“Will you build my website in exchange for equity?”
Every developer I have ever met has been asked this question before. Some hear it several times a month.
Some developers already work for funded startups, where the hopes are the company goes public, and they are on the ground floor of stock options.
With the exception of these already employed developers, everyone I’ve talked to has the same response that I do to this question.
“Thanks, but no thanks. I don’t work for equity. I’d be happy to build your site for my normal fee.”
You’re probably wondering why so many people are passing up such a sweet offer. This is a million dollar idea, after all.
Look, it’s nothing personal. There are some good reasons why I say no to working for the promise of future equity.
Most Startups Fail
90% of all startups fail — even well-funded ones.
Imagine how difficult it will it be for your business idea to succeed if you cannot even pay a developer to create it?
When you approach a web developer, and propose they build your idea for free, with the promise to share in the profits later, you’re communicating a few things.
- 1. You don’t value the developer’s time.
- 2. You have no funding or budget.
- 3. You have not done due diligence to research the costs involved in launching a web-based business or digital product.
But the majority of folks pitching equity-only compensation to a developer don’t realize this. Many people believe originating the idea is the most important part.
Most Ideas Have Already Been Done
This shocks most people to hear, but 99.99999% of all ideas have been done before.
Very few of us will ever have ideas that are unique.
But it is not so much the idea that matters, but how well you execute the idea.
Is Your Business Idea Sound?
A business needs to have market fit. It has to fill a need that people have, and that they are willing to pay for.
A new business needs to be promoted and marketed. “Build it and they will come” is a fantasy. If you have no money for web development, how do you ever hope to market your idea?
Most ideas take time to get traction. The developers willing to work and wait for future equity are already working (and getting paid) at startups already.
Developers Are Idea People, Too
Most developers have ideas of their own. If they are going to work for free, it is more likely to be on their own side projects than your idea.
There’s only so much time in the day. Developers have families to feed. They need to make money with the time they have.
Intentions of Inequality
Some people put there, not you, of course — but some folks out there, try to rope developers into doing all the work for only a portion of the glory. If the glory actually pays off in the end.
There are business “idea guys (and gals)” that want someone to do all the technical work, so they can attach their name to a project, when all they are contributing is the idea.
This is something no sane developer is interested in.
Partnerships mean that each side brings something valuable to the the table.
Web developers bring their know-how, their ability to create something, and their technical expertise to the dance. You should be bringing something valuable as well.
Please understand, I’m not telling you these things to upset or hurt you.
I’m telling you so you know what to expect.
And I also want to give you some valuable advice.
Get your web developer involved from the beginning — before you start making any technical decisions, and pay them for their expertise.
I’ve seen the misinformation that’s out there — even on reputable business sites.
Some articles that tell you if you get a technical partner, your “interests will be more aligned”. While that may or may not be true, if you’re not paying a technical partner, they aren’t going to be doing any work.
I’ve seen “business advisors” on forums telling you that paying a developer will give you poor results, because they work by the hour, and want to pad their wage. Or that hiring a web development studio may cost more, and be less risky, but they will be more inflexible.
While it’s true that there are WordPress developers that are setting a bad example for the rest of the community, they can be detected by doing your homework, and not looking in the bargain bin for someone to get your work done.
Web agencies or development shops are the same thing. They are usually lower risk, have a larger team, and cost more. But this alone doesn’t guarantee results.
Do your homework before hiring a development partner.
People You Hire Are Partners, Too
Perhaps that’s the biggest thing I want to stress. Good people will do a good job for you, if you treat them with respect.
Don’t come empty-handed to a web developer and expect them to do the heavy lifting for you for empty promises.
The developers that do agree to an arrangement like this are the ones I would worry about.
They don’t value themselves.
Ideas For Funding Your Idea
Any developer running a real business and not a hobby will expect to be paid in cash.
So, you have an idea, but not enough money to hire a developer to help you. What do you do?
One solution would be apply for a small business loan. You could also start saving up to get your idea built out.
To recap: realize that ideas are plentiful, and it’s likely your business idea has already been done before. Most startups/business ideas don’t pay off like people expect them to. It takes a lot of work to make a business grow.
Working for the promise of future profits is incredibly risky for the web developer who might consider that offer. Because web developers have bills to pay, we usually want to be paid in money for our work.
Success comes from executing on an idea and continuous, iterative work on that execution.
Quality costs money. Only chumps work for free.
Do your research, and find someone who will deal fairly with you, and you’ll have an ally in your corner for years to come.