months of work to do for a customer, but after I'll get back to you if you still pursue this aventure.

World, great... i have been having this idea running through my head for some time, but need to iron it out a little and do some research .. Am on a 3-6 month project here, will contact you after.

What about terms? Would your ownership be participating preferred? preferred? common? In other words, would all founders be diluted equally?

Interesting idea, but it sounds like you are just trying to have someone make a product for 8k which you can go and sell.

Can you specify ways that you will be involved to justify the 50-50 split?

You're getting paid $25/hr, a $52,000 salary if the job were to last a year. Maybe not Silicon Valley money, but good money for anyone who can even begin to consider this deal. More money than I make in a year. That's good enough. The 50% is icing on the cake. He's hiring a programmer, and paying you to stay on as technical co-founder.

>He's hiring a programmer, and paying you to stay on as technical co-founder.

Nonsense. He's doing an angel investment and taking 50%. That still might be attractive since he does more than just an angel investment but don't pretend he's doing anyone a favor, this is for his own benefit as well as the potential partner.

I wouldn't say hiring a programmer is doing them a favor any more than an angel investor is. The benefit from this comes in him letting you pick your own project, that's the difference between rent-a-coder and this deal. It's a rent-a-coder contract with the option of leading into steady employment.

Again, you're seeing this dangerously wrong. This isn't an employment opportunity, this is a startup where one of the founders is using an interesting way to find a co-founder and the idea itself. You bring the idea, he brings the cash.

He's not giving you a job, he's playing the role of seed investor and co-founder.

Okay. I guess we can agree to disagree, although I think at this point we're arguing semantics.

No, we're not arguing semantics. You're saying he should just be getting a salary and the OP is an incredibly generous person for also offering him half of his own idea. I'm saying that's nonsense. It could be a good deal if you have no other options but 50% is huge.

Isn't the $8k to build it enough to justify a 50-50 split? We're talking about ideas that would otherwise never see the light of day.

You have to question why the idea would never have seen the light of day. If it's strictly because you have a cruddy job that pays minimum wage but you are smart and capable then yeah this would be the kind of opportunity one would be able to take advantage of. If you are like many of the people here, in that we aren't making terribly low amounts of money and can save up then it's not money that's keeping you from your dreams, it's you.

I guess what I'm trying to say is it REALLY depends on the person. This isn't for everyone.

The barrier to launching is rarely money - especially these days - sometimes just having one person pushing you is all it really takes - and it sometimes is worth paying for that let alone being paid.

In other news, going to college isn't for everyone.

Getting married isn't for everyone.

Working freelance isn't for everyone.

Having a kid isn't for everyone.

Nothing is for everyone, dude.

Seed money plus active involvement in growing the business and creating traction could warrant such a split -- especially for an idea that was sitting on the shelf. Fifty percent of something is better than zero percent of nothing.

I think you mean 50% of something is better than 100% of nothing. :-) Same dif though, I guess.

It would be much easier to evaluate the offer if you told something about yourself. Just an anonymous gmail address isn't trustworthy enough. For example what marketing experience do you have and where are you located? If you live in Japan, you likely are not interested in a business project aimed at the Hungarian market.

I would recommend that in Version 1.1 you clarify the legal ownership & indemnification terms.

$5k to build, with payment upon MVP completion... spend an additional $3k, including costs to establish a legal entity with joint ownership with no worse than a 50/50 split and friendly buy-out terms...

Good luck!

Email sent. For the record, I think this is a great idea.

Send me your idea as well. I like what you've done so far.

Email sent too!

The time commitments which come from an incubator are related to why YC's stakes are in the range they are, and why it consists of partners.

How many investments are you making?

One or two, maybe 50% equity is fair for your efforts at building traction and growing the company.

Ten, probably not.

A hundred, no way.

On the other hand, a 100 investments is probably what is needed for the chance at a real payday. On Graham's premises, it doesn't really matter how much equity one takes because the return on the home runs is so large. Thus the 50-50 indicates that the goal is not home runs but more modest exits.

If this were a one time game you'd be correct. Assuming, he can quickly filter out a significant portion, it's possible to be very involved and have a significant chance of a large exit. This, of course, assumes that he's good at what he does which is an underlying assumption of this whole proposition.

Rationale: Let's assume a home-run rate of about 3% which is my rough estimate of what it is for YC startups. That means that funding 75 startups yields a 90% chance of at least one home run.

Now one might ask how long this will take. If we assume that 50% of the companies can be marked as failures quickly, he will only need to invest substantial time in ~37 companies. If he can focus principally on 3 at a time for a period of 6 months, it will take approximately 6 years to achieve a 90% home run probability. Of course, he'll almost certainly have had some modest successes before then.

Again this is all predicated on hmexx being good at selecting and advising startups. For most people, the odds are much worse.

That's a good argument except it depends on:

(a) one person being able to do the job of the entire YC team.

(b) that person having equivalent relationships with additional capital.

(c) one might make the case that the relationships to capital must be better because ventures are likely to be located further from conventional sources of capital.

50% equity is a lot to give up for two months of effort unless the other co-founder is only expected to put in the initial two months. And if that's the case, why bother?

I don't think it's fair to compare it to YC. This looks a lot more like something you would do and then take to YC or other investors.

The comparison is the basis for estimating a rate of success relative to resources available to a company entering the OP's program.

If the OP is investing in only one or two companies at a time, then it is practical for him to participate in YC in his role as cofounder. If it's 25 companies, then it is more difficult.

The entire YC team can advise ~66 startups and they have ~14 people which suggests a person can advise 4-5 startups at a YC-level. It's not quite equivalent since YC has the benefit of multiple perspectives though at the cost of increased coordination.

The truth of b & c are completely dependent on who hmexx is.

YC also has Yuri Milner, Andreessen Horowitz, General Catalyst, and Maverick Capital working with any company which takes a convertible note.

Furthermore, those companies taking the note have a much longer runway than hmexx will provide and will be plugged in to a network of later stage investors.

Finally, each YC company has access to the other companies in its class and the YC alumni...and lots of other things in the valley.

It's logically possible hmexx could approach a similar level of success but it looks unlikely.

YC has those things now. At the beginning it didn't have any of these things, and a few really successful startups emerged from those early days even with YC not having guaranteed follow on funding, not having a large network of alumni and not having the reputation.

The thing I'd want to know most is what you expect you and your fellow entrepreneurs' respective contributions to be after the initial development phase and marketing push when there's more work.

You imply that they'll tend to be fire-and-forget type projects (iPhone apps would work well I guess) but even most of them need some significant attention further down the line. Who puts in the extra dev work or marketing efforts (or even further investment) if it's worthwhile/needed further down the line and how are they compensated if that split of work is very uneven?

To those who responded by email. Please give me a few days. I may need to set-up a mailing-list/blog/twitter to broadcast info before getting to you individually as the response has blown past my expectations.

I'd be very interested to hear rough numbers on how many emailed, how many you considered interesting, and how many of those you end up funding/going ahead with. And I'm sure everyone will want a post mortem in 6 to 12 months :-)

Indeed, Pinboard's PIC-PC had over 300 applicants, and they are hearing responses already. I'd be interested in seeing how many also are applying for this, or if less are interested, since the stakes seem higher.

I think you're on to something here. One suggestion for the 1.1 version: relax Premise 4. A talented developer/designer may not necessarily have good (or any) ideas. I could see myself taking up such an offer if I didn't have to come up with the idea but instead I liked and had a good hunch about a suggested idea by the candidate co-founder.

I find the OP's idea and post really interesting and this discussion enlightening. It has made me re-think the notion of angel investing as this is very grass-roots (one developer, one idea, one partner/investor). However, as a non-coder (not since 1984) whenever I have tried to find a technical co-founder I always hear the argument that coders have tons of their own ideas so why would they build mine - especially for 5-8K. The OP is calling out the coders WITH ideas - it would be interesting to see how many really have undeveloped ideas vs. how many do not.

To the naysayers in this thread: You have several options here other than just saying 'oohhh, this is mean and nasty'.

- match the offer with a better one, so all those that would take up the OP would flock to you instead

- build your MVP, keep 100% and then do your own marketing. $5000 for 50% difference but you get to do all the work.

Either one of those would be so much more effective than just berating the OP or warning others of this evil and greedy person.

Actually it is $8000 for 50% difference because it isn't just the initial $5000, you also would have to pay $3000 for marketing.

And if the OP knows more about how to market than you do, you'd actually need to spend more than that to market your idea as well as the OP will.

Good points, you're absolutely right.


I hold dual degrees in computer science and business management. I think I can do my own marketing, thank you. If not I know people who will for a small fee.

I said "if" for a reason, because this is addressed to a broad audience with different skill sets.

For the record the reason why I made that point is that I would personally value that $3k at higher than $3k because I do not have marketing experience. And yes, there are lots of people who will take a fee to market for me - but I'm not in a particularly good position to know whether I'm getting a good one.

I don't understand what your tone is responding to.

I think he's implying that marketing isn't much of a skill - that competent people with a good product should market themselves. I've heard this from engineers before though can't say I know enough about the intricacies of marketing to weigh in.

I know some great marketing people. I have never met an engineer that gets even close. But I am sure there are exceptions.

Who knows the market of your product better? The person who works hard on it for two months and knows it inside and out, or some guy you met anonymously over the Internet who wants $8000 in exchange for half your stock, just to market it?

Think about it, what does he know about the product? Nothing. You'll spend a lot of time explaining it to him in full details and then he markets those details to strangers, parroting your words.

Knowing your product too well is not necessarily an asset when it comes to marketing, especially if you created it yourself. There is often a tendency to overvalue features which were difficult to code rather than features which add real value. Knowing your consumers is far more important.

You don't need "a lot of time explaining it to him in full details" - he doesn't need to know all the details. If you can't explain the product to him in under a minute, you need spend more time thinking about what is important and what not.


This is great, out-of-the box thinking by the OP.

Anyone who want to do something like this (esp. the OP and jacquesm), please connect with me on LinkedIn: Terrence C. Yang, mentor, angel.

Despite my 'naysaying,' I recognize the value of the idea as an MVP. However, I believe that the HN community is well served by vetting this particular offer.

The proof of the pudding is in the eating. Either make a better counter offer using your rep as your backing or go build something. Saying 'nay' is easy, improving on the concept is a bit harder but can easily be done if you're so inclined. You are essentially saying that people here can't make up their own minds if they want to take a chance on something or not.

If the OP is full of it then I'm pretty sure he/she will be hung out to dry and someone may be out a month and will have gained $5K. Whether that was an acceptable risk to take is up to them.

Unlike much of Western Europe, the US has pay to play model for elite youth sports. It is largely a side effect of the role colleges play in amateur athletics. There is no La Masia. There are no schoolboy contracts.

I referee youth soccer. My son plays. I see the way the business works.

Dreams of college scholarships fill the trough at which professional youth coaches feed. All premised on the misconception that women's soccer is like college football. But women's soccer is only allowed 12 scholarships - football has 88.

The general conception of what it means to own stock in any business tends to be closer to the Microsoft secretary and the Google chef than to an approximation of $zero. My biggest criticism of the offer is the anonymity of the investor serving as precedent for similar offers to the HN community. My concern is that such offers feed off people's dreams.

The deal is structured in a way almost guaranteed to require additional investment should the project gain traction. There's no runway by design and once the technical founder's position is diluted, he can be swiftly booted to the curb.

If hmexx is a moral paragon, I cannot offer a better deal. If he isn't, I can offer no deal at all. And that may be a better one.

So, we're all youths and we need a daddy to look out for us?

Hmexx is putting his money on the line.

You counter with paranoia and paternalism.

If hmexx wouldn't be $55000 short on what two months are worth to me I'd happily take him up on his offer and I don't think I'd need you to look out for me on the contractual side of things.

If there is just one person here whose price tag is a bit more modest and who is sharp enough to come back here to ask for some guidance during the negotiation phase or the review of a contract then that person has all of HN to back them and a ready pool of counter offers in case the OP is full of it.

No deal may be a better one. But those that make it into the big leagues would agree that being stuck in youth soccer is not the end of the line for everybody.

If hmexx is looking for a cofounder the numbers make sense. If hmexx is creating an incubator they don't because there is no meat on the bone at 50% equity. The founder has no way of getting more runway without becoming a minority shareholder - there aren't any good choices once the $5000 is gone.

Maybe, hmexx has structured his offer without considering the ramifications of 50% stake as an incubator. I'm somewhat inclined to give the benefit of the doubt. No level of ethical intensions makes 50% equity make sense either for entering or accepting a project into an incubator.

50% equity is what investors demand to keep an enterprise from dying. Flowers are appropriate for a first date.

You're missing out on the 3rd option: hmexx could gamble 100K, do 12 of these and finally pick the one winner to spend all the rest of his time on and drop the rest.

And of course the founder has a way of getting more runway without becoming a minority shareholder: put more money in.

Yes, and it's the third option that raises the question, does hmexx retain 50% ownership of the other 11 projects? If so, those founders are married to a disinterested partner with veto power.

If hmexx can conjure traction with $3k and little further effort, then entry into his incubator could make sense, even for a person with the resources to develop the project on their own, at least from the standpoint of logical possibility.

Is it good for hmexx's investment to structure a deal likely to produce problems for the counterparty after two months? I guess that depends on whether one believes that fast failures should be total and lead to abandonment or partial leading to adjustment.

A safe strategy for the counterparty to hmexx's incubator option is to produce a minimum MVP and go passive, letting hmexx do all the heavy lifting if he wants to move the project forward.

What I see is that a 50-50 incubator split doesn't align with the interests of either party. It disincentivizes the developer from seeking to raise outside capital, and should the developer choose to pursue outside capital, the developer must use some of his limited runway to do so.

It seems to me that the sorts of developers for whom hmexx's offer is most appealing are those less likely to raise additional capital on their own - i.e. if they were able to raise capital on their own, they might not need hmexx (a talent which conjures traction for $3000, aside).

If hmexx's role includes providing the additional capital investment after runway, then the deal is actually structured to give him majority control. If hmexx's role includes raising capital from third parties, then he is going wind up a minority shareholder anyway, so why not maximize the incentive for the active developer to develop?

If my idea (and development) turns into a multi-million dollar proposition and I get booted to the curb, I'll give you my phone number for $8000 so you can offer to invest in my next venture. But I don't guarantee I'll return your call, because my phone will be ringing off the hook.

If I fail, I'll get another job after a couple months and do it again.

I think it's a great idea. I signed up because I think the marketing value is worth a lot more than the $8000.

I'm tempted to make a similar counter-offer as a developer. Do some customer development, prove the market, and I'll fund your product development and build it for you.

The precedent of a questionable value proposition by an anonymous member raises the question, are caveat emptor funding offers beneficial to the HN community?

Logical assumptions lead to a plausible candidate - but that's not identity.

I've taken substantially larger chances on some HN members, anonymous to me at the time and I think everybody came out ahead, sometimes even considerably ahead.

What you would do or not do is entirely besides the point.

If you don't think this is a valid proposition, then don't do it.

Who cares who the 'candidate' is, I'm sure that anybody that enters into this will want to know before they commit to two months work, at the same time I don't begrudge the OP his choice to be anonymous for the time being.

Being (in)famous can be an upside or a downside when making an offer like this.

There are a few toxic names in the start-up scene and I'm sure that google will be able to turn up enough red flags based on name alone in those cases.

This is basically a 'poker' business deal, there is risk to it, some bluffing, and you hold most if not all of the chips.

I got for the 'chess' business deal, strategy, tactics, planning, thinking ahead of the competition, sacrificing time and pieces to advance that pawn or take key pieces and then win the game. No bluffing, just out-thinking and studying book moves. Chess in 12 dimensions actually.

I don't see the risk. Other than that for me $5K is not nearly enough to cover for two months of my time the deal is actually quite good (I value that 50% at exactly nothing as you can see).

If the OP is worth his salt in the marketing game is the big variable, he believes he is good enough to warrant a $8K outlay, more than half of which goes to his co-founder to cover their time.

I've seen people study chess book moves for half a lifetime and still not be able to play a half decent game of chess. All I have to do to throw them off is play (1) b2-b4 -

50% of an MVP + cash to cover for your time + a co-founder to boot + $3K in marketing budget for your MVP is not a bad deal by many standards, and if you end up not liking the deal you can take your toys and go home and the OP is the loser.

He's betting that it works, not betting that he can screw you over.

Poker or chess, it doesn't matter. They are both adversarial contests over a finite pie.

What makes YC successful is baking pies.

This may or may not be a good idea, but it is certainly a novel approach. My best guess is that the precedent isn't too big a concern because few would be willing to put up cash for such an attempt and the # of MVPs worth buying is low.

The initial offer could be finessed/streamlined/de-risked further with the investor offering to pay the 5k to an individual on the conditions that they are (a)customer No1 for the product and (b)a member of a community where they can (prior to receiving cash) or have (proof required) identified a demand for the product/idea among their peers. This lends from the theory of the deep and narrow well / 1000 true fans methodology for customer discovery/early adopter critical mass.

It's funny, because developers do this sort of thing all the time for much less equity.

Startup: Hey, come work here for below market salary for 5% that vests over 4 years Dev: Sounds rad!

This guy: Hey, work on your own project for 50%, and you only have to work on is the MVP for a month, and I'll pay you sort of crappy but probably better than other people in other fields. HN Devs: You. fucking. bastard.

Also - Startup: And you're going to be working on our project, with the documents and design we came up with. Dev: Great!

This guy: Work on your own idea! Have your own dream! I'll just put in the money and experience to make the business a success. HN Devs: You're not offering enough to have a 50% share in the company that wouldn't exist without you!

> I'll just put in the money and experience

What experience?, I don't know who this guy is!.

Well I didn't say it's true, just that he's claiming it's true.

It is funny. Although, I don't think that comparison is completely fair. Usually, a startup that has started hiring has already achieved some degree of progress, traction, and demonstrated potential.

I love this idea. I realize there are haters out there.

I'll match this offer as well for anyone who is interested.

Yes, it sounds like a bad deal for some people. But for a lot of people its a great way to:

1. not have to find work for a month,

2. work on something they're passionate about anyways,

3. have an idea of theirs that may not have otherwise seen light of day become a reality.

Can I suggest that this is turning into a HN Matchmaking service

Perhaps a little codification might be good:

* A Maker puts their idea onto HS with "MatchMake HN: " * Any interested Investor then replies * Maker chooses Investor (possibly publically) * A month later a "Show HN" is published.

I would be interested seeing everyone's results

I'm now imagining building a marketplace site roughly like eLance/oDesk/whatever else, where the investor can put money in escrow and clients (freelancers) can "bid"--but it's the freelancers who are proposing the jobs in their entirety, not the investor.

I'm loving this entire thread. I wish HN had more brainstorming sessions like these.

Wouldn't it be funny if a MVP uses one of those freelance sites and spends the $5000 on a team in India to finish the project in two months and then has the $3000 to promote it? Subcontracting can be fun you know.


Just put this together. No escrow or anything and haven't fully implemented bidding but let's see if there's any interest.

If nothing else, that is one of the best, most clever, most appropriate names I've ever seen.

Feature request -- What about a user being both maker and investor?

Why wait for hmexx, right?

if you are the maker of http://makermatch.herokuapp.com may I say nice one - great to see spaghetti hitting walls - may it stick :-)

Nope -- see the comment below my own, panther2k saw it and did it. Which is exactly what I was hoping would happen when I threw the idea (rephrasing your idea) out there--I have enough startups on my plate already :)

This would be of interest to me as well. Have just about finished recoding the game that I couldn't get in the MS store due to tester issues. Have been able to do this one with my own skills and some volunteer VAs. I want to do a bigger VN as a follow-up, and this time pay the VAs, and pay someone else to do the artwork so I can concentrate on the script and programming. Getting some dollars up front so I can start it now, and have someone else be point on marketing would be darn close to ideal. I'd probably want a 51 - 49 split so I have creative control, but otherwise...

There is a startup doing exactly that (crowd-sourced investments), can't remember the name. If I'm not mistaken the US law wouldn't allow that until very recently, even still the legal details aren't clear yet. AngelList also serves that purpose.

Founders Club?

yep, Founders Club does that but probably only for more advanced projects that have already recevived some angel/seed money from an established incubator/accelerator.

That is a good idea for a MVP right there. A HM matchmaking service. Using accounts at HN it matches MVPs with investors/cofounders.

This discussion is awesome! I would never have believed such a simple conjecture could provide so much illumination around the myths and realities of startups.

First, its a great deal, both for hmexx and folks who take him up on it. Frankly I think it could be revolutionary. My reasoning is as follows;

Many "products" over the last couple of years have been fairly straight forward web "apps" built on top of existing infrastructure. They provide some basic customer value, they tend to be fashionable (moderate lifetime), and generally take less than a year to produce.

That is almost exactly the same as the book publisher model.

So hmexx sets himself up as an MVP "publisher" and pays "authors" $5000 up front and a 50% interest in the proceeds going forward. Now lots of new book authors would love that deal because they know how to write books but they have no idea how to promote them into bookstores and Amazon's top lists etc. Unlike books though web apps don't pay out a revenue stream on per-unit sales. Instead they tend to either a pay a chunk via a buyout, or they generate income over time with advertising/partnerships. If we're talking about "apps" for mobile then there is a revenue stream very similar to books.

So I reason its a good deal because the content creator has a much better chance to benefit from their creation than previous generations of artists had.

Now as an illumination, the whole 50/50 thing shines a light right into the core of the startup 'dream' mentality. It is the idea that you will start a company that becomes the next Facebook and you become a billionaire over about 10 years of nights. 50% of zero is zero, 50% of a billion dollar company is $500M worth. The closer reality is that if the idea has 'legs' then you can expect a series A round that will reduce both of you to 33% and then a series B which takes you to 20% to 25%. If you get there you're probably making a decent salary and have some small but non-zero shot of a return.

Every year somebody makes over $50M on one of the big lottery games in the US, its only like once in 5 years that people make over $50M from their startup. The good news is that fewer people have the chops to "buy in" to a startup lottery ticket.

So that is the reality. If you want to make some money, buy a house, raise a family. Go work for Oracle or Apple or Microsoft or Google. Don't do startups for the money, do them because you are passionate about what they are trying to create. If you do them for the money you will become bitter and depressed.

But this offer, to be paid $5000 in exchange for a half interest in the lottery ticket you create? Given the 'two, three month' worth of work estimate. There is not a whole lot to complain about.

I like it but I think the order should be reversed, before building the MVP, I would have built a landing page for each idea (after filtering the good ones), spend some money on marketing first and see if it gets beta sign ups traction (developer commits that if it does, they'll build it), only then pay for building it (I would also offer to sign an NDA with the developer protecting their idea if the deal doesn't execute, and also give them a shared user account to the analytics of the landing page for being 100% transparent)

This way you risk only $3000 (or less) instead of $8000, and the developer will be much more motivated to build it knowing it's already an idea with a real potential market.

That system has worked in other creative endeavors as well, the whole 'landing page/sign-up' thing is a way to de-risk concept development but that may not be the issue here.

One has to optimize for the 'harder' thing being done. So if the challenge is getting the MVP written, then this order makes sense, the risk on the $3000 is less than the risk on the $5000. If the challenge is getting people to understand it, then doing the landing page first makes sense. From hmexx's point of view $8,000 is at risk either way, except he "knows" he can do the customer acquisition part but doesn't know if someone can do the "MVP" part.

One of the realities this discussion has highlighted is how little young engineers (and some older ones too!) value the whole marketing/customer acquisition thing. But the beauty of it is that when the risk arbitrage is low enough, that doesn't matter. One has to ask is there a 'funding round' that is earlier than a 'seed/angel' round? Maybe an 'idea' round. Two people come together, one proves they can execute on building an MVP and one proves they can execute by acquiring customers, then the pair take the next step (assuming the thing works and customers are found). This really side steps the whole "I've got a great idea if I could just get it off the ground" discussion into "What are you willing to bet?"

> This really side steps the whole "I've got a great idea if I could just get it off the ground" discussion into "What are you willing to bet?"

That nails it perfectly. I like the OPs proposition. I like it so much that I'm now wondering what would be a better counter offer, and I've failed to come up with anything so far. This little trick could kickstart a whole new phase in the start-up world.

Unless the OP turns out to be Jason Calacanis ;)

So you've alienated all your early adopter customers by saying you have a product but you don't have anything.

Potentially yes, but not likely in my opinion (and in the opinion of people I talk with) and the fact is that most do it, usually they do it when they actually start building it, but we all know that many even big companies, sell first, develop later. Those who develop first and hope they'll find a market, sometimes just end up with a great piece of code with no way to make money out of it.

sell first develop later is a sound strategy, especially if you are building a product/service for enterprise. Sometimes you can even get a prospect to finance the development process. However, i don't really see how you can do the same thing if building a b2c product - except through a kickstarter campaign.

Have you read the lean startup methodology

On the other hand if someone beats you to the punch after discovering your market research, you wasted time and energy.

If someone "beats you to the punch" then they would have beat you anyway. If you have an idea that's so simple that it can be easily replicated from a signup / info page, it probably wouldn't last.

First mover advantage. In the time it takes for you to do market research, others may already have a leg-up in starting something which may converge to your idea before you launch. And having that initial traction may completely squelch your launch

Hah hah, yeah that really worked for Lycos and Excite being a web search engine site before Google. It also really worked for Friendster and Myspace being a social network site before Facebook. It really worked great for Qualcom having a PalmOS based smart phone and RIM with the Blackberry smartphone and Microsoft's Windows CE smart phones before Apple's iPhone and Google's Android came out?

First mover advantage, sometimes you show the Johnny-come-latelys all the mistakes they can avoid, and how they can improve upon your product by examining your weaknesses and flaws because you rushed it to market.

If you are a first mover, consider having in your business plan what you do when the 'heavy hitters' decide to copy your product and do it better. They most likely will so plan on it. Do a total quality management on your product and improve on it every chance you get before the copycats do it better.

I'm skeptical that "first mover advantage" is very important. There are many examples of products and services that were not first, but became the best and won.

Kevin O'Leary says pioneers get slaughtered and settlers get rich. First to move well on a proven idea - and keep moving on it - may have the advantage. First to act? Not so much.

There are pros and cons to being first mover or second mover and examples of successes and failures of each. I prefer second mover, as someone else has de-risked, educated the market, etc. Now it's just to improve/differentiate, and capture market share (all things that are easier said than done!).

First mover advantages are actually very rare. They're only relevant for markets with extremely strong network effects and lock-in. Even then, Facebook wasn't the first social network.

It's always a problem and a catch 22, you want to get customers, but also avoid competition, but I think the trend today is that stealth mode is not that helpful, there are so many ideas and if you believe what they say in the news, not enough developers to build them, your big enemy is a market with no customers, not a market with competitors. if you launch 3 months after someone in today's world, even if they manage to get a few thousands customers ahead, it doesn't make much difference in my opinion if you build it better, you'll catch up.

As someone said here earlier, idea is just a multiplier of execution.

You could also find a niche market that has little to no competition and develop to that. I remember when the Desktop Publishing market was new, and the Commodore Amiga had Deluxe Paint and a few third part desktop publishing apps in 1985. Then later in Adobe made Photoshop in 1989 for the Macintosh that copied the ideas of desktop publishing software on the Amiga. Not only that but Newtek had a Video Toaster and Video Editing software for the Amiga, and later on Apple copied it with iMovie and other stuff. But back in 1985 it was a small niche market, and it grew so much that it migrated to the Macintosh and became best selling products that promoted the Mac over the PC.

The Amiga was basically a launch platform that went away for many niche market software. If the companies that developed those for the Amiga had developed them for the Macintosh, they'd still dominate today.

"I remember when the Desktop Publishing market was new"

So do I. Remember Pagemaker vs. Quark Express?

I thought it was Ventura Publisher vs. Aldus Pagemaker.

Ready Set Go! vs Aldus Pagemaker

Pagemaker reincarnated/replaced as InDesign.

Anyone remember Calamus? Great DTP.

The analogy to the book publishing industry has some merit, but it only gets you so far.

If this were a book deal, the author would be assigning copyright to a company in exchange for an advance and a non-controlling share in that company. And that company's business plan is premised upon the dilution of the author's equity.

Once there's dilution, the author remains with the company at the pleasure of a guy he met on the internet and some other investors. They may be swell people, they not. Likewise with the the author.

Yes, the value is probably zero. But in this scenario, the possibility of an upside is not just dependent upon the product's success but also upon their being some lucky alignment between his financial interests and those of the other shareholders - and they are likely to have multiple intermingled financial arrangements.

>once in 5 years that people make over $50M from their startup.

May be you are trying to make a point but this statement is clearly NOT true. It all depends on how wide the area are you talking about. Are you talking about California or Kansas or entire US ?

Why stop at the US? Doesn't the rest of the world count?

Sure it does.I am not even from the US :) But I thought 3 examples would be enough.

The downside of the book publisher model is that the publishing firms and associated agents are perceived as gatekeepers in the industry.

Unpublished authors talk about the one big break they need to be a success, and all that is standing between them and success is convincing a publishing company of their merits. The same applies in film making - it is the small guy currently waiting tables up against 'the man', who is holding them back from being a successful movie star and actor.

We don't have that in the entrepreneurial community, at least not to that extent. Without the perception of gatekeepers entrepreneurs know that the reward correlates to the work you put in.

I like the funding ideas that don't propagate the story that all you need to be a successful entrepreneur is to convince somebody to give you money.

RIM was offering US $10,000 for any app that generated $1000 in sales. Still might be available leading up to their relaunch.

I think that's an interesting take, even if not meant by hmexx. Startup ideas as publishing. $5000 advance, $3000 guaranteed marketing (of unknown value), and 50% royalties. I'd write a book for that rate. Why not an app?

Financially I do not think this is a great deal.

Emotionally its probably what many devs need.

Accelerators, meetups, co-founders, all serve the same need. Believing that the idea has at least one person who believes in it, and prods you to move on.

That said, this is probably a bad split - hmexx might be better to decide if he is an investor (early stage) or a co-founder -> if the latter then really its just one company - you cannot be a founder of two companies at the same time...

Agreed about the co-founder vs. investor problem. I would suggest anyone who wants to take this offer up do their diligence on hmexx and find out what he's bringing to the table as a co-founder. If it's just $8k for half a company that you will have to split 50/50 for the rest of it's existence, be wary. If he's a co-founder, he should join in on the workload after the MVP is proven. I would also consider vesting for both of you, keeps things honest.

That being said, I think this idea does have the potential to be very interesting, and if circumstances were different I might even consider it.

Yeah - I am sure hmexx has hit on something - and I think it needs to evolve before its right (pivot! :-)

My guess (above) is that HN is the ideal place for investor / 'prenuer matchmaking. Whether pg will let it be I cannot tell you. But it should beat AngelList just because.

This sounds almost tailor-made for YC to use as filter for their own applications. It's closer to their roots too, a tiny team with exactly enough money and time to do something.

> I would also consider vesting for both of you, keeps things honest.

For those of us who are complete neophytes at things like this, would you be willing to elaborate on what this means, and why it's important?

People use the term "vesting" to refer to a clause typically embodied in a founders' agreement in which the shares "vest," or become shares that you actually have a right of ownership over, if you continue to perform your duties.

Vesting schedules typically last 4 years with shares vesting quarterly or monthly.

So, you can think of it like this: After year one, you'll own a 1/4 of your 50%, or 12.5%. Year two, 1/2, or 25% ...and so on. You don't actually own the full 50% (i.e. doesn't "fully vest") until year 4.

Many vesting agreements carry a one year cliff, which means that none of your shares vest if you leave the company before performing for one full year. This is to prevent the "lazy founder" problem, where one founder is doing most of the work and the other one is goofing off, or decides to leave and take another job.

This is important because the first year is the most risky for a startup and requires all hands on deck. If someone flakes out, you can't have a big chunk of shares tied up in them. One, because it isn't fair. Two, because you likely need to go find yourself another founder or will need that equity for first employees. It scares off experienced founders and investors to see a chunk of your cap table trapped in a "bad decision" founder that flaked out. This same logic carries over to why there are vesting arrangements... you shouldn't be compensated if you abandon the company and don't put in the same work as the other founder.

Hope that helped explain what it is and the reasoning for it!

Vesting means that each owners shares of the company will be given to them over time so right off the bat neither of the people own an outright 50% stake.

for example a common scenario is a Four year vesting with a one year cliff, acceleration up any sale or liquidation event.

What this means in every day terms is that you own more shares each month you work, but if you leave before a year is up you own nothing. So if your half is 5 million shares then after the first year of working you will have earned 1.25 million shares after your first year which are now yours and cannot be taken away.

For each working month after that you will earn an additional 104,167 shares (its actually 166 2/3) until you have completed your 48th month at the company at which point you now own all five million shares, or are "Fully vested" as the term would imply.

It basically just ensures dedication to a project and that an early person who was involved with the company in some way does not come back 10 years later suing for "their half" of a company they may have helped start but had no involvement in product direction, success etc.

Thanks for the explanation, I've got a couple questions:

Say two founders begin a vested company and one drops out, does total ownership transfer to the other founder?

If BOTH drop out, how are assets divided?

Lastly, it seems that the disagreements over ownership will merely shift to disagreements over 'time worked', and weather the effort was legit.

You would lay out how things are divided in your paperwork when you form the company. If there are no outside investors, it's simpler for a company to fold.

In the case of one person leaving, all their invested shares fall back into the management pool and are distributed proportionally amongst the remaining co-founders (but not investors, they always only have the number of shares they paid for).

Also make sure you do an 83b election (in the US) for vesting shares. Otherwise you pay income taxes on the value of them as they vest. Google it for lots more info, it's pretty straightforward

Thanks to the others for explaining vesting, they are spot in.

Basically, you don't want to end up in a situation where your co-founder can take off after 6 months and still have 50% of the company. Co-founder==co-worker, in the strictest sense.

Conversely, if the $8k is to be treated as just investment (which would not fall under vesting) he should be taking much less than 50%.

It's not just an investment though, the OP has committed to doing some serious marketing, let's say at least equal to the amount of work that the dev co-founder puts in to create the product in the first place.

From what I read, he was committing $3k towards marketing and gathering users, but did not specify how much work he'd personally do. Just want to make sure any people new to this ask the right questions up front, I'm not implying that hmexx is trying to screw anyone

This is very intriguing. A lot of people have objected to the 50-50 split. It does seem like a lot for the amount of money invested. To me, this depends on how much work the investor will put into it.

Let me put it this way - if someone with money offered me 8K total for 50% of my side project, and that was it, I'd say no way.

If someone with talent, motivation, and a remarkable ability to get things done offered me nothing other than his or her dedication to making my side project a success in exchange for 50%, I might say yes.

So it isn't really about the 8k. Here's the thing. Suppose you're one of those highly motivated and effective people, but you know yourself and you just aren't the creative force behind a project. You know that there are lots of creative programmers who would produce an app if they could just get away and be funded for month or so. So you offer some money. Instead of finding prototypes and looking for one to fund and support, you're finding programmers and looking for one to produce a prototype. Instead of looking to join an early startup, you're offering a small amount of money to create a startup to join.

Maybe one way to modify this would be to say - if I pass, you keep the money and your prototype, and I give up on my share (or it is greatly reduced). If I decide your app is the one I want to run with, we are now 50-50 partners in the venture.

I think of the proposition as an intro to a PARTNERSHIP.

I posted above that I'm willing to match the offer. I don't think of this as an "investment" so much as me trying to kick start a relationship where I'm a cofounder.

As such, I'm interested specifically in ideas where I believe I can provide value that the other cofounder doesn't, so we both benefit. I expect it to be an ongoing pursuit where I continue to work on the company.

Buying half a company for 5k and then putting in 3k of advertising only to walk away would be the wrong move on my part and that's not the intention I have going into any transaction that may result from this.

I really like this idea.

It removes the risk for the developer to just 'build' (which is ultimately what they enjoy doing) and also shifts the key responsibility for the initial marketing / customer acquisition away from the developer (which is often what they either don't enjoy doing or suck at).

After this phase, either the idea is a success, the developer gets paid and a mvp is now a business hopefully with profit (for both parties involved) or the idea was not a success and the developer still gets paid some money.

If you have a world changing idea and you've quit your job with a plan to start a start up - that's fine. This probably isn't the right opportunity for you - try Y Combinator or go in search of real funding once you've built a self financed MVP.

However, if you're a developer with a niggling idea that you keep meaning to work on because you know it could turn into something bigger or you just don't feel confident in your own marketing / customer (or user) acquisition skills then this is a really great opportunity!

I've literally missed so many opportunities before, where I've had an idea - not executed it due to no short term monetary reward or no confidence that I could market it correctly and then watched as a start up is formed a year or two later by someone else which was essentially that idea!

First off, I love this idea and don't listen to the naysayers.

Second, I would strongly recommend getting a lawyer to draft up some sort of agreement that specifies what happens if the project isn't up to spec, etc. It would essentially be a basic contract. I know there's always the temptation to say "well the legal costs would be too much to enforce it" but that's not always the case. This is garden variety stuff here. You don't need to protect every scenario to provide some value to yourself.

The deal amounts to $6500 dollars in exchange for 50% equity. The $3000 spent acquiring users/customers is to the benefit of both parties equally.

As the offer is written, the $3000 could be spent on AdWords and similar services.

Correct. Thought I'd confirm this response so there is no confusion as to what I am offering. The $8000 in the title is not 100% accurate.

hmexx, to be clear: you pay $5000 to the developer to seed full time development for a month or two and on completion you will in addition spend $3000 promoting the product.

An open question is: how active of a partner would you be once the business (hopefully) becomes a real/profitable business? Are you offering to be a full active partner in running the successful businesses that you seed with this offer? If so, then your offer sounds like a good deal for developers.

Anyway, great idea!

50% upfront. 75% upon 50% completion. 100% upon 100% completion. Your 50% ownership is contingent upon at least $10,000 sales resulted from your effort to "acquire enough users/customers", tracked within 6 months from full delivery. Deal?

"At this point, I'll take over and spend an additional $3000 to acquire enough users/customers for us to evaluate the project's likelihood of success. We split the resulting company 50-50, as equal co-founders."

How does this scale. Presumably in Hacker X builds a product you like and you're able to find success with your $3000 and marketing efforts, how does the relationship move on. Presumably, you've now built a product dependent on both of you. Hacker X needs to build new features/scale and you need to ramp up your marketing efforts in equal measure. But you have products from Hacker Y and Hacker Z that you're currently working on, and Hacker A, Hacker B, and Hacker C's products are also financially viable. What happens now?

I suppose my issue is (from the hacker perspective) that for 50% equity, I expect some lasting relationship with the person handling the marketing of my product beyond wherever $3000 gets you.

For those jumping on OP for requiring 50%, remember it's an offer and you're free to explore other avenues. Nobody is holding a gun to your head. For many people, this is a pretty fair deal. It might not be for you, but I don't see how OP is taking advantage of anyone. He's significantly reducing risk for freelancers to work full-time on their own projects and that significant risk reduction comes with a price tag.

That is a very good though. I sure would hate to put 100% into my 50% and the other 50% of the company only allow 10% because the other 90% is in 9 other companies... You said it better.

If this was answered, I can't find it.

- At $5k / 50%, who is covering the costs of creating a separate entity (LLC formation)?

- What happens in the event that the project is completed in time, but the addl $3k spent to acquire enough customers doesn't yield any positive results?

- Who owns the IP in case after all is said and done, it falls into a dead pool? IP in code that didn't survive as a startup is still valuable.

- How many side-projects are you funding and are you expected to be directly involved in each one?

Some people look at getting paid $5k to complete a side project as plus. I guess to some it is. Taking 2 months to build means you were paid $2.5k per month (around $15 per hour) assuming 40hr work weeks.

Customer acquisition is the most time consuming, costly and difficult part of any startup. Is $3k really realistic to determine if the market is there?

Very important questions here. Also it's much better to validate the idea before building the product.

Worry about that crap when you have something to worry about.

Sorry, but $6500 for 1/2 of your company seems like a raw deal at any stage. If your idea is even halfway decent, you should be able to do better than $13000 for your initial valuation.

Protip: find real investors who are interested in giving you a fair price. This offer is basically equivalent to a payday advance or a loan shark in terms of cost.

Not sure why you got down-voted so much, it didn't seem like you were being ridiculous. Maybe people didn't like when you equated the OP with a loan shark? That said sometimes people need loan sharks.

Would it not be more effective for you to first spend the $3,000 talking to customers (perhaps pre-selling)? Then once you land on an idea customers want, then you can invest $5,000 (or more) to actually build the product.

I agree that finding product/market fit first is much more efficient than building a product with unknown market response.

This whole discussion is amazing. He pretty much removed any obstacle you might have to create your idea, offered his experience... and then a torrent of excuses and whining came back :). I am sure a bunch of smart people are probably taking him on the offer.

hmexx if you would like, hit me up, I have several ideas that I am trying to create, you obviously have experience gaining traction, so maybe we could agree on one or two to work on it, I need a good cofounder.

You don't need to pay me anything, in fact, we could both add 2-3K (more is excessive) as initial funds for each project.

Obviously I would like to know a little about you and you can evaluate me as a potential partner.

I love this! The numbers are wrong though. Over time the developer will get resentful. Imagine that the developer created a SaaS site that brings in 50k a year, after a few years of dev (which I have). Anyone would feel resentful about paying an ongoing 50% "tax" to an initial investor.

In the 50k/year scenario the investor get's a 5x on investment for years to come. That would be an awful feeling for the developer who's putting in the ongoing maintenance effort.

A better idea would be for the investor to claim 50% until capital investment was recouped, then gradually scale back.

- So, 50% until the $8k was paid back. - Then 25% until a 2x return. - Then move to a 10% ongoing royalty fee.

This excites and incentives the developer to keep building things out knowing that one day they will get the the 90% lions share of profits. It also works for the investor who can rinse and repeat the process with multiple developers.

Wow. I'd rather go on fucking Shark Tank.

If someone is willing to take $5,000 to do the heavy lifting up front (therein taking most of the risk) for only 50% equity, their idea is either terrible or they aren't committed to seeing it through.

What risk? $5000 to cover yourself + $3000 marketing along with a (free) guy to do that for you which is a huge advantage that every person "launching" via a "Show HN:" submission could benefit from.

If it turns out to be a crap idea you lose 50% of a crap idea. If it turns out to be a great idea you gain 50% of a business.

Agreed. $5k to hack on a personal project for 2 months isn't really a ton of risk. Especially because OP didn't really put any huge requirements on this. It doesn't have to be a gigantic project (well, ideally at least, I'm not sure what he'll end up picking). I'd love to see the whole process documented though.

Agreed. Life is full of risk vs returns decisions.

Employment - Low Risk, Low Returns

Startup - High Risk, High Returns

I love how this preposition is somewhere in the middle.

You still have to do all the work to build the MVP.

And you get paid to do it = labor, not risk.

I have made and launched dozens of sites. The only ones I was paid to build belonged entirely to someone else. The ones I made for me .... I could barely afford hosting at some stages in my life.

Or they live in a second/third world country, or they're a student, or...

$5000 to spend a month working on something you love isn't that bad for many places in the US, even.

I wouldn't take this deal, because stopping / starting employment isn't that easy for me, but I can see other people rationally taking it.

And if other people think he's underbidding, I would encourage them to bid him up.

A couple years ago I would have been all over this. I've done several ventures similar to this resulting in modest exits as well as couple resulting in being simply paid for working 4-12 weeks on something I want netting nice contacts.

It's okay if you don't hit a home run. It's even better if you don't starve or get evicted for your troubles.

I wouldn't take this deal, because stopping / starting employment isn't that easy for me

But for those people who freelance, and are in between jobs this may well be an ideal opportunity to (continue) being paid for doing something they have been thinking about for a long time.

Just to put this in perspective, I live in a Central European country, part of EU, I earn almost 2x national average and I have to work about 4.5 months to get that kind of money.

.. Do you think that 5k he gives is going to be tax-free?

Do you think 4.5 months salary is a tax-free alternative?

yes? unless I read that wrong he's saying he'd have to work 4.5 months for his post-tax savings to equal $5k...

$ 8000 is 1-2 months salary for a top developer in Brazil, depending on experience. To work on a side-project you're trying to get off the ground, it's fair.

Hey man, I'm from brazil too. Where in Brazil you receive 16k reais for two months of coding? I can see this only in a high level of seniority.

I assume he was thinking in R$, not dollars, with a slightly <2x exchange rate. Either way, a developer is not going to leave a good paying job like that, if he can just save for a few months and own 100%.

I know, Ricardo. It's a real good money. My question was where to find highing pay jobs like this in brazil, if you are not a senior developer.

Exactly my thoughts

+1 student

You think coding up the project is the heavy lifting?

You really think that the hard work of a sucessfull company is the inicial coding, you are much far from the truth. For coders, design a product is really simple. The problem is what to make, and what sells. That is the place where you can get help.

And they're putting their idea they've spent a lot of time thinking about and are passionate about, and that OP thinks is quality enough that it could work; He's not going to put money into simple hobby projects.

Neat idea. Personally I think it's a good opportunity for guys like me who have a ton of ideas but half implement them, or implement them and never market. Sure, 50% is a large chunk for doing "all of the work" but I don't have to worry about funding or marketing, so that's pretty solid. You say you're a "techie" as well. Do you bring anything else to the table? Would you create marketing materials (websites, ads, etc) or would your partner be responsible for that as well?

My concern with the approach is that it doesn't seem very lean. An idea that a developer has kicking around isn't necessarily one that has a market. I'd suggest getting involved early on the product development side and getting out and talking to customers.

Articulated market needs are much more valuable than just an idea... Nathan Barry had a nice post on HN the other day having to do with this: http://nathanbarry.com/finding-ideas-project/

Business Model Generation (http://www.businessmodelgeneration.com/book) is a helpful resource as well.

Anyone can come up with an idea. Lots of people can build a product for a wage. Finding someone who will develop their own idea is what's valuable. The question is whether people who can deliver technically want a partner who can deliver marketing and are willing to take the risk finding them.

I like this idea so much that I'm willing to join hmexx and e21 by matching the offer for the right idea.

Further, the right idea/individual would get my full, undivided attention, resources, and limitless brainstorming/pivoting sessions.

I'm also a fan of the idea of documenting the process and milestones on hn for the benefit of future teams or projects.

My background is in law and business and I'm interested in technologies that bridge offline and online domains. I'm a daily reader of hn but a new poster.

hmexx -- thanks for stepping up and encouraging more of us to do so.

You should add your e-mail to your profile - it must be in the "about" field for everyone to see it.

I happen to be sitting on a project that bridges online and offline, we applied for the last YC batch but didn't make it. Will send more info as soon as I'm able to :)

Give me a shout here: http://brandonparsons.me/contact/

Contact info: @vik1211 about.me/viksingh

I think this is perfect for first time wannapreneurs with very limited connections which seems like a large untapped space.

I applaud the proposal. I'd love to hear about a follow up post in the near future.

Considering the very low percentage of IDEAS that turn into valuable companies, especially without the injection of new contacts and business expertise that an incubator might provide this actually seems like an OK deal. If hmexx does 10 of these, there's a very good chance that he'll flush $80K down the crapper and 10 developers will have had a great time building something they care about and learning a TON about what it's like to work full time on something alone. Perhaps some new friendships are forged.

If you know that your idea is THE big idea that can be worth millions, take $5K out of the bank or your retirement fund or sell your car or do anything in your power to come up with 2 months of survival money and do it on your own. If not, have some risk free fun and a great experience building something awesome with hmexx's money.

Just thinking aloud. Is this really ... ?

Dev: Is rock star techie whose disadvantage is lack of motivation Dev: Builds MVP that Proposer thinks is going to be valuable Proposer: "Validates" it by showing it around Proposer: Sells flips MVP for considerably more than $8k

It's not necessarily bad, it's probably symbiotic.


* Do all stars care about 5k? * If they do, why is short-term motivation of $5k show powerful? * 50/50 with equal voting rights? Disputes, ahoy. Two people that never worked with each other before.

This proposition was a great idea being trapped in a limited framework. Great because it was validated very well in the most profitable segment, i.e., HN programmers. Limited because right now, the investor side is monopolistic (no offense). Scaling MVP takes time, and hmexx won't be able to run 20 projects at the same time.

I think this model should be expanded into two-sided market to attract more capital and more diverse background from techie investors. These techie investors may indeed come from Hacker News community themselves, who are more mature startup-wise (more capital and experience). Although the model has not been tested on the investors' side, I can sense a healthy demand from the comments here (especially from haters' camp :))

P/S: hmexx, would you consider this as my proposal for your 8K investment? :)

If the investor is a good co-founder and committed to the idea and has the network and chops to make something happen for $3000, might be a good idea for some people.

But... you want a co-founder who is committed, can point you to the right way to build the MVP so that you can actually acquire customers, has a network in and some knowledge of your vertical.

Otherwise, you build an MVP, give up 50% for... not necessarily very much. Now you have a weak co-founder with 50%, might make it hard to take the next step, sort out control issues, have enough equity to get more people interested and still be interesting for the founder.

And if you really believe in your idea, and are the kind of strong hacker and entrepreneur that will be successful, is $5,000 that big a hurdle for friends and family, credit cards etc.?

You summed it up nicely here.

I can't seem to see any biography about you on your HN profile or this post.

Are you planning on doing this anonymously?

No, but I prefer sharing my identity on a 1-on-1 basis during project discussions, rather than put it in the proposition.

[thread flagged]

To me, this is a red flag.

The offer is set before the entire HN community. It has substantial financial and legal implications.

You are competing with YC.

Your track record is relevant to the ranking of this thread on HN.

> The offer is set before the entire HN community. It has substantial financial and legal implications.

So? If you're not going to take the OP up on his offer then what business is that of yours? Or are we little children that need your protection?

> You are competing with YC.

And YC can't deal with that competition? It has to be shouted down so nobody knows about it?

> Your track record is relevant to the ranking of this thread on HN.

Not one bit. The ranking is only dependent on the number of upvotes, not based on his/her track record.

Really, you have 0 business flagging a thread like this. It's one of the more interesting experiments that I've seen here and if stuff like this gets flagged then HN has truly lost its charm.

The OP got a chance to address the concern I had about the specific offer. He did so. This page kept its upward momentum. Call the fouls which matter.

Fair enough. I can see where you are coming from, although even if you found out my real identity (which might be possible if you look carefully enough through my history of comments), you would not find anything that would substantially strengthen the proposition.

I'm no one special... just a techie with some moderate success who wants to help launch some cool new products.

It's not so much discovering something which would strengthen it, as discovering something which would weaken it.

Since your comments point to a trail which leads to a plausible individual, it is difficult to see a serious legitimate benefit which arises from not claiming to be that person. On the other hand, falsely claiming to be that person would have legal implications.

[Edit] on a meta-level, I believe that a precedent for this type of offer to be made anonymously is a hazard to the HN community.

Until you reveal your identity, you're wasting everyone's time.

He's really only wasting about 30 seconds of it, though, as comments and Google are indeed the only two things required. He appears to be exactly what he says he is.

I personally don't think his identity is relevant to all HN, but it's definitely something that's going to be revealed to the selected candidate/project because of the legal implication.

He's not withholding identity indefinably, just filtering for privacy sake.

That's reasonable to me. Anybody could out him once they connect, if he was a shady character the ruse wouldn't last long.

I don't at all understand why people are berating this proposition.

This proposition makes a helluva lot of sense.

I have done the hustling/marketing side of a startup. I got my failed (sigh) startup lots of good press and lots of users.

I would venture to say that I probably put in more work than any developer on my team at that point.

Now, I am a hacker but I 100% fully understand the value he is putting down. He will be just as invested in your MVP as you will be. His sole job is something you never have to worry about. Maybe he doesnt hold his end up of the bargain, which may happen. If that does happen, well make sure there is a clause in whatever agreement you sign.

I think it's an awesome idea, and I'll gladly take you up on it. I have a side project that's nearly completed for some months now, and this is exactly the kind of kick in the butt I need to finish.

To all the naysayers: I take it that you all have finished your ideas, went through YC and are accomplished millionaires? If not, what's with the negative attitude? Here's someone OFFERING you money for your project, and OFERING to do all the hustling for you. You underestimate how much work and trouble hustling is...

Thank you for this opportunity, and you can expect my email later today!

I'm in, and emailing you now, for the exact same reason I applied for Pinboard's PIC-PC within minutes of it going live. I have an idea for a project that I really like and find really helpful. I think others will like it too. I'm also really really busy. This will give me just enough of a push to actually DO instead of just think about it, and enough of a backing that I can get SOMEONE else involved once it's built, so I don't have to spend all my free time running it, while working full time.

Cool proposition but because of your onerous terms you are self selecting for bottom barrel. In startups (where there is a power law distribution of outcomes) it would be much preferable to offer more generous terms and simply be more picky selecting for founder competence. Also- need to figure out statute of limitations: who decides when one MVP stops and another begins? What if a freelancer takes your money hacks up a bunch of MVPs and learns enough to do the full swing by themselves?

Here's a counter-offer. If you have an idea and I like it, I'll take your $5000 and will build an MVP. You'll have to commit to spend at least $3000 more on marketing right after it. And I'll take 50% of the business.

FWIW, I have a story of a better proposition. I currently do a lot of subcontract work for a consulting company. These guys have been around for a while, but to gain more exposure, so they have been wanting to publish some Open Source stuff. I've been working, on and off, on an interesting (to me, at least) project that I was planning to release under a BSD license and if it gains traction, turn it into a business. What the consultancy proposed was this: they would pay me to finish the project and publish it under their name. We would then market it as an OSS project, gaining more exposure for their firm and for the project. Later, if I choose to turn it into a business, I already have a potential partner who is intimately familiar with the project. If not, I get paid, and they get a cool OSS project to show off.

This is strictly a better offer than the OP's: I get paid for about the same amount of time, and I get to keep 100% of the creation (so does everyone else, since it's Open Source). In other words everybody wins.

> This is strictly a better offer than the OP's

Is it available to everyone, though?

Yes, anyone will be able to use the project for free and modify the code under a BSD license. Thus anyone can build a business off it if they choose. That is the risk I am taking. It is mitigated by the fact that the firm I am working with and I will be the ones most familiar with the code and free usage of this project will simply validate the idea.

Edit: or do you mean the offer? If so, then no, currently just to me. Though if others could negotiate similar terms.

I meant the offer. It does sound better, but there are lots of better offers out there, this one has lower barriers to entry though. I see it less as the route to go if you are an entrepreneur and more a good way of giving people the kick up the pants they need to start their journey.

I think that in 2013 is more important how you build it than what you build. The implementation become more important than the idea, so the ideas are overestimated.

Things that can actually succeed:

* A payable gmail alternative.

* A payable mail list (I think 37 signas was working in to that).

* A payable online book designer like (write in markdown and have a professinal like pdf output, epub, mobi...).

* Online radios. There are a lot of labels that want to promote their new records, and a lot of music lovers that want to have their online radio.

* A payable service that evaluates and give you reports about your internet connection.

* Humble bundle as a service.

* [1 thousand more]

So... ideas there are a lot. Problem is decide which one to build or improve. There are for sure companies that do already all the previous examples, but small changes can become totally different products. The good products have people with good criteria behind. What i mean is that instead of looking for someone with good idea, is better to look for someone with good criteria.

On any case, thanks for the initiative.

Premise 2 is flawed IMO. An MVP built by a lone, but talented techie for $5000 / number_of_hours, isn't likely to turn into something 'successful' at all because 1) someone who values their time so little is probably not that talented, and 2) an idea whose perceived valuation is essentially $8K probably isn't that good to begin with.

The US isn't the only country in the world where business and software dev happens. US$ 5k is ~2 months a good developer salary over here in Brazil, it's a pretty decent amount for one month of work.

Most importantly, 99% of ideas are valued at $0.

As another Latin American mentioned, the US isn't the only country in the world.

U$ 5.000 is about what I get for 3 months of salary, so it works out.

I agree I'm not talented... at selling myself, but I do believe myself capable of building something in 3 months.

I like the proposition in principle, I won't do it because I have too many financial commitments and it sounds too risky and I have only one shot, if I was a kid just out of college I might have done it.

The government of my country has a similar offer, but with 0% equity, for local entrepreneurs, I'll try to take on that offer :) .

I'm interested, but I have an important question: Are you an accredited investor? Must you be, for this plan to work?

Accredited by the American Dental Association or the Fidelity Investments sales intern training program?

Hi hmexx. I have a counter-proposition for you: I am a talented web developer who has made others millions of dollars, but I never do the same for myself for pretty much exactly the reasons you describe. I've launched one site successfully in the past, and it was profitable to the tune of beer money, but I never really wanted to make anything more complex in part because I'm terribly vexed by business requirements. I want to build a bunch of shit and throw it at the wall to see what sticks, but I don't want to deal with the business end of things. I require no financial investment -- I only ask that you use your time, contacts and expertise to promote the business. I'd be happy to discuss this at more length. I'd be happy to discuss this offer with anyone else as well. Contact me via the info in my profile for further details.

This proposition will work IFF the OP has street cred. Why did you choose to go anonymous? Founders want a backer with street cred more than they want money. Most founders will gladly give 90% equity for a pittance if the investor is in the league of Ron Conway or a16z...

I think this is a great opportunity. As a developer coming from a third world country, I am sure many people could benefit from things like this. In a third world country, a student or recent graduate with no experience, would make those $8k in a year.

While it might not be interesting for some people already working in a company (as you mentioned in the FAQ), it might very well be interesting for some students for example. Instead of an internship, they could work on their project for 2 months (or more) with your help. This is an amazing initiative. I study (in parallel of my own company) in a really good engineering school specialized in the field of computer science in France. If you would like to get some people there. While I am not directly interested, I could help you get some students there. Drop me a mail at arthurquerou [@] gmail.com if you are interested.

I will not trust in someone to develop a product, that can not save 8000$ in one year and get 100% of the business.

a) That guy is not able to save such money = Doesn't have real interest in the product. b) That guy is willing to share 50% the company, so probably doesn't trust on the idea as much as he/she can say. c) If that guy doesn't have the money, and can't get the money, is because is probably not good enough to develop such product.

So if you want to pay as little at 8000 I really hope you where meaning it is not in America or Europe and it is in another country, where the base salary is lower than 500$.

I have a site that I would consider selling you for $5000. In fact, I just asked HN what they thought I should do with it - http://news.ycombinator.com/item?id=5028846 Sadly, I didn't get any traction so not many people saw it or gave feedback.

It is a complete MVP that I do not have the time or money remaining to market. The code is all there and it is extremely portable. I have an idea or two about how to make a profit with it as well as several features you could add to make it really great.

Take a look and let me know.

It seems there is a fair amount of devs willing to do this and from what I can see a fair amount of people who would invest in projects.

Wouldn't it make sense to pool a small amount of $2-5k investments from a number of individuals who all agree on a particular project and taking it to launch. Not speaking about crowd-funding/kickstarter. There's clearly a lot of very smart people who can build shit, and a small amount of folks willing to invest. Why not just pool everything together. Spread the risk, but combine the talents of more people.

Why not just pay someone to code up your own idea and spend your time and money marketing that?

it doesn't have to be perfect to become a successful product. Dan Shapiro has built and sold a couple of products that way and it has worked out well for him. I don't see the value in paying someone a fee (and a minimal one at that) then giving them half the company for a relatively small amount of work.

Also, your email is not in your profile, so if someone wanted to contact you, you are already making that part of the process exponentially harder

The big problem I have with this is that the 50-50 split gives hmexx too much control.

With this 50-50 split who decides the future direction of the project.

After the MVP is ready there is still a lot of coding required to make it a successful business, you need the developer to be fully committed to the project. Losing 50% stake this early is not that much motivation. Unless the new partner brings specific skills to the table that the business can't survive without.

It's better to take a small stake like 15% and just choose a project very selectively.

Great proposal. I just upvoted it. Don't know if the typical freelancer dev will jump on it and has enough will power but I totally agree on premise 1,2 and 3, so true. Great post!

MVP? Minimum viable product. I have an idea. I'm not sure you could call it a minimum viable product. Maybe you know.

I'm very good at AutoLISP programming. I' m trying to make a business out of it. Do you know AutoLISP? It is a the programing language of AutoCAD.

Working with AutoCAD. That is the problem. It takes a long time before an AutoCAD drawing is created. And that is not all.

Once the AutoCAD drawing has been created, it must be checked. So creating a drawing in AutoCAD takes a lot of time.

I could write a program in AutoLISP. The program creates an AutoCAD drawing in no time. And there is no need to check the drawing.

Who could be interested in what I'm doing? Who could be my customers? Well. That is easy. AutoCAD users are interested.

I'm now promoting my business. I'm trying to find customers for my business. But I'm not very successful up till now.

I have opened an AutoLISP blog and I have opened an AutoLISP newsletter. Every week I post a different article on them.

I also have written a demo AutoLISP program that I give away to people that are interested. And I have written an AutoLISP paper.

Right now I want to find subscribers for my blog and for my newsletter. Maybe you have some suggestions for me.

You had a proposal. You are willing to invest a total of $ 8,000 in my business. And if we are successful, you will be my 50% partner.

I think it is a fair proposal. I can agree with that proposal. But my business idea. Do you think it is any good?

My only comment is to setup a buffer vote in the contract so to mediate with a third-party in times of conflict.

50-50 equal partners means no one gets what they want. That is both good and bad.

Let's walk through hmexx's premises.

Premise 1, that investors overestimate their ability to pick good ideas is undoubtedly true. The best investors are still usually wrong. But the consistent returns that the Sequoias of the world suggest that even if they're usually wrong, they're right enough to make oodles of money.

Premise 2, that an MVP built by a lone founder is just as likely to succeed as a full team on AngelList is almost certainly false. Years of research have demonstrated that founding teams help success. A lone founder can certainly succeed, but is less likely to do so.

Premise 3, that freelancers don't pursue their ideas is absolutely true.

Premise 4, that HackerNews has talented people with good ideas is also absolutely true.

Now comes the key--he's offering $8K (plus the value of his marketing expertise) for 50% of the company.

Let's be generous and assume the marketing consulting is worth $7K. If the average seed investor is paying a $5 million premoney these days, that's a 99.7% discount! Even if a sole founder is 1% as likely to succeed as an AngelList startup, he'll still be 3X ahead.

My conclusion is that hmexx is a marketing genius. He's found a way to buy stock at a 99%+ discount. Also, he's still going to apply a selection process--if Premise 1 were true, he ought to choose at random.

Hmmm, maybe I should invest in him!

Also, just to add to the scrum, I'll double the offer to $10,000!

Problem is, no one believes you.

My investing bona fides: https://angel.co/chrisyeh

I think this is worth it if you would be a good co-founder in any case. That means you are really putting in 8000 for not working the first two months, and then work the same amount as the other founder.

However if putting in 8000 is the only thing you do, then it's a horrible idea. Putting in more money, maybe.

This is the perspective of someone in the Bay Area though. 5000 is easily saved/spent here.

You can find someone else cheaper, but likely would have to communicate remotely. That increases your risk too.

I like it but I think what you should do is reverse the order a little, I would first get ideas from people (sign NDA etc if people require it), then put a landing page, get the marketing going for a few weeks, the ones that get the most sign ups, go back to the developer and make that deal, the rest, well, you save your 5000$ and the developers time on a potentially bad idea (could be a great idea, but not attracting enough interest)

I think it is very interesting and creative offer. I am software developer who tried to build many different products. From my perspective money was never a problem. The problem was to find partner who knows how to promote and sell product. Or at least someone who want to learn it. IMHO this person is worth its 50%. Or 33% if there are 3 founders (marketing, programmer and graphics designer). Even without any up front money. So this $5000 makes this offer even better.

For me this proposition would look better if instead of money it would contains some milestones. At each milestone we will define some metrics and based on this metrics we will decide if we move on or pivot/drop the idea. For example:

M1. Agree on problem we want to solve and the way we reach our customers. I would love to change the world not just make money. Can we agree on it? etc.

M2. Create and promote MVP. Example metrics: how many people clicked learn more button?

Good partner is more worth then invested money. But that's of course my point of view. I don't need money and can spend half my time building the product (The other half need to make living :-) )

But I believe for many people it could be great offer. And I wish you best luck. Would love to hear how it turns out.

Essentially you want to get lucky! :) In my opinion, the success of a start-up is determined by: 1. Co-founder chemistry (how well they know each other, shared vision etc.). With this approach, you'll have no idea what your "so-called" co-founder is like. BIG risk! 2. A vision. Not sure how you can even run a company without having a vision of what you like to do, or what problem you're going to solve. At best, you can be an investor but not a co-founder. And unless you're well networked and bring something valuable to the table, not sure 8k means a lot; and 50% equity for that is too high. 3. Execution - LOT of work. Not sure a startup is as simple as you make it sound. A prototype for 5k + customers for 3k = success? I agree the cost of building a tech. start-up has gone down significantly, but IMO it takes a lot beyond that. Unless you have advantage of owning a groundbreaking idea/IP or something with high barriers of entry it all comes down to execution. 4. The right support and network. 5. And yes, luck!

...having said that, think there is still a chance (however small it is) that it might just work and you might get lucky, but what are the odds?

Just one point: the 50/50 split can just be a starting point for profit sharing. Companies can be structured for that decisions/voting are handled independently from ownership percentages. 50/50 splits aren't forever either. Additional equity can be issued at certain milestones. There are a lot of ways something like this can be setup so its fair for everyone and it seems like hmexx is open to suggestions to make that fair.

Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact