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Ask HN: Would you work for stake in an app?
if you were offered 10% ownership, no pay, but get to work with friends?
The offer is coming from three friends of mine who have been running shop for about 2 years and recently picked up a project they need help on. They received 75% stake and some cash to build the thing and are willing to give me 10% of their share. The idea of working with friends is awesome and at the same time I get to own a piece of something.. the value of which I am unsure. The client they're working with wants the app foremost for his own business and built as saas so he can go and sell to other small firms that could use it.
- oceanician 16y agoWell, I watched the Y-combinator vid about working for startups and he was saying if a company has 2 co-founders, and angel funding then 5-10% would be about right. I presume that would be a paid position in the US though. In the UK coders never seem to be offered equity, which I think is wrong. From what you say, they're working for a client. But the client isn't paying either for the project? Sounds unwise! But does sound like a way of potentially creating something organically from nothing with just your effort. It does sound highly risky though. What if this end client is rubbish at sales? Do you get the right to retrieve his 25% and give it to another Sales professional? Or retrieve, then sell the 25% to an investor, in order to pay someone to sell it? If it wasn't friends would you work for nothing? If not, then at some point when it gets hard going, will you resent your friends for you not being paid? I guess it comes down to, is the effort you're willing to put in going to be worth your share of the dividend on the profit at the end of year 2? (Presuming it takes more than a year to pay off!) Just my thoughts. Not really from direct experience, though I do work for a consultancy that does work for startups.
- magic_johnson 16y agoI caught that vid too, but not sure how important the angel funding part is in this case. They're a small profitable shop working for a client and cutting him a break since he's a friend as well (we're all friends here! hah). So the client pays a smaller amount for the app that he plans to use for his own business but receives only 25% of any future profits that the app generates. The client's expertise is not sales, he runs a business in the domain and knows other small businesses with similar needs. If it wasn't friends, then I would base my judgment solely upon my evaluation of the product's potential to be a success (given the people working on the project, and the idea itself). I know my friends, I know they're competent, and I know on a scale of 1 - 10 in terms of having an "in" I'd put the client at an 8. Those factors sort've take some of the risk away for me, but not quite enough to put me at ease and 10% does feel like a small amount to be working for. I wouldn't resent my friends if the project fails, they're my friends. Plus resentment is one of the seven deadly sins of business.
- kls 16y agoNo, I am sorry but as a developer you are the product, look at it this way, you can focus your development time on your own idea for free and retain 100% ownership. I never understood why developers accept 10% for building the whole thing, when they could work on their own ideas. I understand the need for someone who can sell, but it has been by experience that if you have a working product you can find someone to sell it, you only need someone who can sell, when you have something to sell. Now in saying that there is value in finding a co-founder that has domain knowledge of the market you are targeting and if they can sell great, I personally would not go into a "I develop the whole thing" arrangement without at least 30% and 50% if there are only two of us. Anything less than that and they have to start ponying up a salary, it is just not enough equity to take the risk, when I can go build something myself with that time spent. As well it sounds like you are dealing with people that feel that there is value in ideas. It has been my experience that those individuals (and their lack of experience, in start-ups) can feel like they did all the work they need to in coming up with the idea. This can create a sour environment where you feel like you are doing all the work.
- magic_johnson 16y agoYou've expressed much of my concern here, however, to add I wouldn't be responsible for building the entire app. In terms of coding my role would be limited to frontend dev. I'd also probably help make some decisions on app architecture and of course share my own ideas to in helping to shape the app as we're dealing with pretty loose specs.
- kls 16y agoto add I wouldn't be responsible for building the entire app That does change it a bit, but you should still be in for or close to an even share if no one is going to pony up cash. You are taking the same risk as the rest of them.
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