Questions

We are early stage. We have revenue and proven the concept. Several investors have expressed serious interest. We are seeking a technology partner - investor. We now need to switch from an analogue systems - processes to a multi-sided aggregation platform so we can scale. When you walked in my type of shoes what did you do? Suggestions?

Wow, this is sort of the penultimate question. I answer this not as a founder, but as a co-founder that watched several other founders and investors wrestle with this dilemma. I've seen the pattern repeat as a consultant as well. It's an issue!

The problem with this common situation, is all about information... meaning who's got what information. When partnering with a developer, there's a brutal but sobering fact that a great developer will bring up right away: "Without someone like me, this technology can't happen." Like I said, it's brutal but sobering in a good way. A developer knows better than anyone else when things are being built versus being invented. In the case of the latter, all developers feel this is worth quite a bit.

Conversely, most developers don't have the business vision to create a digital version of a successful analog business process, because they're supposed to be busy coding! That's exactly why developers are very into sharing, because writing code for a living is a process to achieve some other goal, and isn't magic.

So both parties need each other, but one has the execution while the other has the vision. Geez, now we've got to negotiate?

Before talking shares, you as a business visionary should keep one major risk-point in mind. The developer you're partnering with MUST be personally invested in the project. The difference in the code quality between a project done to get paid, and the code from a developers personal project are monumental. You want a dev that is ready and willing to give your model heart + soul, and obsess about things you don't fully understand during your shared journey. If the dev isn't personally invested in the project, you run a high risk of them giving you the code equivalent of a 3-door coupe when your business needed a custom rally car that raises eyebrows.

In a start-up, you'll have to leverage what you envision against the cost-vs-quality debacle of acquiring a skilled developer. I can tell you from experience, that no matter where you try to save, other costs will pop-up in the development process. Cutting costs in the beginning, comes back three-fold in the end if the code is not easily maintainable. And worst of all, the first build is never perfect - while the second build usually results in epiphanies derived from the mistakes in the first build.

This is the sort of stuff that a developer knows well, but it never gets brought up in meetings, because the cost of programming is so significant yet typically not understood by the key stakeholders. So when you negotiate with devs, be sure to keep in mind that their role in the team is massive, and their work (in their mind) will become the entire business sometime in the future. Even if that's not the case based on your model, a programmer who thinks that way about a project will give you bleeding edge work at all times. ;)

So find a comfortable fit personality-wise, and with the right shared ambition. Then treat your programmer as democratically, and as evenly as you can afford. A great programmer will by pure habit give you more than you asked for, which seems to always be something that businesses need these days. The trade off is that you show the programmer in shares, just how important their best efforts are.


Answered 6 years ago

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