Throughout the past years, I have been solicited by many friends, friends of friends, and complete strangers to be a technical cofounder/developer on a new project.
For almost all of the projects and startups that have been presented to me, I have declined.
Here are the main reasons why:
Almost always, the offer from the startup goes something like, “You create us an app for free, and we will give you X% of our company/profits in return.”
I think the founders of these startups underestimate the amount of the work it takes to build the “app” as well as valuing the X% equity.
The X value could be 100 and still developers would decline to work for free. Startups need to evaluate the way they propose working relationships by providing a clear explanation of their business and why it is worth the risk of a developer.
Here are some questions that every team needs answered and communicated to potential technical cofounders.
1) What does the current status of my startup bring to the table?
Could this developer duplicate this startup themselves? Does the ideas and execution of the business rely on specific expertise of the existing team members? In other words, what makes your current team so special and unique? I can’t stress enough how often the answers to these questions are not offered.
2) What is the problem my business is trying to answer?
This question is almost always overlooked or not communicated effectively. How do you know if this is a real problem? How much does this problem cost an average customer? Who/what says there is a problem, and why does their opinion have any credibility?
Who says that your business has a solution and does the person making the claim hold any credibily?
3) How close are you to closing business with your first customer?
If the answer to this question is more than 3 months, it will be incredibly difficult to convince a technical person to build something for free. You have to remember that decent developers have a very high opportunity cost. They could be working on any number of paying projects/jobs. Every hour they spend working on your project is costing them their hourly rate. It doesn’t mean that your idea isn’t good, it just might not be good enough to be worth the risk.
4) Why can’t I pay this developer?
You need to have a legitimate reason why you can’t pay a developer any amount for their time. Remember, it is very likely that your time is NOT equal to that of a developers. Just because you are working for free doesn’t mean that your opportunity cost is equal to someone else working for free. Could you raise money and pay the developer some discounted rate plus equity? Developers will often pay more attention to combo offers of money and equity as it lowers risk yet.
Startups should approach potential technical confounders the same way they do investors. While investors give you
dollars, developers give you
dollars in the currency of time.