Web Startup Lessons

Today I received an inquiry from a student at an Ivy League university who wants to launch a web startup. Maybe you’re facing the same challenges as James; he’s got a great idea but doesn’t know where to find a technologist to help build it. And James doesn’t have any money to pay for development. I gave him some advice; maybe you’ll find it useful, too.

Hi Daniel,

I recently ran across your blog. I found your suggestions in the article “Startup Mistakes: The Partnership Gone Sour” especially useful.

I have a related dilemma. I have an interesting project idea, but it requires seasoned programming skills. None of my friends and I are able to do this ourselves.

I’ve managed to contact two serial entrepreneurs by email, give them the pitch, and both of them agreed with me but commented that it would be a challenge to set up. I’ve also contacted my university’s entrepreneurial director who also said it was a feasible and interesting idea. Then, through SCORE (the nonprofit association of volunteer business consultants), I contacted a professor with experience in a related field and he liked it as well.

So you see my dilemma. How can I go about looking for a (very) good programmer willing to do this as sweat equity? Which avenues would you suggest I should take?

Best regards,
James

How to Find a Technical Partner

Here’s what I wrote in reply to James’s query:

You’re on the right track. You were smart to look for help from your university’s entrepreneurial director and from the nonprofit association of volunteer business consultants. I’m sure they were encouraging but as you no doubt discovered, their advice was likely non-specific. You’ve demonstrated your tenacity by contacting the two serial entrepreneurs but your project probably is not far enough along for them to do more than offer general encouragement. You’ll probably need to contact two dozen serial entrepreneurs with a very well-developed project before you get actionable advice and referrals.

You’ve done well so far. What I like is that you’ve looked for feedback about your idea from people who can help you evaluate its potential. In the process of gathering feedback, you’re beginning to develop a network of advisers and supporters.

First Things First: Your Requirements

You seem to feel that your project isn’t ready to move forward without a software developer (a “programmer”, as you say). I’m going to suggest you do everything you can to solidify and define your project before you bring on a technologist. I will caution you not to spend a lot of time with spreadsheets and PowerPoint. Instead, write a one-page summary that describes your project and put together a deck of ten slides to illustrate it (if you can’t get it down to one page and ten slides you’ve got a problem). Then spend all your time on two things: talking to people (networking) and creating a wireframe (a simple mockup) of your web app. Your wireframe serves as a “requirements specification” for talking to developers and investors. The process of creating the wireframe (and gathering feedback) will help you refine your business concept. Until your wireframe is done, it’s too early to talk to developers or potential investors.

You have two avenues open to you. You can find a technologist to join you as a partner, for half of the company’s equity. Or you can find seed-stage investors who will give you the money to hire a developer. Let’s look at a few variations on these alternatives.

Is Your Partner a College Student?

It’s common for a college student to do a sweat equity partnership with another college student. One partner takes on a business role and the other takes responsibility for technology. The upside is that both of you can work insane hours with little sleep for no pay (after all, you already do that and it’s called college). The downside is that your success is dependent on someone who has very little skill or experience. Your partner’s technology skills will be limited (relative to someone who has been in the workforce); moreover, your partner’s self-management and relationship skills may be very limited as well, so you both will learning as you go about working together. Ultimately, the project can founder on the “core incompetencies” you both bring to the partnership. If you cannot compensate for your mutual “core incompetencies” by learning quickly or bringing in additional help, your project will fail. So, one way of looking at taking on a partner is to ask, am I willing to make the success of my project dependent on my partner’s “core incompetencies” that I haven’t yet discovered? Generally, you’ll do so because you like the person; they are a friend and the prospect of your project failing or succeeding is less important than the pleasure you’ll have in working with a person you admire, respect, or appreciate. So that’s that; partnering with another college student introduces a high level of risk but has the advantage of requiring no investment.

If you want to partner up with another college student, and you don’t know any technology geeks, you’re going to have to make an effort to broaden your social circle. Go to meetings of any campus entrepreneurs groups. More important, go where the geeks hang out. Post flyers around the CS labs. Go to CS lectures and events (even if you can’t follow what anyone is talking about). Go off-campus to other universities. Infiltrate the social networks (Facebook and Twitter) and then try to connect face-to-face. Practice your business development skills; you’ll have to be the socially skilled person because many technologists are shy and introverted. Be prepared to encounter technologists who are highly opinionated, ambitious and have their own ideas for startups. You’ll have to be further along and closer to funding to convince them to drop their idea for yours.

Looking for Experienced Developers

Your next alternative is to find a technology partner who already has been in the workforce. Unlike most college students, you’ll be joining forces with someone who has been accountable for actual deliverables. And they may have more experience at self-organization and team work. Your challenge will be to convince someone that your project is viable. That’s why you need your wireframes and a clearly defined scope of work. If your potential partner sees that it’s very clear what he or she needs to build, that it can be done relatively quickly, and that you have a network of potential investors or business partners, you may be able to get your partner to build what you need for a share of equity or deferred payment.

Where to find a workforce technologist? Again, go where the geeks are. In this case, figure out the technology platform you’re likely to use and go where the users gather. If you’re likely to use Ruby on Rails, find the local Ruby users group monthly meeting. If you’re in New Haven, you may have to go up to Boston. If you’re in Sacramento, go to the Sacramento Ruby Meetup and go to the San Francisco Ruby Meetup as well. Use Google and search for “ruby” or “python” of “php” and “meetup” or “interest group” or “user group” and your city (or the nearest big metro area or technology center). Again, you may not know what anyone is talking about. And you will have to be the one with the mad social skills. Be prepared to encounter other startup entrepreneurs who are more interested in their own ideas than yours. And consultants who aren’t going to work for you for free. But if you are sufficiently prepared, you may be able to convince someone who is between jobs (or open to a side project) that your idea can be implemented quickly and rapidly funded or launched.

How to Pay for Development

Try to bring in a technology associate with a deferred payment rather than shared equity. You’ll meet some consultants or contract programmers who are used to waiting thirty or sixty days after completion of a project to get paid (though they usually get paid something upfront before they start). If someone is out of work or between assignments maybe they won’t mind getting busy with your project in exchange for a promise to be paid later, while they wait for their next real job to start. You’re asking someone to take a chance that with the code they deliver you can get funding or gain some revenue traction. For that, you’re going to have to offer them more than they usually get. That may be attractive to some people. The alternative is to offer them equity in your company. But realistically, anyone who is skilled enough to earn good money for their work is not going to work for equity in a college student’s startup. Money talks; bullshit walks; but if you can impress someone that your project is easy to build and likely to fund, and if they have time to spare, you may be able to get it built for a deferred fee.

What if you can’t find a technologist who will work for a deferred fee? That’s why you need to be looking for seed-stage investors at the same time as technologists. Your most likely source of funding is friends and family, if your circle includes anyone with financial resources who values entrepreneurism and is willing to take a chance on you. If your funding needs are specific and detailed, such as paying a developer for two months to build a web app based on your wireframes, and you have a developer’s firm bid or proposal in hand, you may find that an investment from a family member is more likely to be forthcoming than if you are asking for a handout to support yourself indefinitely while you “launch a startup.” If your friends and family can’t capitalize your project, then you’ll have to extend your network to include business advisers, potential business partners, and angel investors. Though it will take longer, if your funding needs are specific and detailed, you are more likely to find the capital you need.

How much will you need? What will it cost to build your project? It depends on the scope of the project, of course. But let me put it this way. If you can do it for $5000 to $15,000, you’re likely to be able to finance it with a deferred payment or a loan from friends and family. If your project is going to cost more, you need to go back to your concept and your wireframes and reduce the scope. That’s the key. Refine your project so it can be launched with a deferred payment or a family loan. You can add to it after you begin to generate revenue or find your investment partners, but if you can build it and launch it cheaply, you’ve kept the concept simple and got your project off the ground.

Further Thoughts

James, you’ve read my post “Startup Mistakes: The Partnership Gone Sour” so you know I recommend getting someone with CTO-level technical expertise to review the credentials of anyone you’re bringing in as a technology partner. You don’t have to hire a consultant (though that’s an option). You may find that some of the more experienced developers who you meet while networking may be willing to help you vet a potential partner or contract developer. It’s basic bootstrapping; you’ll want to leverage a little bit of high-level technical expertise to minimize risk.

James, I hope you’ll give us an update later and let my readers know how this unfolds for you.

And readers, leave a comment if you have any ideas for James.

This entry was posted on Monday, July 6th, 2009 at 9:38 pm and is filed under articles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.