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As a developer, something I worked out with a startup trying to save some cash was that I would work for about half my normal hourly rate up-front. Then I woul

As a developer, something I worked out with a startup trying to save some cash was that I would work for about half my normal hourly rate up-front. Then I would take a share in the startup's revenue (not equity - say 20% of gross income) until the other half of my hourly rate was made up for - this could take a year or two years etc, or if the startup is very successful it could only take 3 months; but it is capped to the total 50% of the hourly rate * number of hours worked. I also would take an extra share of revenue, say for the first year, as a potential bonus for taking on the risk of possibly not earning my full developer rate if the startup fails. This extra could be 5% or 10% of the first year or two years' revenue but is not capped and so if the startup is very successful the developer could do quite well, but the founders have not sacrificed any long-term equity in their business. I thought that was a nice way to give the developer a share of the business' success without actually giving up equity, and also without asking the developer to take a total risk that they could have wasted their time and never receive anything for it.

cmos 18y ago
This is creative, but the problem with clever 'backpay' solutions and startups is that often they are starved for cash, so the extra 5% or 10% is valuable money that they could be using to grow the business. From an owner's perspective, I would never spend future revenue today. What if your not making enough money to pay the bills, yet have to give a percentage of revenue to a developer? They aren't going to stick around if things get tough. It would be slightly safer to agree to a percentage of profit, but much better to just give a percentage of the company. The same could be said for replacing the lower salary. When you go to work for a startup there is a reason you get paid less: cash in the early stages is extraordinarily precious. This can not be said loud enough. I would not work for a company that didn't understand this. It's a battle to start a company, and you really need everyone "in the same boat". If it sinks, everyone loses out.
- anamax 18y ago
  > From an owner's perspective, I would never spend future revenue today. What if your not making enough money to pay the bills, yet have to give a percentage of revenue to a developer? They aren't going to stick around if things get tough. If they developed the product that's producing said revenue, why does it matter whether they're still around? Suppose that your product required an expensive piece of equipment and you didn't have enough cash to pay for it. (Or, you didn't want to pay cash.) Would you object to paying over time? Does the answer depend on whether the payments go to the manufacturer or a third-party? Yes, you might well prefer terms with a fixed cost but there's a considerable risk that they'll get nothing and it's unlikely that they can reuse the code elsewhere. (Besides, you probably insisted on an exclusive license.)

cmos 18y ago

This is creative, but the problem with clever 'backpay' solutions and startups is that often they are starved for cash, so the extra 5% or 10% is valuable money that they could be using to grow the business. From an owner's perspective, I would never spend future revenue today. What if your not making enough money to pay the bills, yet have to give a percentage of revenue to a developer? They aren't going to stick around if things get tough. It would be slightly safer to agree to a percentage of profit, but much better to just give a percentage of the company. The same could be said for replacing the lower salary. When you go to work for a startup there is a reason you get paid less: cash in the early stages is extraordinarily precious. This can not be said loud enough. I would not work for a company that didn't understand this. It's a battle to start a company, and you really need everyone "in the same boat". If it sinks, everyone loses out.

anamax 18y ago
> From an owner's perspective, I would never spend future revenue today. What if your not making enough money to pay the bills, yet have to give a percentage of revenue to a developer? They aren't going to stick around if things get tough. If they developed the product that's producing said revenue, why does it matter whether they're still around? Suppose that your product required an expensive piece of equipment and you didn't have enough cash to pay for it. (Or, you didn't want to pay cash.) Would you object to paying over time? Does the answer depend on whether the payments go to the manufacturer or a third-party? Yes, you might well prefer terms with a fixed cost but there's a considerable risk that they'll get nothing and it's unlikely that they can reuse the code elsewhere. (Besides, you probably insisted on an exclusive license.)