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Are Full-Stack Developers in the NYC area interested in becoming a Cofounder/CTO for only equity?

For start-up companies, it has become increasingly difficult to acquire high quality programming talent while being cost efficient.

Would a full-stack developer consider receiving a large stake via equity and a cofounder position in the company in exchange for foregoing salary during the early stages of product development?

29 Replies

Brian McConnell
3
0
Brian McConnell Entrepreneur
Head of Localization at Medium.com
Um... No...
Adam Arthur
6
0
Adam Arthur Entrepreneur
Atom Creative Corp, DevShare and infoATM
As a architect level software engineer and entrepreneur, the answer is "potentially" -- but it is rare. First, you should know that talented software developers like myself are CONSTANTLY approached by people who want us to build their product "for free" (in our eyes). Many have families and obligations, and aren't in a financial position to take that kind of a risk. Additionally, you will need to bring something fairly substantial to the table. What are you contributing to building the business and how does the developer know that, should he or she build the product, it's going to be a financial success? Just know that we're constantly approached...
Bob Graham
3
0
Bob Graham Entrepreneur
Engineering and Software
Hey Alexander,

The answer is of course, YES!
I can say this from experience. I have had 3 different CTO co-founders in the past for various projects that I used this exact style of agreement for.

Of course there is ALWAYS a way to do anything you want to do. How easy and fast will it be? Probably not that easy, but if you really want it, you will find a way.

Having a good CTO is like trying to go out and find a really great new friend. You can't force it. You just have to put yourself out there, meet a lot of people and eventually it will happen if you want it badly enough. Founder Dating is also a great resource.

It also helps tremendously if you've already done some up front leg work. Examples are:
-Find a seed investor
-Done some smoke tests to good results
-Build some partnerships
-Do some competitive/marketing analysis
-Built a readership list/blog with followers
-Started a community around what you want to build
-Become a good front end designer
-Take UX courses and become a UX expert

There are lots of ways to offer value in a startup besides just the code.
If you want a great CTO, I'd do a bunch of that legwork while you look. Each day you build your business before you have the CTO, you become more appealing.


Roger Wu
2
0
Roger Wu Entrepreneur
co-founder at cooperatize, native advertising platform
Depends on who the other co-founders are. If they aren't technical, what are they doing to show their competence? (and needing a product to sell otherwise they can't sell anything is not a valid excuse)
Atanas Stoyanov
1
0
Atanas Stoyanov Entrepreneur
Founder, CEO wootrader.com

Have to agree with most of the other posters - It really depends on what the other founders contribute to the business but in most cases its not worth the time of a high level full-stack architect.

If its just the 'idea'/'business knowledge', then most high-level technical founders already have (too many) ideas, so why would they take just a smaller portion of equity and work for free on realizing someone else's idea.

If the other co-founders could contribute financing/investing, huge network etc, then it might be attractive.
Andrea H
5
0
Andrea H Entrepreneur
Special Projects Director
I am confused why someone would say "um...no," or that it is rare. Aren't a lot of businesses built with two (or more) co-founders and one being technical? If the answer is yes, how are these partnerships formed?
Adam Arthur
1
0
Adam Arthur Entrepreneur
Atom Creative Corp, DevShare and infoATM
Ok, I'll use myself as an example. I've actually recently agreed to build someone else's project for equity, I'll be taking a 49% interest in the company and I will be responsible for building the product. However, historically, I've only worked on my own projects or been paid for my work. It's rare in consideration of the number of times I've been approached. In this particular case, the non-technical co-founder brings contacts and knowledge to the business that are essential to its success and I believe the product has the potential to generate 10-15MM in revenue. It's far from guaranteed, but it's not pie-in-the-sky. I agreed to participate because I believe in the market opportunity and need for the product. If you consider the number of times I've been approached versus the number of times I've agreed to do work for equity, it's a really, really low number. The developer that agrees to this will want to truly believe in the product. It's also vital that the other co-founders bring something meaningful and tangle to the table. The developer doesn't want to do 99% of the work for 1% equity. That might sound ridiculous, but that's the kind of **it people throw our way. Using me as an example, if you can demonstrate a credible market opportunity with a solid foundation for building a business, i.e. it's highly likely that the business will be successful, it will increase your chances greatly. I wouldn't likely participate in the next "billion dollar app" idea, these companies are called unicorns for a reason. But if you approached me with a solid, demonstrable market opportunity I would consider it. The other factor has nothing to do with your idea. How many people can go a year or two years without an income? That's essentially what it takes to build most products, so you are -- in fact -- asking your developer to deplete their savings to build your idea. For all intents and purposes, if it took me a year to build the product, I'm agreeing to invest $180,000-$300,000 (the salary range for architects of my level) into the company. It's a substantial amount of money! So, think about this, under what circumstances would YOU PERSONALLY give up a $180,000 job? It has to be compelling, or you need to find someone (like myself) who is actively looking for opportunities and has already decided to forego a paycheck.
Atanas Stoyanov
0
2
Atanas Stoyanov Entrepreneur
Founder, CEO wootrader.com
Andrea - yes, its very rare nowadays.Most good partnerships are with close friends/relatives/college buddies or with investors/business mavericks making actual contributions to the company.
Jason Graves
1
0
Jason Graves Entrepreneur
Software Architect - Nokia Bell Labs
This is most likely a bad decision for both parties. As the visionary, you have this idea that you can't build yourself. So you reach out looking for a developer that's willing to be your partner in this idea. Good news... there are a TON of developers in the NYC area. Bad news... most of them have jobs, great benefits, and very impressive salaries. So the actual list of developers willing to work for equity gets reduced to a very low number. However, like the previous comments say, these developers do exist, and with a little work you might find one that bites.

But be warned, just because you find a developer, doesn't mean that they know how to build what you need. That's kind of like assuming that all guitar players can play the flute, simply because they are musicians.

As the saying goes...you get what you pay for. You should be able to place certain expectations on the application that is being developed. Afterall, this is your idea. But this can be very difficult when this person is your cofounder. Remember, your partner is doing all of this work for free. More often than not, these situations will end badly. And when that happens, you'll be exactly in the same place you are now, looking for another developer.

I suggest looking for a strong Systems Architect or Senior Fullstack Developer to bring on as your CTO. This is someone more likely to work for equity, since all they really have to do is plan, oversee, and serve as your technical advisor. The CTO position is the next logical step for Senior Developers and Systems Engineers, so being able to say that they are the "CTO" of a startup, might be enough to agree to be your co-founder. This person should be able to develop a plan, spec the product/service, design the API, and find talent (via students, recent grads). A CTO should serve as your Technical Advisor, Systems Planner/Architect, and basic knower of all that is App Development. Your CTO should be able to call BS on developers that aren't pulling their weight, or possibly leading you down the wrong path. Overall they are there to keep you from wasting time and money on the wrong developers.
Andrea H
1
0
Andrea H Entrepreneur
Special Projects Director
Right, Atanas. The other person would have to bring something to the table (i.e. business, resources, etc.). I would think it would be impossible to just fine a technical co-founder to build something and the other person not do anything. But are you saying even if there is a business + technical co-founder relationship, it most likely occurs with just friends and family?
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