Ask HN: Partnership deal with programmer, what % split?

https://news.ycombinator.com/item?id=962199

by az • 17 years ago

3 9 17 years ago

news.ycombinator.com

I found a programmer to work on a project with and we started talking already. At first I suggested making a 50-50 split between the two of us, but a friend suggested I should at least have a majority stake.

How much would you offer a programmer if you came up with the idea? (I want to put this in writing with a lawyer and I need some insight in any necessary details.)

bhousel• 17 years ago

There's really no right answer -- it depends on the situation. But your friend is correct that 50-50 split is rarely the right way to go.

Judging from how you worded your question, it sounds like you might be overvaluing your idea, and undervaluing your programmer. Disclaimer: I'm a programmer-founder myself, who regularly turns down deals just like what you're proposing, so there may be some personal bias in my answer :)

To test my theory, which of the following statements do you more agree with?

A. "The idea is more valuable than the programmer - I could probably hire anyone smart enough at programming to implement the idea, and use my knowledge to guide them in the right direction."

B. "The programmer is more valuable than the idea - I'm relying on their knowledge to know what to build. The idea might even change over time once they start building stuff."

---

Anyway, here are some things to consider when deciding how to split the founder shares:

How much time will each of you be spending on the project? It's very easy to underestimate programming tasks. If your programmer is spending 80 hours a week and you're doing relatively little (as the "idea guy"), there will be friction.

How much experience do each of you have in projects like this? Do either of you bring anything else to the table - connections, clients, seed money?

What are each of you prepared to give up to make this project happen? Consider time spent not doing other work. Will both of you be quitting your jobs for this? Cutting back hours?

Also, how well do you know this person?

Good luck!

tptacek• 17 years ago

Things that I think might influence equity:

* You're full time from the beginning, she isn't

* You're contributing actual money to the project

* You're starting the project with committed customers

* Your reputation or background is key to acquiring customers (for instance, you're a doctor selling to hospitals)

* You bring funding connections (for instance, you've founded and sold a VC-backed company)

* The first revision of the product doesn't require advanced programming, so you can get actual customers without a tech cofounder

For some of these, you can grant equity conditionally; for instance, hold back N%, which reverts to the two of you 50/50 on contingency (for instance, specific list of customers don't buy, funding falls through).

Personally, if the word you're thinking of for this person is "partner", you should just do 50-50 with vesting.

I think the big problem with 50-50 isn't fairness so much as that it limits your options down the road. The big problem with 60-40 is that it can wind up being overtly unfair, which can kill your company.

az3• 17 years ago

Depending on how we split it, the money invested will be split as well (i.e. Lawyer costs and server costs split according to our ownership percentage)

Its hard to say who will spend more time on the website. The concept is mine and I have already done research on it and I will be doing the manual data entry into the database. The programmer will obviously do the programming, we didn't discuss if he will assist past that.

Business Connections - I have a few connections in the industry I'm planning to service, I don't know how much connection programmer has.

Also, programmer likes to do 'projects' for fun. He's worked on a bunch of products for good of society and I don't know how much he has profited.

siong1987• 17 years ago

Something that you might be able to do:

If you friends is an idea guy just like you, try to get a programmer friend to see how he/she thinks about the deal. Do the opposite if your friend is a programmer.

We have no idea what your idea is, so, it is really hard to judge whether a 50/50 split is fair or not.

pmichaud• 17 years ago

It really depends on what you're bringing to the table. If you're a rockstar, then the programmer might be willing to take less since she knows you'll bring in massive business. If you're among the legion of "idea guys" who have never actually done anything, and don't have much experience or many connections... well then, she might consider just doing it without you.

az3• 17 years ago

I'm no 'rockstar', I'm a newbie with a good concept and programmer like the idea already contributed to the idea on our first conversation.

I don't think he will take the idea from me since he has no business experience. We need each other for our respective pieces we contribute. Programmer has admitted to me many times how he has no business sense and he would probably accept any % share. (Might be his love of new projects)

ct• 17 years ago

Ideas are a dime a dozen. The details and implementation are key to making it a success. If you're bringing more than just an idea like funding, connections, and have committed sales contracts already in hand then you'd be worth more than 50/50.

A 50/50 split just says I haven't really thought it through what both of us will really contribute. No offense.

az3• 17 years ago

The idea is a good idea and we don't know yet if it will make $.

The partnership will be setup in advance of the websites success, if any. The website data will be licensed to companies and only then will we know how important the data is for them.

Since the concept is mine, I should have majority share. Although 'Ideas are a dime a dozen', but a programmer is nobody without a concept. We each need each other: that's what makes a team!

Like I commented above, programmer does 'projects' for sun; I just don't want to come across greedy and take more than is fair!

DenisM• 17 years ago

And once again, Founder Pie Calculator to the rescue:

http://www.andrew.cmu.edu/user/fd0n/35%20Founders%27%20Pie%2...

Ask HN: Partnership deal with programmer, what % split?

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