Make sure you have milestones setup in your development process. If she said it would take 6 months then make sure at 4 months your developer is at a reasonable place, hell make sure at 2 months that they are, if they aren't then it's time to reconsider the contract.

If they estimated it would take 6 months to do then by 4 months 90% of the site should be done, the other 90% is the smaller fixes, tweaks etc that always take a long time but a good developer will have learned to account for these in their estimate, but you should have a functioning(although not totally) site that far in.

I'm not one for micromanaging or the non-technical boss watching over the hackers shoulder every 2 minutes getting in the way, but it really shouldn't have been allowed to drag on for 12 months without a product. After missing the first estimate without a full application(even if it was a buggy one) you are going to have serious problems and should be looking for someone else because they are either too inexperienced to estimate their own work, too inexperienced to break their estimates down, or not doing their work.

So it can be done.

In my personal experience, I've never seen outsourcing work well, or really work at all. The first startup I worked at spent $300k to setup an office in China, paying their developers about $10-15k/year. It would've been a great deal, except that the China office produced nothing and sucked up the complete time of both the CTO and chief scientist so they couldn't get anything done stateside. They would've been far better off writing the code themselves.

The startup I talked about above was some years ago, and I had no idea how to program anything. It worked out because we were extremely persistent, and simply didn't take no for an answer. A year ago I thought that it might be a good idea to actually learn to hack, and so I set about learning it. Now I'm doing a web-based startup and I have to admit that programming it yourself, and knowing what the heck you're talking about gives a number of advantages:

1) your dependance on external partners is minimised

2) you can see what features are trivial to do, which are hard, and which are just impossible.

3) your product becomes better because it is what you want, not someone elses interpretation of what you want.

4) you don't need a lot of capital, just a lot of time.

For your experience, persistence and not taking no are both really important to startups and very difficult for many technical people. So you added some value that a hacker couldn't get by just going off and doing the same thing on his own.

In the startup I mentioned above, the founders were all technical people and didn't really add anything of business value besides that. They were outsourcing because it was cheap and out of a misguided assumption that they needed a big team (and probably because they were spending Other People's Money). They would've been far better off writing the product themselves.

I don't know enough about drinko to know what s/he brings to the table, but unless it's a lot of sales connections to potential customers, it'll be hard for a good programmer to justify spending time on her project vs. all the other projects out there.

An overall note on your post: I think that when you break it all down there are basically only two things that matter in a startup: 1) having a product. 2) being able to sell it. Often the people that are good at making products are terrible at selling them and vice versa. So you certainly need good hackers, but you also need great salesmen. And both of them need to be pretty persistent, since they're facing tough jobs.

Well, it would be a lot easier if it were just a collection of rules to follow;-)

I'd be interested to hear what mixmax did, in what field, in order to succeed without technical people, although it's mainly academic interest, as I'm definitely "technical people" myself.

I don't think you can blame outsourcing for that exclusively. Most startups rewrite their code multiple times, to track design changes. OTOH, if it was a rewrite motivated by code quality issues, I can see what you mean.

;-)

(The beers make us care even more.)

Hope someday we get that chance.

where do you live?

I and a couple of friends of mine did the technical work for a startup on a contract basis 2-3 years ago. We were working in our spare time, and it seemed like a fun project, and a good occasion to learn Rails.

Of course, little did we realize that they were planning to pay us with money they hadn't actually raised yet.

We did end up completing the working demo for them, but basically left after that because they weren't paying us. They had the demo they needed to keep pitching it to investors, but it took a lot longer than they had expected. A year or so later, they had apparently raised more capital, because they launched a beta from a different technical team that had apparently rewritten the site from scratch in PHP. They have since unlaunched, though the site still offers to let you know when they launch.

If you can perform technical work yourself, you have the ability to keep working on delivering the product you want to deliver without draining your cash reserves. You can take a day job, live in your parents basement, or whatever works for you that allows you to keep building your company.

If you can't perform technical work yourself, then the minute you run out of money, you lose the ability to work on your product. That gives your project a much higher risk of failure.

We outsourced initial development of a prototype, it cost us little money but much time, and the quality of the output was appalling (from both a user and a technical perspective). It was functional on a very pedantic level, but mostly useless.

Daniel

What was it? Sounds fun.

Basically it’s an advertising display. The way it works is that you have a motor with an attached circuitboard that has a row of RGB LED’s attached in a line from the center and out. When you spin the circuitboard and modulate the LED’s in the right fashion you can create the illusion of a display that’s hanging in midair. This is pretty computationally intensive for an embedded application (72 RGB LED’s that each need to update roughly 5000 times a second) so we used FPGA’s for it. The whole contraption has a built-in GSM phone module, and can communicate with a central server. The idea is that you take the display to a bar or some other outlet and plug it in. It will then automatically call in to the central server and request updates. Each display has a unique ID and thus it is possible to create content and advertising for individual displays, or groups of displays. If for instance you want to advertise in a certain part of town you can buy advertising time on only displays in the part of town you’re interested in. There’s a webbased tool for doing this.

Our focus was on building a media channel, and we thought we would be distracted by doing consumer products as well.

The idea was that always that she would be a full co-founder. We agreed on a low equity split initially because of the asymmetric risk we were taking. The idea was always to increase her stake 6 months into the project, but not in the way it happened.

I met her through a friend, and 3 months ago would have been proud to call her my cofounder.

I am going to learn to hack regardless, I am just trying to figure out the best way forward in the short term, as the payoff for learning to hack will be a few months.

I think in retrospect it would have been better to offer 50% and the same salary as you.

Going forward though, I'd say definitely learn to hack. Also find people who might help not because of a salary, but because they think the idea is cool and want to be part of it.

Any scaling equity package should be linked to dates and performance goals. You basically said you didn't want her to own the company unless it succeeded, when success was contingent on her.

Sounds like she trusted you. Then stopped trusting you. Then left a few months later. You screwed up. Go apologize.

It wasn't a hazy equity offer.

Stop refuting everyone's opinion.

For example, if there was another partner here that knew how to hack, but wasn't a nurse, I'd say: Learn as much as possible about health care - it's your industry.

it does sound like she didn't have the experience or the maturity to whittle down to an achievable project, however. learn to code, maybe that plus this experience will make you a much stronger manager and designer next time around.

Point remains that asking for equity does not fit with expectation of failure.

It doesn't have to be that long. Do you have any programming experience? Do you have any friends that do? With a smart friend guiding you through, you can skip a lot of annoyances when you learn to program.

This is also a prudent point - what have you been doing the last 12 months? That would have been more than enough to get the hang of Django...

Market research, ethnographic study, trying to raise more funding,(too early for VCs here, and there are not many risk taking angels here), running the ongoing alpha, liaising with patient groups, and health organisations, writing copy and designing interfaces. Learning about tech startups is a phase transition from the perspective of a nurse.

If you're really dedicated to continue with the startup idea, and want to complete your first beta, I'm not sure waiting to learn Django, getting your feet wet, and developing proficient skills to actually continue the project would be the best idea, as it would hinder you from launching quickly, if that's your desire. So, although you may decide to do it on your own, you should be actively looking for coders.

If you're really out of cash, and you have no family/other sources to borrow or raise money from, and you need money, then maybe a part time job to start generating some sort of revenue may serve well.

Also, go to your local Django camps, check out djangogigs.com, get on listservs, find the Django Google group and post there. Not using Django should be an option as well, if you happen to come across that gem of a coder who's willing to take the load and doesn't code in Djnago. Also, applying to YC could be an option. If you do have some sort of prototype to show, and are willing to learn to program, you could be paired up with a group, of course that's all speculation.

Just don't get stuck in a rut of depression. Be rational, and exercise some damage control, because down the road, you'll probably find yourself in a more unforgiving storm.

I wish you luck but I think you've got some serious structural problems, both in your company and your relationship with this Django girl.

That salary is crazy for someone that early, before revenue or major vc capital. By drawing that huge salary, she is avoiding all the risk and therefore deserved less equity. I think the 6% you gave her was generous.

Daniel

If you really gave half a shit about the original poster and the situation she's in, you wouldn't be going through picking on every damn comment and responding with idiocy, and starting branches of discussion that aren't relevant to the subject at hand and do nothing more than make finding useful information here more cumbersome.

More choices from Encarta Thesaurus: lass, miss, young woman, mademoiselle, daughter, lassie, mademoiselle, maiden, damsel, maid, young lady.

What about "gal"?

I guess Encarta isn't very knowledgeable about the American West.

If she were actually "all in" on the business, 35% for a developer would be perfectly acceptable, even if she wasn't taking on as much risk. But, you need a vesting schedule in these kinds of agreements. At least then, you know you get four years of labor from the person--or they lose (some or all of) their stake.

I'd suggest going back to the drawing board (and back to a real job, while you gather your wits and save up some money). If you can buy out your former partner (hopefully for a pittance, though it sounds like your former partner is far more dangerous at the negotiating table than you are), you can outsource the remainder of the work--with better contracts. Or, learn to code on nights and weekends and finish it yourself.

But, if you can't buy out her stake, you can't build a business. It's hard enough to build a profitable business when everybody is working full-time on it. It's going to be damned near impossible when 35% of your company is doing nothing for the bottom line. Raising money will be impossible. Making it profitable will be difficult (while stock holders don't have any particular right to be paid dividends, at 35% she's got voting rights that have to be dealt with...depending on where you're incorporated, you might find 35% is a dangerously high ownership stake). And any exit, unlikely as that is, will be bitter sweet.

I assume that the 35% equity doesn't actually give her decision-making power? There's probably a couple of loopholes you can exploit here.

Once you've got your equity back, follow some of the advice here. Get yourself a real developer, try to get a little more money and release a version 1. Barring that, cut your features down, and rethink what you really need in order to get you to the next stage. Something small and simple may be all that is really essential.

And by the way, it is obvious from your post that you're dedicated and really want this to succeed - that is the one most important ingredient in success. I think you have a good chance,

Good luck.

Feel free to e-mail me if you have any questions, my mail is in my profile.

Lots of businesspeople manage low-equity (or no-equity) employees. Their business isn't jeopardized when one of them threatens to quit. Some of them are savvy enough to know how to keep projects small and focused and checkpointable, so they're never more than a milestone into the weeds and can always hand working code off to the next developer. Others simply pay more than 80k for a lead developer. Many of them pay large premiums to hired gun consulting teams who will deliver pro work without caring about equity.

80k may sound really expensive to you. For a startup, it kind of is. But it's right smack in the middle of the ballpark for an experience Python webdev. It doesn't sound like you were really doing this person a favor. Chances are, when she poked her head up and looked around a few months into the project, it seemed like she was doing all the work and taking a sucker's cut.

She doesn't have to be right about that. She gets to do whatever she wants. People renegotiate comp all the time. You didn't sell her. She left. Learn more about managing people before you hire or contract more of them.

This is true to a degree. We agreed to the initial arrangement as a fair deal, but I didn't appreciate the way she swtiched terms on me, and then bailed when the going got tough. (ie funding ran out)

This is a excellent wiki with lot of tutorial/information/samples about django http://code.djangoproject.com/wiki/Tutorials http://www.b-list.org/weblog/2006/nov/16/django-tips-get-mos.... http://www.b-list.org/weblog/2007/sep/04/django-accelerated/ http://www.slideshare.net/simon/advanced-django/ http://djangoplugables.com/ http://www.djangoproject.com/community/ http://djangobook.com http://showmedo.com/videos/video?name=1100000&fromSeries.... http://showmedo.com/videos/series?name=v7kABKL6R http://blog.disqus.net/2007/03/11/a-django-primer/ http://www-128.ibm.com/developerworks/linux/library/l-django....

Talent is a marketplace. It isn't owed to anybody.

She's not taking enough risk to get anything close to 35% in my opinion. It doesn't get more sweetheart that that. Too bad she was too dumb to realize that her good position could have been very good later on.

Again, it seems like you're talking as if there were "rules" about equity participation. You would have to have an absolutely awesome idea to make, for instance, a security researcher participate in a startup for no salary. Even if you pay one $50k, and that $50k cripples the startup and maxes out hardship for everyone else in the company, it's still a sucker deal for the researcher.

I'm using a familiar example to illustrate a point. It's a marketplace, not a secret society.

And I don't care what you're doing, if it takes 12 months to get a prototype in django, you aren't worth 80K.

Whole deal sounds to me like she didn't give a crap about long term future of the company, she just wanted to ride the funding into the ground through her paycheck. I'd bet she demanded more equity in a moment of faith, but by that point they were doomed.

Unless you were paying the developer very little, or nothing, that is when equity should be used as payment

35% is a LOT with $6900/m

As happened here, apparently.

There's a whole chapter on this problem in most introductory game theory textbooks. The basic problem is that you cannot directly control how hard someone works, you can only give them incentives to work hard and then measure the output. Much as you'd like to say "She's a professional, you're paying her, she ought to do a good job," the real world doesn't work that way. She'll do a good job if it's worth her while to do a good job.

The economy is not fair. You can try to pretend it is and watch all your ventures get driven into the ground, or assume that you're going to get a raw deal sometimes and only take those raw deals when it leads to a sweeter deal later on.

I paid the 35% equity 8 months ago, only to have her quit when the going got tough.

My comments are mostly intended for bystander-readers who're thinking of doing the same thing - paying a technical developer a full salary + 1-5% equity to develop a product from scratch. There're a lot of people that still suggest that, and it really doesn't work, as you've found out the hard way.

I dunno what advice I'd give to you personally - it's a hard situation, as many others have pointed out. Probably cut your losses, chalk it up to an expensive learning experience, and move on, then try again some other time. As I mentioned in another comment, I think it's fairly unlikely that this developer left you usable code that someone else could pick up, so it'd be difficult to get a contract developer to push it to finish line. You could learn to hack yourself - Python and Django are not difficult - but it'd set you back at least a couple months, and then you'd still have to implement everything.

[Edit: last paragraph was on the assumption that her work was not even demoable, but rereading your post, it sounds like you've gotten to alpha but just need to incorporate the feedback in. If that's the case, a contractor might work, but be aware that it's harder to read code than to write code, and if the code quality is bad enough any contractor would just have to throw everything out and start from scratch.]

If you can find a technical cofounder, someone that you trust that you know is a good developer, I'd do that (and give the decent equity from the start!), and then they can probably write the whole site from scratch in a couple months. But it has to be someone you know well, someone whose skills you're sure about, because otherwise you run the same risk with them.

I don't know if it's intentional but it seems like a lot of people here are talking as if there were "rules", like "x% is fair, y% is unreasonable". There are rules of thumb. But compensation is a marketplace. If the founder has no leverage, taking a lower stake in exchange for salary isn't honorable. It's just stupid.

Both parties need to feel like they're getting a square deal. If either of them don't, it doesn't work.

* Maybe you really did do a majority stake's worth of work, and she was just inexperienced.

* Maybe you didn't really do a majority stake's worth of work, and she felt like she had gotten shafted. You did start her at 6%.

* Maybe she was just a bad employee and a crap dev and wanted the paycheck. You weren't experienced enough to notice and fire her.

* Maybe through no fault of her own the project became untenable (for instance, maybe the spec changed a bunch of times, or you couldn't hammer out a reasonable set of features to launch on --- this has happened to us lots). You ran out of money, and she couldn't stay, good faith or not.

What are you going to do different next time?

If I was hired to do a project, and my payment was inline with my market value, I wouldn't care what my employer is doing as long as I kept getting my money.

$6900/m sounds like market value to me. If I was in the nurses position, I would have offered 1% equity on top of $6900/m

Of course, there are two sides to every story.

If you make a mistake when you negotiate a position, you are not ethically required to "ride it out" to some foreordained date.

Like I said, it's one thing to negotiate better compensation, or to walk away for a better offer, etc. It's another to say "I can screw you over and I will use that to get more from you".

And like I also said, there are two sides to every story. This is seen exclusively from the owner's side.

Obviously the poster thought that the app would become lucrative enough to justify a $160k investment. If the payoff looked really huge, you could justify being a little more stingy with the options. Just sayin'. (From the guy who doesn't have a lot of options because his app is in healthcare too)

However in business, relationships and "karma" - for lack of a better term - are really what things are about. There are times when you should be looking at maximizing your position, and there are other times when you should be looking to cooperate in order to maximize a collective position.

Many of the people here (myself included) are simply stating that the dev displayed poor business acumen by being too aggressive in taking advantage of another's weaker position. The key being who that other person is - her supposed partner.

Partnerships need to have a level of loyalty beyond any particular transaction or they simply won't work.

Chalk it up to first-time founder mistakes on both sides. Almost everybody drastically underestimates the amount of effort required to get a startup off the ground. So what seems acceptable at first ("yeah, this won't be hard for me, I can whip it off for you") starts to feel like you're getting massively ripped off later.

And I totally agree with the comments on other subthreads that she's probably not a very good Django dev. I wouldn't be surprised if this is her first Django project. I remember that I expected my first PHP project to take 3 months; it ended up taking 3 years (I didn't charge for it; it was a volunteer project in college).

I never had 94%

I was eventually ok with giving up founder level share, but expected founder level commitment. This is where the gap lies.

What are you asking her to do? Stay on in an untenable situation? News flash for you: when you make a mistake signing on with a company, you aren't "honor-bound" to stay there until the situation plays itself out. If your situation sucks, leave. She did.

There's another unfortunate lesson here. When people threaten to quit, counteroffers are often a waste of time. People with MBAs will tell you not to make them at all. I've learned this the hard way; I got a really good offer in the middle of my last PM job, brought it up with my current company, and they upped my stake. But for the next 2 years, they were constantly on the defensive assuming I was going to quit again; it damaged the working relationship severely.

If you're a solid company, and someone gives you an ultimatum, a no-foul clean break is often going to be the right move. I wish it wasn't like that (I had no intention of quitting), but some political situations are untenable.

- She only left cause they were out of money, I suspect she would have rode that horse to death.

-I'm done debating; it was really fun, I got work to do; Im sure you do too... .rb

Again: the project could have been broken into milestones, maybe with each demo-able. The founder wasn't technically capable of doing this, but could have had the dev write up a spec milestone-by-milestone, and then managed the project to that spec. At any point during the year, the dev could have left and the founder would have had something usable to work with.

Not only that, but by not managing the project well, the founder sent a message to the dev: "I don't really know what I'm doing, so I'm throwing money at you to make things work". There's nothing wrong with that when the person you're throwing money at is a full partner whose interests are aligned with yours. This person wasn't.

I'm making a lot of assumptions here, and I apologize if I'm off the mark.

  I refuse to give up on the idea, and I know that the window of opportunity is only a few months.
  I am considering outsourcing the development to India, so I can get it to a releasable state.

You have got a lot of good suggestions on the way forward from here. I would also endorse you seeking out the Django experts on this forum who have offered help. At the bare minimum, they can review the code and tell you where exactly you are and how much more effort it would take to make a beta release.

Alongside, you can get some legal advice on getting out of this partnership with the least possible damage to you and your ethics.

Learning to code obviously would be helpful, and it really ain't that difficult.

Don't worry about this temporary setback, just get back up and give it a shot again. Being in the medical field, am sure you would have seen people fighting and coming out strong from far more difficult situations.

Good Luck.

Unfortunately, it is more difficult for a developer to step into a project this late and be up to speed right away. For example, if your original developer had 1 month of work left to completion, it might take a new developer 2 months to learn the system and complete the remaining work. (this depends greatly on the complexity of the system and on the quality and clarity of the code you have at this point).

My advice would be to find a good developer you trust (not always easy, I know) and get them to look at what you have so far. Get them to look at your specs and requirements and design docs. Get them to look at your source code so far. Talk about what is left to do. This will take a few days, maybe a week. Pay them for their time. The goal is to get a professional opinion on the state of the current codebase (at this point I imagine there is little trust left in the original developer, so I would also treat any claims of progress they made as suspect), an estimate of how much work is left, and their opinion on how best to proceed (outsource, hire another developer, try it yourself).

It's hard to give more specific advice without diving into the details of your project, and you will be proceeding blindly otherwise. It sounds like you can't afford to make any more mistakes.

And, she's wasted 14 months of your time with precious little to show for it. As far as I'm concerned if you work on a Django project for 14 months and have little to show for it, your developer is incompetent.

Start over. Chalk it up to a lesson learned. Pick up a couple of books and start learning how to code yourself. That way, you'll know if your next co-founder is producing crap or not. And, you just may be able to code something up yourself.

Pick up a prn job just to cover the bills. I'm a nurse, I moved to Silicon Valley, and you can get a prn job out here that pays $75 an hour pretty easy. We have people the commute from Dallas and Oregon to work here. Fly in, work 6 days straight, make 5K and then fly back. Consider it. You'll also make contacts in Silicon Valley which is very valuable.

Yes. It's really that easy.

How do I get that sweet deal? I assume I need to be a nurse, but are such gigs really that plentiful? I could work like three weeks a year at that rate.

But, yeah. Hospitals nation wide are chronically short of staff and California is certainly no exception. Gigs like that are fairly easy to come by if you work it right.

A lot of hospitals are willing to work with you and schedule you all in a row like that if they know you. Many nurses come to the Bay area as a contract nurses on a 3 month contract. They develop a relationship with a department or manager, and then sign on as a per diem and arrange their schedule so they work 6 shifts in a row at the end of one pay period and the beginning of the next one.

I think there will be more and more of this since there is such a disparity in pay between nursing wages in the South and wages in the Bay and in California in general. A nurse in Alabama can work their heart out for $20-25 an hour taking care of 6-8 patients at a time in the ER, while the same nurse in California will make 2-3 times that and care for no more than 4 patients at a time (state mandated staffing ratios).

Staffing ratios mean that hospitals have to maintain minimum staffing levels and if they don't they get in trouble with the state. That means that nursing salaries go up and they're willing to have nurses commute from TX, or Oregon or wherever.

We have a prototype, but not one I would be able to release, as it needs a lot of user interface refining.

It is an online web app service for patients with chronic conditions that helps them manage their problems and has some social network features. (I am a nurse)

i think we've got a silent karma troll.

Since you're plugging them, could you disclose your relationship?

:)

I probably can't help because of a non-compete (I'm working on something that sounds almost identical, minus social networking). However, this space is always interesting to me.

For this reasons, and still more, I would suggest that to take this forward you absolutely need a technical co-founder. Try to find one, and even if you have to give a very high (~40-45% stake) consider it a good deal.

Additionally, 12 months is too long a time for beta. Cut down your featureset ruthlessly so that only the ones required to expose the core functionality of your site remain.

So what do you do now? You need to sever the relationship with this person, first and foremost. How much work is there left to do? If it's less than 25%, outsource this (doesn't have to be india... many dev's will be ok to pick it up, especially if there could be an upside - in the future). You should/could learn django regardless, since you should be aware of what your system does in the end.

If you've got more than 25% to do, you should really learn to finish this yourself. I'm learning django and python at the same time, and honestly it isn't difficult if you have a programming background. Be aware that you may need to move this to the back burner and take a job to get by.. you won't be able to move as fast as she did. You may also be able to find some devs on YC here that might be interested in negotiating on more favorable terms. Not all programmers can look at things that way, but most here can.

Good luck to you, and if you see me on IRC (django) I go by the same user name.

Clearly, the poster underestimated her position and overestimated the dev's ability and that's what got her in trouble. With more knowledge, she could easily see that a django dev isn't worth 80K + 35%! In fact, I'm sure she'd get some bites (provided a solid idea) for the 35% alone from some very experienced people.

If the market did enforce the line, we wouldn't be having this discussion. :-)

Strong disagree that a Django dev isn't worth 80k+35%. Sure, I wouldn't pay anything close to that, but I have a mature thriving company. But on day 1, without the capital to contract the project out, that could be a totally fair deal.

Am I totally wrong about how much Django devs make relative to PHP or Rails devs? Because my experience is they make more than 80k if they're good and have any business aptitude. They certainly get billed out higher than that.

This startup needs a technical partner, not an employee, imo. So, you'd be looking at upwards of a 50% share with nowhere near that salary requirement.

BTW - Billing rates rarely translate into salaries in any normal fashion. Two different markets, and the billing rate one tends to be much more inflationary.

I can see the logic in your UI comment, but again - 12 months ? That's enough to design and polish the UI of a Boeing cockpit :)

Why do you think MSFT and GOOG are so slow to enter this space? Because of all the hidden rules, regulations and pitfalls of the medical industry. Our poster probably has a good handle on this, or has been working hard to get a handle on this in the last 12 months.

If she was planning to ride it out long term, she would've definitely demanded more equity up front, and she would have offered to take a lower salary. It's not financially stupid to take as low a salary as possible in a startup. Lower salaries = more runway = more chance of eventual success = equity stake is worth something = rich.

Write the contract so that no ownership interest is achieved until a Series A funding event. For every hour that the technician works, they accrue the same hourly rate figure in an options account. This way when the startup is funded, the developer's percentage is determined by the value of their options account against the VC's valuation, not some arbitrary point like 6% It's much harder for someone to walk away from $100,000 in equity than it is a theoretical 6%

Should have included a clause whereby the equity would disappear if the developer quits.

35% is rather outrageous for any founder in a company that has raised significant amounts of funding, let alone a well paid one.

To echo other comments, 12 months to create a prototype in Django seems like a very long time. Either the developer sucked or was working on other projects on the side. It is also possible that the requirements kept changing mid-flight and this was a management problem.

Outsourcing to India may work or it may not. Regardless, at this point you need to pay based on results instead of time.

Good luck.

You probably have to really love your idea in order to stick with it. Reading your post made me think about the most recent PG essay ("be good"):

http://paulgraham.com/good.html

Specifically, this quote:

The added confidence that comes from trying to help people can also help you with investors. One of the founders of Chatterous told me recently that he and his cofounder had decided that this service was something the world needed, so they were going to keep working on it no matter what, even if they had to move back to Canada and live in their parents' basements.

Once they realized this, they stopped caring so much what investors thought about them. They still met with them, but they weren't going to die if they didn't get their money. And you know what? The investors got a lot more interested. They could sense that the Chatterouses were going to do this startup with or without them.

A next step may not be "outsource to India", but rather to hire someone for a few days to document and report what's there and what's working and estimate how many hours it will take to get it to a demo.

That's a small project ($2k-$3k at the going daily rate for indie Python devs) and at the end of it drinko gets enough info to make a sane decision.

Drinko may be screwed --- her dev's demands aren't crazy, but as run4yourlife points out, her accomplishments over 12 months (!) probably don't justify them. This may be a case where someone should have been fired after weeks, not years. In that case, she may be starting from scratch.

But if both parties were acting in good faith, Drinko may be a short contract away --- maybe even a pure "skinning" HTML+CSS UI project away --- from a demo that will generate customer interest, help her get more funding, and attract a better quality of developer.

The first thing you need to do is get her to either sign a non-compete, sign away the company, or make you an offer to buy out her shares. Something legal might be necessary. If she is willing to sign a non-compete, and finish the project that is what you want, else, options 2 and 3 are on the table.

Next you need to finish your project. http://uservoice.com/ provides an outsourced software feedback engine for a website. If your feedback engine is more specific to your business process then you need still need to hire a developer.

At this point in the process, if you need to find a technical co-founder, i would skip it and go right for a freelance developer. You have developed most of the idea, and now you just need to round the corners, this is a perfect job for someone that just wants a pay check. I suggest 2 options to finding a developer.

Option 1, go your local colleges TODAY! and talk to career services. You might be able to find a programmer that can pick up fairly quickly what your previous developer did. You might be able to get away with $10-$20 an hour.

Option 2, i have heard of good things from http://programmermeetdesigner.com/, or another place to pay someone for a project.

Ok, so the final thing you need to do is to raise more money. Either sell the app now on a trial basis or something. You might be able to get some cash in the door to help with legal fees, and to pay your new designer. You might find it easier to see if you can get another $50k right now from an Angel, Prosper.com, or from a potential customer that might loan you the money.

I hope that helps. If your product is medical related, I know some people who might be able to help you in Wisconsin.

I'm not sure this is the case. It sounds like the "it's nearly done" is based on the developer's word, and there isn't actually anything demoable right now. If that's true, and given that it's taken her 12 months to finish a Django website, I think it's a good bet that all her existing code is unusable and will have to be thrown out. If you understand Django, it should not take you a year to finish a website; more likely, the dev doesn't understand Django and doesn't really have anything working.

You know another option is for drinko to start a new company, and license the tech from this company to the new one, to avoid all of the bullshit.

Drinko, in all likelyhood, you are starting over at this point. I have seen 3 projects fail this way. Your BEST BET is to learn to code.

Your Resources:

* A partially complete web app, for patients with chronic conditions; helps them manage their problems & has some social network features.

* Feedback from your alpha testing.

* 45% equity in the company (with the ability to recover the extra 29%), which owns all of the IP.

* A limited amount of time before you must seek means to support yourself.

Your Goals:

* Develop your web app to a beta-worthy release.

* Get funds to develop to a point where you can charge, or maintain it long enough to exit.

Your Obstacles:

* Your user-interface isn't presentable enough to for your app to go public.

* Without a developer, you have no means to improve the front-end of your app, or implement new features.

* You have no funding left, very little personal money, and debt.

What I think your plan should be:

1) Ask yourself if you truly believe that your app can be satisfactorily profitable. Ask yourself if you're willing to work hard over the next 2 years (at least) to make it happen.

2) Reduce your expenses as much as possible. You said your monthly outgoing is $2,000. If I can live on $800/month in Boston, you can reduce your expenses to at least $1k to $1.5k. This pushes back your horizon for total cash failure.

3) Increase your income, even if it's just a short-term influx of cash. Whether it's through another loan, selling non-essential assets, or fully-booking half a month with temporary gigs.

4) Learn to code, and instead of continuing development, modify your user-interface to a level where you can release to users. Forget about advanced features. Basic functionality in a working interface, with the promise of advanced functionality, can get enough signups to take you to the next step.

5) Offset costs, and/or get to profitability. You haven't shared your business model; if it's offering the app as a white-label service to institutions, focus on getting your first customers once you have the basic functionality in a working interface. A modest amount of users, however dispersed, should be enough to at least demonstrate interest, and get them to license it from you on a trial basis.

If you're intending to monetize it through users directly, charging isn't feasible until you're offering advanced functionality, and advertising isn't feasible until you have a ton of users. But affiliate sales can generate income with even a modest number of users, and it's likely that the nature of their conditions makes them likely consumers for specialized products, possibly that are highly profitable.

6) Focus development on rapid iteration. Prioritize your feature list by simplicity and usefulness, and either split your attention between adding small, useful features one at a time while working on the larger improvements, or outsource development of the small stuff(one at a time, so you build relationships and can measure quality) and focus solely on the larger improvements.

7) After the three to six months the above should take you, take stock again and consider if you want to get another co-founder (if there are some really large improvements that need to be made that are out of your coding league completely), and/or seek more funding.

8) Let us know how it goes!

If you can sell another hacker on your idea, they may take it to the next stage (prototype finished) for no up front cost beyond the equity.

Let me pose this hypothetical situation. You contract with this developer to create your web app before you have fully spec'd it out. But that's okay because you're using more of an agile approach. The developer gets on with her job of creating a basic prototype and you tackle issues as they arise. Things begin to change and you see want a few minor changes to the web app. The developer not being very assertive, says okay to most change requests. But 6 months in things have changed so much that the developer realizes that this project will be in perpetual beta. You are frustrated because the developer hasn't finished when she said she would. She's frustrated because she realizes just how extensive the web app is and that she underestimated the amount of work that would be involved (and with the feature creep there is even more work now to boot). Both of you are so far away from the original terms of the agreement that the whole thing leaves a sour taste in your mouth. She can walk. But you're left with the tab.

If this sounds like your situation, I know it won't make you feel any better, but it's a common story. I think what you need to do is offer the developer a way to save face while helping get you out of your current rut. Chances are she's not very proud of having bailed on the project, nor does she want bad word of mouth to spread. She was probably frustrated. Can you identify her frustrations and address them? If so, can you talk her into re-joining the team and giving her the 35% equity? Right now, you have 94% of a whole lot of nothing. If she doesn't want to re-join fully, ask her if she will help document the project and transition it to another developer for you. If she does this, you will give her the existing 6% equity in the company. If she flat out refuses to talk to you, keep your composure and be polite but let her know that under the circumstances you feel her monthly payments were more than acceptable compensation and she has no equity. If this happens, your money is gone and isn't worth pursuing. But I would contact a lawyer in order to sort out this non-documented partnership. You will want her to sign something because right now there are a whole bunch of ugly intellectual property ownership issues that you are at risk of down the road.

Scope creep was limited.

The company owns the IP - we did sign paperwork on that.

In case it isn't clear, at the time I did agree to giving her the 35% in equity. I currently own 45%.

She has agreed to documenting and transitioning the app.

As others have said... learn to program. Consider it a character building exercise. I don't see too many other ways out of this situation.

That said, I don't think she was being malicious here. Most of these stories don't involve malicious folks. But when working with contractors you have to factor significant cost overruns as a reality. The work will be costlier and take longer than you expect.

EDIT: I also forgot to add. This is a litmus test. If she thought that her work would yield dividends, she might just bite the bullet and work for free until everything is finished. But she's not. She doesn't have confidence in the viability of your product/service. You might want to probe her and ask why. If you aren't going to get much out of her, you may as well at least try to get some feedback.

I cannot imagine having paid this person so much money, $6900 is a lot of money, x12 is like a well paying job. To have her leave without finishing is horrible.

As your pretty far into it, all I can say is you must get to market fast. My #1 suggestion is hitting your network, find a good developer to consult with, have help you put together a road map for completion then consider your options.

Don't loose faith and don't spend another dime until you have a clear path to launch planned out. Good luck boss!

two of my more recent projects were http://www.serious-internet.biz and http://www.soshal.com.

if you want to talk, you can reach me at mantwon ----at---- soshal.com

It is hard to give any advice because we know very little about the actual application you are building. 12 months and no prototype sounds very long to me and maybe some of the more time consuming features should be cut and the rest buttoned up to have a working demo.

Could you explain the idea so that we could get a better idea of the difficulty?

Ditch her. You don't need her and her screwy demands. That's pretty decent pay, I wouldn't have given her any equity. Do what you can to part ways as soon as you can.

Find another developer, on a contract no equity basis, if you can afford it somehow. If you can't you'll need to offer equity. Learning Python from scratch is an option but not a good one in my opinion. If you can afford to outsource, you can probably afford a semi-decent developer who is prepared to accept a decent sized share. Try and find someone who isn't going to screw you over, look worldwide and not just in your own backyard. As most of the work is done and you just need to get things refined to release an alpha or beta, it shouldn't take too much money in development costs. Then you can start whoring it out and getting some money to get things going.

I don't know what anyone else thinks but don't pay yourself. Invest all you can into the business. If it means you can only check on progress for an hour a day and you need to work part-time or full-time in Starbucks, then that's what you are going to have to do. Run it like you would a normal business. No one I know would have paid themselves that well before they've even started. If the idea and execution is good, it's a sacrifice worth making.

Good luck.

Developing the app yourself it's not an option, unless you have a decent background in programming, with obviously it's not the case. Some knowledge of how things work may be worthwhile, though.

You need to find a good developer: if he or she is in the US, India or Europe is irrelevant. The problem is you can't know if someone is good developer or not, as you are not one yourself. A safe bet would be an entrepeneur with experience who could show you his past work but it will be expensive so definitely you need to raise more money.

It's easier to find an undergraduate willing to do the job but that will be like playing the russian roulette, may be it will work but may be it won't.

Something I don't understand is: what are you have been doing in the last year? If you don't code, and you don't have customers yet, Why did you quit your job?

As much as I hate to say it, you need to find a decent attorney to discuss the entire situation. He will file a suit against her and you will most likly get part of your $$$ back. The cost to meet and file will be probably 2K.

She must be held accountable for her actions.

PMCM

As for getting the project finished, realistically learning django now is not an option. Outsourcing is an option but I wouldn't recommend it. You don't want to outsource your development at this early stage in your company.

Your best bet to getting the project finished is to threaten to fire your current developer. If she is fired before 12 months, she does not get any equity. Don't repeat the mistake of giving more equity/money to a third-grade developer who hasn't been able to get a working prototype in 12 months.

At the moment, I think you need to get an opinion from a real developer who can look at the code and the project design to see how long it would take to get it to the prototype stage. Depending on that I would try to get more funding in order to implement it while at the same time pursuing the legal route and trying to get your money back.

Also, learning Django may seem a little overwhelming at first but it's not too difficult - you can usually find the answers to any questions online.

There is a contract for the company set and equity structure.

Regarding legal costs, I've used Pre-Paid Legal's Small Business Plan for a year. It costs $69/month and they do all sorts of stuff (and things like contract review are free). It isn't perfect but it has saved me the hassle of, "Should I sign this? Should I do it like this?" since I no longer have to worry about money when it comes to important legal decisions. URL: http://wserver0.prepaidlegal.com/legalzoom/SBpage2b.html

Also, bear in mind that if he structured the company as an LLC, there's no such thing as an equity-holding employee; she's a principal. He may not even be able to fire her or recover the equity, unless they're on good terms.

In any case, I am just considering that an option to at least try to get the partner to finish the job or at least get some of the costs back.

The development must go on so I wouldn't say pursuing the legal route is the primary goal.

I would investigate the offers of people on this forum (including me: patrick at zill dot net) to assist in some way.

I would start learning Django but, would not make it a full time effort as there are other things to work on, no doubt.

I would immediately contact a lawyer and work on reducing or eliminating the 35% stake. As far as I am concerned, reducing it to 0% is wholly acceptable.

At the very least have the lawyer send her a letter stating that the work she was to perform and which she was paid to do, was not completed and was not up to acceptable standards. This can form the basis of denying the equity stake later.

Nobody outside of the medical world could possibly care about this stuff or get excited to work on it. Hardly anyone INSIDE the medical profession cares about it. Entire entry-level careers have been created for ths type of thing (medical records specialist) because nobody who can do something else wants to do it. I'm surprised your programmer ONLY wanted $6900 a month. Boredom is the real reason she didn't get much done and eventually left. Also, let me guess... she also hated your guts because she was sitting here working on this super boring application while you were out doing stuff she perceived as not very important.

This isn't meant to be insulting. I had an experience similar to yours. Nearly identical, aside from the duration and money involved. I didn't get paid as much and I bailed after 4 months. We even were using Python! I was the programmer. Other person was a doctor. Building some sort of medical record keeping startup thing. He was paying me ok, but not great. I had some laughably low percentage of the company. After the first two weeks, I alternated between wanting to kill him and wanting to kill myself. It sucked that bad. Medical record keeping is insanely boring. The programming issues are equivalently boring. It is like doing your taxes multiplied by 1000. It sucks. SUCKS. The hardest part of your programmer's day was probably mustering up the psychic energy needed to even fire up her text editor. I'm almost having a nervous breakdown right now just thinking about it. You medical people have really gotten yourself into a record-keeping pickle.

Your only hope is to learn programming because any programmer that is any good will want to disembowel themselves working on this sort of project. There is a real opportunity here, because all this work is going to end up being done by huge mega consulting firms who specialize in these sorts of boring recordkeeping problems. They are going to charge $69,000,000 per month to do this. The thing is, they don't really want to do it either, so I'm sure they will gladly pay you at least $6,900,000 for the right to license your finished software. That is reality.

There's a Russian saying "the morning is wiser than the time between late afternoon and night". It sounds better in Russian (3 words).

And here's a song about evening:

http://www.youtube.com/watch?v=1KoNUYLBnX8

You are understandably hesitant about starting django from scratch. There's nothing to fear and you can pick it up.

Most importantly, outsourcing it to India isn't necessary. You want good coders who can be hired on the cheap, especially during summer time? Try undergraduate and graduate students. I don't have the faintest clue as to what your idea is, but if one person working normal hours got you to this stage in 12 months, you can definitely pay two guys 15,000 for 4 months and get something great. Picking the right people might be a challenge given that you may not be able to judge their hacking skills well. That is something you can crowdsource here perhaps (or Topcoder; has/can anyone used it for that purpose)? You can email me if you'd like to pursue the idea.

I feel sorry for you but here's what my advice would have been (although it would not have helped you in this situation) but typically when I contract out my project to someone else other than myself, I normally would include a deliverable clause in a contract, even if the other party is a cofounder.

The deliverable clause is basically a statement of work, with specific milestones and dates that the "contractor" would agree to. This helps in keeping the project realistic (in terms of scope creeps) and also makes sure that the project progress in good terms.

I would have to agree with most people who commented about the salary paid out. At $6900, you could have hired an outstanding developer without dishing out any equity. Although the equity play more than often would help as a motivational push for the other party.

My immediate suggestion would be to get the code checked into a private repository, hosted at github or elsewhere. Then with a high volume laser printer on hand, get into a routine where you print out your code base on a weekly basis.

At that point its just a matter of hiring some folks to take a look at what you have, as far as the code base goes, before deciding who to pay next to advance the project.

There's a great book called "Bootstrapping" by Greg Gianforte, that outlines this process of pre-selling without a product. I highly recommend you to at least take a look at the first chapters.

What would I do?

1.- Evaluate the quality of the product you have so far. I am sure there are people here that can help you with that.

2.- Try to get back the 35% from her. I think is the least she can do.

3.- Find a good technical co-founder. If you have a good idea and a good product somebody may be interested. Offer them a plan where they can get equity with time. e.g. 20% after 6 months, 45% after one year of work. To find the co-founder you need the help from somebody you trust that can help you evaluate how good is your co-founder. You have already shown that you are committed to your idea.

Good Luck!

What is the sustainable strategic advantage of your application? Why does keeping the code closed further that?

Just something to consider...

Short of learning to code, which would be a good idea either way, you could try something like elance.com to find a qualified developer to get it to beta. That could even produce a partnership afterwards, although I agree with what PG said about partners being friends first, for the trust factor.

Good luck, hope you're able to pull through :)

1. Outsourcing may not be a good option particularly for work that can be done by 1-2 developers. Approach a local developer, try and negotiate a contract where you give equity but not salary.

2. The runaway developer has 35% equity still? That might be very problematic in the future.

3. I do not about Django particularly but learning Python is not tough. Python is a very easy language to pickup and you should devote some time to learning the language so that you can at least understand what your fellow dev is doing.

To elaborate: if a developer is earning a full salary plus equity, there is no opportunity cost to them. Your company will be no different to the developer from any other contract gig, barring the greater upside potential. The hunger to succeed will not match yours.

Instructional copy is written, but not implemented.

Lack of help - again written, but not implemented.

Lack of privacy settings.

Inability to search.

I have fallen into the trap of "more development" will solve this before. If you're selling a fire hose to someone on fire, they won't be too concerned with its color. Are you not releasing because there is no fire? Is that possibly why the developer did not see dollar signs and left? I ask you this not to be glib, but because I was on the other side of a similar, but much more amicable situation.

If you decide to outsource, be sure to make all the legal work well (nda's, work contracts) and bind the payment to the delivery of the project.

ps. I too think you were screwed, with that salary and equity it seems that you are her wallet, not emplyer or at least partner.

just my 2 euro cents.

Advice 1) Read Getting Real by 37 Signals at http://gettingreal.37signals.com/toc.php

Advice 2) Hire a decent lawyer, and attempt to recover the money you have paid to this "developer". There is a saying in hindi called "Lato keh bhoot bato sah nahi manti" meaning... Ghosts who need a kick in the ass don't agree with words. I think you owe your investors to pursue every route to get the money back. Talk to your investors. They might be able to help on the legal front. Yes, it will take swallowing your pride and admitting you f*ed up by bring this person into the deal but honesty will take you a long way with good people.

Advice 3) Decide on the right development plan from here to launch. I'm assuming you've got a business model that focuses on generating revenue not eye-balls. If not, quit now!

Your primary options seem to be a) develop yourself b) outsource to offshore c) outsource to students at nearby university.

From what you've mentioned so far, I wouldn't recommend developing it yourself. Learning the language is a good idea to know what a good job looks like.

Outsourcing to offshore is fine if you find a good team. A client of mine has had some serious problems with his India team. Proceed with caution. You need to be clear on deliverables and get constant "back-ups" of the code. This way you can tell if real work is being done... and have an early detection system of getting screwed.

There are university juniors who may be knowledgable enough to take your code and run with it. You may pay them or offer a equity share. Students usually have expenses even if they are low. So expect to cover them. Also, use all your resources in rewarding them. It's obvious that you are personable and have interesting friends. Help your developers get connected. So regardless of whether your startup succeeds or not, your people will have a strong future.

The fourth unlisted option is to find a quality company who has a reputation for getting shit done and paying them a fair amount to get your product live. This will take money. And this could come from money recovered from your ex-partner.

Advice 4) Start selling. Yes, start selling before you have your product. If you have a purchase order for $10k, your investors will probably match it. You'll need to get creative.

Most of us, both developers and entrepreneurs, have been screwed at one point... or will be at some point in the future so I feel your pain.

Just remember: "A diamond is just a hunk of coal made good under pressure." ~ Rod Weckworth

I wish you the best.

Find everyone she knows and be so loud that she cannot afford to ignore you. I don't know the exact legality involved so become friends with a good lawyer.

You have to treat this start up like your baby... and you are mama bear. If someone tries to kill your baby, you need to rise to the occasion. I almost never give this type of advice but it's appropriate and needed in your case.

What if 11.5 months later the entire product changed drastically?

On that note, I wouldn't mind doing some part-time Django work this summer. I come a lot cheaper than this girl and frankly it sounds like I'm a lot better. (purdue.edu walshmj)

Good luck.

Chris