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Of course there's risk - very large risk. The fact I'm willing to subscribe contractually to a minimum number of hours in return for a small percentage of what

Of course there's risk - very large risk. The fact I'm willing to subscribe contractually to a minimum number of hours in return for a small percentage of what could potentially turn out to be nothing should the startup go belly up. That's the fun of it - I'm along for the ride - not looking to make a quick buck. That's why deferred compensation isn't of interest.

gfodor 13y ago
People who work on their own startups on evenings and weekends aren't generally considered to be taking a very large risk. People who'd do contracting for equity in other startups where there is already some traction likely less so since there is more likelihood of those startups being successful. Also your post implies you are looking to do this for multiple startups. Not only does this kind of send a bad message that you'd not be that invested in a company you literally owned, but it also reduces your risk profile since you are trying to "diversify."
- monkeymeister 13y ago
  Yes, this is a valid point. It will require management and careful planning on my side. By many pies, this will initially probably be around 1-2 maybe 3 projects, and I do have a lot of time / flexitime from work. If this begins to get traction, I would consider making this more of a full time thing.
- ahk 13y ago
  Don't startup advisors like Tim Ferris do basically the same thing? Advice/market/time for a small amount of equity? The only difference here seems to be that it's developer skills instead.
  - thesis 13y ago
    The only difference between this guy and Tim Ferris is developer skills?
  - austinl 13y ago
    Advisors should provide connections to get your business to the next stage. Whether that means helping you land a Series A or getting you intros to business partners, it's typically worth a lot more than dev skills - which is why they can justify taking equity.
tptacek 13y ago
I don't think you're out to make a quick buck, which is why I suggested an alternative to your plan. And, obviously, equity could end up being worth zero. The problem is, the owners of a company have to allocate equity on the assumption that it's not going to be worth zero, but instead worth a huge amount of money; else why be starting that particular company? Your incentives aren't going to align with those of any rational founder. The people that will take you up on an offer like this are disproportionately likely to fail; the ones that succeed are likely to regret having given up equity to a nights-and-weekends contractor. Note also that this is a signaling issue; the cap table of a startup comes up pretty quickly in due diligence. I really think giving equity to contractors is a bad idea. Why not instead sign up for a scaled deferred compensation plan? You could ask for 2x or 3x what your normal rate would be, perhaps scaled by the startup's first valuation. You'd capture some of the upside, but not an unbounded amount, and you'd be along for the ride without the baggage that comes with ownership.
- monkeymeister 13y ago
  I think what I'm looking for is something fundamentally different to what that would offer. I'm looking for ownership, to be a part of the startup and assist from a technical point of view from MVP through to ongoing development of a polished product, and that justifies ongoing equity based commitment.
  - tptacek 13y ago
    What is a range of percentages you might think would be reasonable for assisting with technology from MVP through ongoing development? Let's assume that you take a key role in actually implementing the MVP.
    - monkeymeister 13y ago
      That would be incredibly difficult to put a figure to without a product to work with. For example, I would want less equity for a web application because they are generally less taxing and can be done in shorter time and therefore the contracted hours would be less. An iphone app would probably come in slightly more due to the complexities of development, testing and launch, but it really would depend on how much involvement the founder needed, the requirements of the individual project and the complexities involved. By a small percentage, I mean a small percentage :)

gfodor 13y ago

People who work on their own startups on evenings and weekends aren't generally considered to be taking a very large risk. People who'd do contracting for equity in other startups where there is already some traction likely less so since there is more likelihood of those startups being successful. Also your post implies you are looking to do this for multiple startups. Not only does this kind of send a bad message that you'd not be that invested in a company you literally owned, but it also reduces your risk profile since you are trying to "diversify."

monkeymeister 13y ago
Yes, this is a valid point. It will require management and careful planning on my side. By many pies, this will initially probably be around 1-2 maybe 3 projects, and I do have a lot of time / flexitime from work. If this begins to get traction, I would consider making this more of a full time thing.
ahk 13y ago
Don't startup advisors like Tim Ferris do basically the same thing? Advice/market/time for a small amount of equity? The only difference here seems to be that it's developer skills instead.
- thesis 13y ago
  The only difference between this guy and Tim Ferris is developer skills?
- austinl 13y ago
  Advisors should provide connections to get your business to the next stage. Whether that means helping you land a Series A or getting you intros to business partners, it's typically worth a lot more than dev skills - which is why they can justify taking equity.

tptacek 13y ago

I don't think you're out to make a quick buck, which is why I suggested an alternative to your plan. And, obviously, equity could end up being worth zero. The problem is, the owners of a company have to allocate equity on the assumption that it's not going to be worth zero, but instead worth a huge amount of money; else why be starting that particular company? Your incentives aren't going to align with those of any rational founder. The people that will take you up on an offer like this are disproportionately likely to fail; the ones that succeed are likely to regret having given up equity to a nights-and-weekends contractor. Note also that this is a signaling issue; the cap table of a startup comes up pretty quickly in due diligence. I really think giving equity to contractors is a bad idea. Why not instead sign up for a scaled deferred compensation plan? You could ask for 2x or 3x what your normal rate would be, perhaps scaled by the startup's first valuation. You'd capture some of the upside, but not an unbounded amount, and you'd be along for the ride without the baggage that comes with ownership.

monkeymeister 13y ago
I think what I'm looking for is something fundamentally different to what that would offer. I'm looking for ownership, to be a part of the startup and assist from a technical point of view from MVP through to ongoing development of a polished product, and that justifies ongoing equity based commitment.
- tptacek 13y ago
  What is a range of percentages you might think would be reasonable for assisting with technology from MVP through ongoing development? Let's assume that you take a key role in actually implementing the MVP.
  - monkeymeister 13y ago
    That would be incredibly difficult to put a figure to without a product to work with. For example, I would want less equity for a web application because they are generally less taxing and can be done in shorter time and therefore the contracted hours would be less. An iphone app would probably come in slightly more due to the complexities of development, testing and launch, but it really would depend on how much involvement the founder needed, the requirements of the individual project and the complexities involved. By a small percentage, I mean a small percentage :)