How to form an alliance with web developer (profit-sharing)
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How to form an alliance with web developer (profit-sharing)
I have (what I believe to be) an excellent business plan that hinges on finding a skilled website developer, but do not have the cash to front for it. Given that compensation will be limited to when-and-if profits start coming in, how should I go about finding a skilled PHP / SQL developer for the website?
The nature of the business is that I will very likely spend much more time executing it than the developer will spend on the website; thus, I feel that the developer could receive a generous and fair compensation in the end, but not upfront.
How do you recommend that I approach this task of creating a business alliance? Since there is a lot of trust involved (supplemented by a contract), should I stick to local development? Or should I try to find the best-suited developer out there, regardless of his location?
I recognize that trust is a two way issue. I have spent several months’ worth of time developing this idea; naturally, I have created proprietary business knowledge that I don't want stolen. I also understand that the contractor or freelancer has to establish that I am a trustworthy individual; after all, he is investing a couple weeks of time, minimum.
If you have any thoughts or suggestions on how to go about finding such a skilled contractor or freelancer for this project, please do share.
The nature of the business is that I will very likely spend much more time executing it than the developer will spend on the website; thus, I feel that the developer could receive a generous and fair compensation in the end, but not upfront.
How do you recommend that I approach this task of creating a business alliance? Since there is a lot of trust involved (supplemented by a contract), should I stick to local development? Or should I try to find the best-suited developer out there, regardless of his location?
I recognize that trust is a two way issue. I have spent several months’ worth of time developing this idea; naturally, I have created proprietary business knowledge that I don't want stolen. I also understand that the contractor or freelancer has to establish that I am a trustworthy individual; after all, he is investing a couple weeks of time, minimum.
If you have any thoughts or suggestions on how to go about finding such a skilled contractor or freelancer for this project, please do share.
Re: How to form an alliance with web developer (profit-sharing)
best bet is probably someone local. However, DevNetwork has a forum that is dedicated to pretty much what you're asking for: This way
Re: How to form an alliance with web developer (profit-sharing)
I didn't think for-profit work could be posted in that forum. In my own mind, this is not volunteer work. However, I might reach some good people there.
Re: How to form an alliance with web developer (profit-sharing)
Rule number one of freelancing: say no to "I have this great idea...I'll pay you later..."
Generally most people won't go for it. Maybe if it's a fantastic idea and they would be willing to make an investment (of time). But generally freelancers don't have enough time to do 'real', paid projects to think about work that might pay at some unknown point in the future.
Generally most people won't go for it. Maybe if it's a fantastic idea and they would be willing to make an investment (of time). But generally freelancers don't have enough time to do 'real', paid projects to think about work that might pay at some unknown point in the future.
Re: How to form an alliance with web developer (profit-sharing)
I can empathize with this cautious sentiment, having played the role of freelancer myself. In this case, however, I believe it's a matter of finding an individual with enough vision to recognize that this is not merely a website, but a business in which others will be investing a significant amount of time as well. The website is only a small component, and the profit potential is quite high.
Because of the concern of delayed compensation, which seems to be rooted in trust, perhaps the most feasible route is through a friend or referral, or finding someone local who I can meet face-to-face.
Because of the concern of delayed compensation, which seems to be rooted in trust, perhaps the most feasible route is through a friend or referral, or finding someone local who I can meet face-to-face.
Re: How to form an alliance with web developer (profit-sharing)
Years ago I had an idea about running a development company that doesn't actually charge anything for making websites ... but instead takes a (significant) equity share in the business in return for building a prototype/initial version/ongoing development of the online presence. I wonder if that would work as a business?
Re: How to form an alliance with web developer (profit-sharing)
In my search for a web developer, I did come across one guy who takes this approach. We are still in the discussion stage. He appears to be fairly successful as a developer, but I'm afraid that he might lack the vision and business acumen to grasp the value that I can provide to him.I wonder if that would work as a business?
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alex.barylski
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Re: How to form an alliance with web developer (profit-sharing)
Wrong! Every business man has to realize that:The nature of the business is that I will very likely spend much more time executing it than the developer will spend on the website; thus, I feel that the developer could receive a generous and fair compensation in the end, but not upfront.
a. Software is never written once
b. Software usually requires being maintained along with the system/environment it's quite likely the developer gets stuck doing far more than you in terms of time.
Awesome...you have an idea...and idea is nothing without proper execution. Assuming you have the business sense to make this venture work you have to realize the developer needs to invest 1000 hours of his/her time upfront and then work along side you as you make change requests, the system grows and expands, security holes are discoverd, performance issues, etc.
Assuming that the developer will invest in "your" idea initially...and that he will have more "invested" than you would you be willing to go 70-30 or 60-40 at the most?
I've tried this...twice...it didn't work either times. Executing ideas are a lot harder than they seem. So I essentially wasted my time got nothing in return. Next time I'd be hard pressed going 50/50 without some real serious business acumen behind the individual with an idea.
I'd want to seem business plans, marketing strategies, contacts and at least 1000 pre-orders or contacts willing to join. Ideally there would be a minimal financial investment on their behalf as well, as a show of good gesture and *real* interest in making this venture work.
At that point I might consider 50/50...
Location...really means squat. You can make or break trust instantly over email as you can in person. The only difference in face to face you can make amends before hard feelings have time to set in. Just walk on eggs shells and you'll be fine.Since there is a lot of trust involved (supplemented by a contract), should I stick to local development? Or should I try to find the best-suited developer out there, regardless of his location?
Knowledge is power, I agree. But it's useless if it's *not* used or executed properly.I recognize that trust is a two way issue. I have spent several months’ worth of time developing this idea; naturally, I have created proprietary business knowledge that I don't want stolen. I also understand that the contractor or freelancer has to establish that I am a trustworthy individual; after all, he is investing a couple weeks of time, minimum.
You worried about your business knowledge I'm worried about my proprietary source code. Lets strike up a contract. I sign a non-competitive agreement for up to 5 years and so do you. I never need to hear or learn of your "knowledge" and you never have to see my "source code".
If one decides to leave and try again with someone new - they are required to pay a exit fee to the other party at X hours X an agreed upon rate. This prevents me from stealing your ideas and prevents you from later deciding to find another developer from to pay upfront and rebuild the web site and dropping me off the face of the earth.
Re: How to form an alliance with web developer (profit-sharing)
I understand that as software complexity increases, costs increase exponentially. My background is software. I choose not to program this site myself because I realize that web development is so different from what I'm experienced with.PCSpectra wrote: Wrong! Every business man has to realize that:
a. Software is never written once
b. Software usually requires being maintained along with the system/environment it's quite likely the developer gets stuck doing far more than you in terms of time.
PCSpectra, it sounds like you chose to get involved in some projects that looked appealing, but lacked proper execution. Is this the case? Would you be willing to elaborate?
I do have a marketing plan, contacts, and a test website (I've gone door-to-door with the concept locally). I don't have pre-orders though. This business seeks to create a new advertising domain. Pre-orders within a new market space would be quite a herculean task.
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alex.barylski
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Re: How to form an alliance with web developer (profit-sharing)
So you found a new way to sell advertising? Good business, requires the right connections though...
I tried to start a facebook type site before social networking was all the rage...I thnk it consisted of me and a few friends I managed to convince to sign up and test the system. LOL The second was a Camping community site for my father...that flopped to as he failed to write articles, promote the web site or anything really...
It shows me he's compiled enough data (and has enough contacts and industry insight) to at least convince people that what he says is coming is indeed coming.
If your selling advertising it shouldn't be that hard. I worked for a design agency many moons ago that frequently sold advertising space to clients months in advance, sometimes 9-10 months.
I tried to start a facebook type site before social networking was all the rage...I thnk it consisted of me and a few friends I managed to convince to sign up and test the system. LOL The second was a Camping community site for my father...that flopped to as he failed to write articles, promote the web site or anything really...
It's what separates the bussine savvy from the backyard business...good sales men (so I am learning) can sell Ice to an Eskimo. That is the kind of sales guy I would follow off the face of the earth with a project idea.Pre-orders within a new market space would be quite a herculean task.
It shows me he's compiled enough data (and has enough contacts and industry insight) to at least convince people that what he says is coming is indeed coming.
If your selling advertising it shouldn't be that hard. I worked for a design agency many moons ago that frequently sold advertising space to clients months in advance, sometimes 9-10 months.
Re: How to form an alliance with web developer (profit-sharing)
Like any investment you'd only invest your time in something you thought was going to be a sure-hit.onion2k wrote:Years ago I had an idea about running a development company that doesn't actually charge anything for making websites ... but instead takes a (significant) equity share in the business in return for building a prototype/initial version/ongoing development of the online presence. I wonder if that would work as a business?
Think of Dragon's Den on BBC. I think there something like that over (here) in the states.
Re: How to form an alliance with web developer (profit-sharing)
Many aim for high expected value. To illustrate, take the successful developer whose basic needs are met, and can afford to gamble his time. He is in a position to take on riskier opportunities that have the potential for high payoff.panic! wrote:Like any investment you'd only invest your time in something you thought was going to be a sure-hit.
Re: How to form an alliance with web developer (profit-sharing)
And while you're gambling on this venture your career is going down the toilet.
Re: How to form an alliance with web developer (profit-sharing)
I don't think you could really build sites on a large scale as well as having a career. I find it hard enough writing my own stuff in my spare time let alone trying to build things for other people. You'd need a pile of cash in the bank to live on while you ran the company for the first couple of years, then, if you've done it right, the equity from the completed projects would start paying the bills.panic! wrote:And while you're gambling on this venture your career is going down the toilet.
It'd be a risk, but any business venture is.
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alex.barylski
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- Joined: Tue Dec 21, 2004 5:00 pm
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Re: How to form an alliance with web developer (profit-sharing)
The real problem is that everyone is greedy and wants money. 
No business man in his right mind is going to accept anything less than 50% for his or her idea and no developer with any experience in such a venture would accept anything less than 60-40 in his or her favour.
What might sway my vote is if you demonstrated equal investment not in time (making contacts, etc) but in somethign tangible like money.
If the site takes me, say...
12 weeks (3 months) to develop and get ready for launch and my hourly rate is $35 Cdn/hour.
8hrs/day = 280
5 days/week = 1400
4 weeks/month = 5600
3 months = $16800
If you demonstrated that you would invest that kind of money into the project (not just giving me a gentlemens agreement but a legit investment stored in escrow until project completion) for advertising...
THEN...then I would consider my investment equal and would agree to 50-50.
Doesnt sound like you have that kind of money...so essentially you want me to do all the leg work upfront...accept this loss...then start from scratch when we launch and share the profts evenly.
See why the math doesn't add up?
I have a newsletter managment application I am trying to sell (similar to campaign monitor, etc) and every business savvy person I have tried to partner with wanted 50-50. I laugh. How about 25-75 and I offer you monthly bonuses for excellent work. Or 50-50 and I cap you at 55K/year.
I'm flexible in many ways...but I know from experience that wishy washy projects are risky.
It would be akin to me asking someone to give me 150K (approx amount it cost me to develop my application) to develop a project I hadn't even started. The banks would laugh at you and so would I.
Now if I went to the bank, showed them a fully funcitonal peice of software, with a client lead list of say 1000 willing to pay customers (signed) as well as stats and past experience I have which would increase the likelyhood of success...then maybe I'd get a loan but they'd still want to make their money back plus some.
I need to learn to become a more business savvy individual...while I believe in the mantra 50% of something is better than 100% of nothing...I also believe that 50% of everything I have is quite a lot when I don't have a gun pointed at my head.
No business man in his right mind is going to accept anything less than 50% for his or her idea and no developer with any experience in such a venture would accept anything less than 60-40 in his or her favour.
What might sway my vote is if you demonstrated equal investment not in time (making contacts, etc) but in somethign tangible like money.
If the site takes me, say...
12 weeks (3 months) to develop and get ready for launch and my hourly rate is $35 Cdn/hour.
8hrs/day = 280
5 days/week = 1400
4 weeks/month = 5600
3 months = $16800
If you demonstrated that you would invest that kind of money into the project (not just giving me a gentlemens agreement but a legit investment stored in escrow until project completion) for advertising...
THEN...then I would consider my investment equal and would agree to 50-50.
Doesnt sound like you have that kind of money...so essentially you want me to do all the leg work upfront...accept this loss...then start from scratch when we launch and share the profts evenly.
See why the math doesn't add up?
I have a newsletter managment application I am trying to sell (similar to campaign monitor, etc) and every business savvy person I have tried to partner with wanted 50-50. I laugh. How about 25-75 and I offer you monthly bonuses for excellent work. Or 50-50 and I cap you at 55K/year.
I'm flexible in many ways...but I know from experience that wishy washy projects are risky.
It would be akin to me asking someone to give me 150K (approx amount it cost me to develop my application) to develop a project I hadn't even started. The banks would laugh at you and so would I.
Now if I went to the bank, showed them a fully funcitonal peice of software, with a client lead list of say 1000 willing to pay customers (signed) as well as stats and past experience I have which would increase the likelyhood of success...then maybe I'd get a loan but they'd still want to make their money back plus some.
I need to learn to become a more business savvy individual...while I believe in the mantra 50% of something is better than 100% of nothing...I also believe that 50% of everything I have is quite a lot when I don't have a gun pointed at my head.