I am interested in hearing your thoughts on this. I will very shortly
develop a web application for the eLearning industry in a SaaS model. I
have a good idea and some very good contacts in the industry. I am more
of a .NET person but decided to make it in Ruby in order to have the
capability to adapt the product more rapidly and let’s face it, the
starting cost with the technology are much more attractive.
Now, I could do it on my own over time but I would like to have 2 or 3
experienced RoR devs with me in this endeavor. Their expertise would
speed up the development, complement my own skills in product and
software development and make it much more fun and interesting. The
issue I am facing right now is that at this point, I don’t want to give
away any equity in the project and I am not a startup with a cashflow
where I can pay developers an hourly rate. What I am, is a father of two
with a day job and an entrepreneurial spirit whose take on software
development and life is very similar to the folks at 37Signals (now
Basecamp).
What I want is to have an amazing life-work balance and work on
something I love. I am committed to build a great team of dedicated
individuals who will also have an amazing life-work balance, where every
member will have a say in the direction of the product and where money
will not be a preoccupation (meaning that they will earn much more than
any other place for the same type of job). I will always remain private
and never seek public or VC funds so don’t expect a Cinderella story. I
have been exposed too much to a public company modus operandi to know
that I don’t want this model.
Now, my question to you is what business model would make it interesting
for experienced devs to share the risks? Beside eventually be part of a
company with the aforementioned description, what would you consider an
interesting proposition to develop the product on your spare time (a few
hours per week) until it takes off? Although I am not opened to give
away equity (for the moment at least), I am more than willing to share
the profits for a certain amount of time or up to a specific amount.
What would make it interesting to take on the risks? What would you
consider a win-win business model?
Thanks a lot! I wasn't aware of that book and will read it for sure. At
the end of the day, I want everyone who deserves it to have its piece of
the pie but I have met many business owners who have started with
partners having a large equity and eventually regretted it. Many
mentioned to me that, having known, they wouldn't have proceeded that
way.
I am sure the proposed book will shed some lights but I am also very
interested in hearing what developers would consider a fare deal from
their
perspectives.
I have a good idea and some very good contacts in the industry.
The issue I am facing right now is that at this point, I don't want to give
away any equity in the project and I am not a startup with a cashflow
where I can pay developers an hourly rate.
"I'll gladly pay you Tuesday for a hamburger today" is not really a
new business model
Now, my question to you is what business model would make it interesting
for experienced devs to share the risks?
A business *plan* that demonstrates that your idea is viable would
be a good place to start, IMO. Then people can make an informed
decision about the level of risk involved in contributing free labor...
Ok, I agree that it is not a revolutionary business model However, I
wanted to know what it would take for people to trust someone enough to
take the plunge. Especially a project where there are realistic
expectations and risks. I am not one to make bold claims such as "it
will be the next Facebook, I'm telling you!". I usually run away from
those.
Regarding the "business plan", I will gladly share it with people
showing interest and who can positively contribute to its success. There
are big players in the industry I want to go in but I want to take a
niche market that seems pretty much unaddressed. And while I have a
pretty good idea of the direction and have some contacts, I don't have
an elaborated business plan. This is why there are some risks and that I
want to touch the water quickly and see if there are enough fishes in
the pond.
Thanks again for the Slicing Pie book, I bought it last night and read
it in one sitting. Very interesting and it gave me a solid ground for
what I was already thinking.
Now, I need to validate what type of pie and Grunt Fund can work out. If
someone would be offering a pie that looks like this:
50% of profit for the next 2 years with a possibility of converting some
of this profit into a 25% equity after the 2 years. This applies of
course to all the Grunts working on the project and I am looking at 2 or
3 grunts max.
Thanks again for the Slicing Pie book, I bought it last night and read
it in one sitting. Very interesting and it gave me a solid ground for
what I was already thinking.
No problem Yves, Glad you found it interesting and helpful.
I thought the same way when I was told about it.
I think it makes sense, and it sounds fair.
Now, I need to validate what type of pie and Grunt Fund can work out. If
someone would be offering a pie that looks like this:
50% of profit for the next 2 years with a possibility of converting some
of this profit into a 25% equity after the 2 years. This applies of
course to all the Grunts working on the project and I am looking at 2 or
3 grunts max.
Would that be enticing enough?
I think that depends on the Grunts , and their situation at the time you decide how you want to go about it.
To me it sounds fair.
There is also a spreadsheet that may help you make your calculations.
Have you seen it?
It will be interesting to see which Grunts are interested. For sure I
want to attract serious Grunts that are in for the long run. My goal is
really to have a long term sustainable business where it is fun to work,
the project stimulating and with a more than fair compensation.
There is also a spreadsheet that may help you make your calculations.
Have you seen it?
The Grunt Fund Calculator
I was pretty sure that there would be such calculator but didn't look
for it last night. Thanks for providing the link. I will use it.
