I'm building a new startup and I'm having problems negotiating with technical engineers .. How should I go about it
Hello guys, I'm building a new fintech startup and I'm in search of a technical engineer, the problem I'm having now is that the engineers I have approached want to be co-founders of the startup.
This is my first time running a startup and I don't want to make any silly mistake.. Should I let them in as co-founders or not ? And what's the right way to negotiate with a co-founder or a technical engineer ? Please I need help and answers. Thanks guys
I have this great idea for a restaurant.... all I need is a chef... and money to lease a building and buy equipment and hire other staff. It's weird though.... I can't get any chefs to start working for free. Anyone have any advice?
In all seriousness, you sound delusional.
If you want to run a software company, you either need to learn to make software or you need to find someone who you get along with and have an existing, strong relationship with who will join you as a partner in the business. Any other approach (like outsourcing the software development or relying on an employee) it very likely to fail as you'll need to iterate quite a few times to get your product right and you likely don't have money to do that if you're paying full freight for a good contractor, plus you won't have anyone to maintain / support your software after they move on.
@Jaydirect First of all, until you actually know if someone is a really really good programmer, there's no point in making them a co-founder. You'll very very likely end up with a co-founder who just knows how to talk sweet, and is beyond bad at programming.
If you only have an idea, and no money, I highly suggest you learn some programming yourself, and slowly implement some prototype.
Think about Profit Sharing instead of equity.
Between equity and payment there's profit sharing. This isn't talked about a lot, but does offer a lot of upside without the equity risk.
For indiehackers and first time founders, I find that equity alone has too much downside. It is more useful in situations when you know you'll be attempting to get VC funding and/or will be working on the product for 5-7 years. (From what I've seen there's a vesting period of 4 years.)
Find a way to Work Together
What has saved me a lot of heartache later, is to offer a small project fully paid, or a small side project that remains under the technical person's ownership 100%. And if you neither of you want to continue, they own their portion forever.
In my case, I thought I needed ML for a project. I worked with an old friend 1 day a week for about 6 weeks. His sunday. We got to work together and formulate a working prototype without having to deal with equity or payment. He coded and owned what he did 100%. We left the project amicable when we decided to not work together.
Have you considered building the MVP for your product using no-code?
In the past, I've spent months trying to vet a technical co-founder. You could be using this time instead to start building something tangible yourself.
"negotiating "
What are you offering / expecting?
Say as a job, the guy can get ~150,000$/year
Are you offering him a job at that rate + risk?
Lets say we compoud that 3%/year, would he make over $1,719,582 after 10 years garanteed?
I'd say with the risk of all or nothing you'd want to make that ~10x
Do you show him how that would happen without over inflating projections?
What stage is your company at? are you overvaluing the idea and/or some progress you made?
If you didn't already raise money or actually signed some big contracts or have actual traction with users on some MVP, it's probably not worth too much. To the point that if it's just the two of you it might just be a 50/50 split.
What are you bringing to the table and are you able to communicate that properly?
Do you have some major personal contacts that are going to be worth money for this company?
Do you have some experience with previus successful startups?
What do you already have that reduces this project's risks dramatically vs a project at stage 0?
Are you paying the "technical engineers?" Or are they volunteering?
It's still a new startup and there's no much funds and That's exactly where the problems is .. how should I agree payment terms if I'm to pay them and how do I agree term's with them if they are volunteering?
Yeah, so unless it's a charity, you're gonna have a hard time finding people to volunteer with no expectation for payment - even if that payment is in the form of equity. Engineering takes a massive amount of brain power and no one is going to just give that away without some sort of payment. Find a partner who wants to with with you on the problem, work out fair equity for the time spent (the idea itself is worth pretty much nothing) and go from there. Or if you don't want to give up equity, build it yourself by either learning to code or learning to use nocode tools.
It's really hard to convince me to work without a paycheck. You'd better be bringing a lot more to the table than an idea and an offer of some equity. If I wanted to take on more work after my day job, I'd just do some freelancing and make a higher hourly rate than my normal day job anyway. So what are you offering that's going to be worth more to me than that?
Wow, thanks alot for the response .. I've learnt alot from you guys.. thanks
Look into founder vesting
https://www.indiehackers.com/post/partnering-up-is-hard-what-we-need-e4d5c3c339?commentId=-MImtX9GMx_c3mrUFN7E
Alright, thanks
There's a lot of negativity in the replies. It's fair to say you need more than just an idea but people are overstressing paychecks. People build open source for example. If people are genuinely wanting to be a co-founder then they must at least believe in the idea. Best of luck to you.
Sorry this guy has no idea how valueless ideas are, and how valuable engineers that create one of the highest leveraged assets are :/
This comment was deleted 6 years ago