Isn't this a horrible deal? Incubators typically inject more money for far less equity! I earn $10K a month, I could easily save up $8K in a few months, and do this myself for 100% equity.

True. If you can get into YCombinator, for example , you should obviously go for it. I can't compete with that. If you're earning $150K+, or you've already been working on your side-project for a year, this may not be for you. On the other hand, if you're just getting started and you need a little push, both financially and emotionally, this could be right up your alley.

Who the hell are you? Why would I work with you?

I'm also a techie. Have had one moderately successful venture so far, which has given me a comfortable life (but not quite retirement amount). I want to reduce my coding time and instead help people get their ideas to market using my resources. Hopefully we can build a few success stories along the way. You can find out more during our first Skype chat!

Will you fund everyone and every thing?

No. I'll still need to like your idea, and feel that a positive long-term return is possible. But my belief in Premise 1, combined with the favorable structure of the proposition, means I don't need to be that picky. I'll also need you to commit to working on the MVP full-time until it's done. Evenings + Weekend work is something this structure is actively aiming to avoid. Sign up, ship it, then go back to earning a steady income.

As a partner in a consulting shop just starting out, this isn't a bad proposition. It nets you rent money to work on scratching a pet peeve; if you're between clients and you've got something really simple you can wrap up in a month at a discounted rate this is a great idea. HN is filled with "passive income strategies" blog posts that revolve around short projects like this.

Back in October I might've taken you up on it.

A NDA, a No-Compete Clause in a contract, and even nothing written down and signed and witnessed by a notary public just rings alarm bells in my head.

What stops him from taking your MVP project and doing it with someone else? What stops him from telling others about your project so they can copy it or do it better?

Nothing whatsoever. But then again, since we're talking about ideas that would be on the shelf anyway not a whole lot would be lost.

And the OP would be outed and burned beyond recovery. Anybody stupid enough to risk that on a forum as widely recognized as this one would be seriously out of their mind.

> What stops him from telling others about your project so they can copy it or do it better?

Again, absolutely nothing. What stops YC from doing something like that when you apply to YC?

This all boils down to basic trust, and at some point in the business game you're going to have to extend yourself far enough that you can get burned a little if you want to up your game.

This guy is extending himself far enough that he'll get burned a lot if he abuses the trust he's getting here. That alone should count as some insurance.

Imagine how many upvotes a post along the lines of "That hmexx dude is XXX YYY in real life and screwed me over" will get. Probably even more than "That hmexx dude is XXX YYY in real life, we did this thing and have just picked up follow on investment".

Startups are all about execution. It's with this in mind that I find the OP's proposition interesting. In my opinion, the more important part of the proposition is not the money or the marketing work, but the kick-in-the-ass that he's providing to someone who would normally fear taking the leap to execute.

Having someone to whom you are accountable (i.e. a cofounder) is huge for executing. Being accountable only to yourself makes things incredibly hard to continue to execute through all the difficulties of starting a company.

A valid point of course but in reality anyone needing this type of arrangement wouldn't be in a position to sue to enforce the contract. Unless the idea turned out to be so super successful and if that were the case I'm sure money would be forthcoming to avoid any problems.

If you have questions or HN-style critic on the structure/proposition, write below and help me build proposition version 1.1!

A couple thoughts:

* If you have a month to work on a project, consider taking this offer. Nothing helps motivate people (myself included) like a deadline and a partner. Don't get hung up on the equity split or other boring details -- just go do it. And be thankful you have the free month to work as you will; not all of us are so fortunate!

* I am skeptical using 50-50 as a basis for a partnership in general, much less with someone on the internet I've never met. You are probably a chill dude, but I had similar optimism for too many girls I met online... :) Everyone claims to be funny and open to new things. If I had goals to work on this project fulltime, I'd be very concerned that the two of us might not work well together (I have no reason to believe this, but this is a risk based on past experience). I'd prefer some way to break ties. Either 49/51 split or something. If I had goals to work on this as an anonymous internet side project like my github work that happens to generate income, then rock on with 50/50 because it's simpler and anything else gets in the way of the product.

* Would you mind documenting the outcome of this experiment? PG often cites YC's internal data as influencing their decisions. Not having access to that data and believing I see a large number of survival biases on HN, I'd be curious to see someone as honest as you document what actually happens. If anything, I imagine the outcome from the experiment will better inform you of improvements than any comment from HN.

* Best of luck! I love creative experiments. No one here knows how this will turn out, but I know we all are interested to follow along.

1 - That 50 - 50 split is a killer when I'm doing most of the work. 2 - You talk about taking a month or two and full time working on this project until completion. Trust me when I say I'd love to do that, the issue is I can't just go jump back into the same job as if I didn't ditch everyone here for two months.

Like I said this is probably just not for me, but those are two things you may want to consider for version 1.1.

For a product that can be built in 2 months (per the guidance here), it is going to take much more time to develop the sales and marketing and acquire enough customers to make it profitable.

I think this underscores why this may be a great deal for a (young?) developer with limited business experience. I learned a lot of hard lessons like this once I stepped away from an editor.

As for me personally (which I said off the bat was the kind of answers I was bringing. Personal opinions on why I myself wouldn't do it.) I feel comfortable with my ability to sale to people and gain good traction and growth.

But this is a killer opportunity, especially for someone younger who can live on the 5k and is not worried about family and mortgages yet.

This could be better than an MBA for many people who want to bring a real product to market.

Note: I have no context at all on the OP, so I'm making the jump that they have a strong business background and would not be flailing around once it was time to execute.

Honestly, I'd probably pay $5000 just for some good ideas if disclosure didn't ruin the concept.

Think of it this way: would you have made $8000 in a month or two without his investment? Would you have potential for continuing income on that project afterwards? If the answer is yes, then this isn't the deal for you. If the answer is no, then what's the harm? If you're in position to negotiate this as a deal breaker, you're likely in position to find something more flexible. If you're unemployed and want some money while you work on a project you've been dying to work on, you've just come out ahead. There are plenty of job offers for freelance/contract programming that don't offer 50% royalties, or royalties at all.

- Product

- A Market for said product (solving a problem for a customer who has money)

- Getting your Product to that Market and convincing customers you solved their problem

In reality, you are probably doing about 33% of the hard stuff (and the other 66% is hard too, making sure you have the correct MVP and promoting it)

Until you've put a product out there, you don't really know how hard the other two are and how critical they are to the success of your venture. hmexx is offering to do that part for what I consider a reasonable cost to test the waters.

YMMV, of course, and you're free to take on 100% of it all, but reducing risk is how you get a product launched. I personally like hmexx's approach here.

That said, reducing risk isn't what hmexx is doing. Since the risk of quitting your job and starting on your own product is failure to create a good enough product and NOT have a job to go back to. He's not made any warranties about you being able to resume your previous job (nor could he, or should he.)

Again, look at my other comments, where I plainly state this is not for everyone, like people who already can market and recognize an MVP. And it's best for younger people who have crummy jobs and little marketing and/or business experience, and little to lose (like a nice good current job.)

Premise 3 was:

> Most freelancers will not build and/or follow-through with their ideas, because they perceive their opportunity cost to be too high.

I wouldn't quit my job for this (if I had a job), but as a freelancer I'd consider taking a month of no client work and building it at what amounts to a reduced hourly rate.

Software developers who don't intend to go into management should not be permanent employees. You should be working as a contractor so you don't have to worry about things like this. As a contractor, you don't get paid for days you don't work so no one cares as much when you're gone (so long as it's not negatively impacting a project). I usually take 8-10 weeks off per year, so taking advantage of this offer would be easy for me and have no impact on my "day" job.

World.

Upfront will be small (possibly nil) to prevent time-wasters. We can agree milestones based on nature of project. Once code is flowing onto a shared repository for a couple days, I'll feel comfortable starting the money drip.

C/S corp in Delaware sounds reasonable. A yet to be drafted, founder's agreement to be signed at project start also to protect both parties.

Can you specify ways that you will be involved to justify the 50-50 split?

Nonsense. He's doing an angel investment and taking 50%. That still might be attractive since he does more than just an angel investment but don't pretend he's doing anyone a favor, this is for his own benefit as well as the potential partner.

He's not giving you a job, he's playing the role of seed investor and co-founder.

I guess what I'm trying to say is it REALLY depends on the person. This isn't for everyone.

Getting married isn't for everyone.

Working freelance isn't for everyone.

Having a kid isn't for everyone.

Nothing is for everyone, dude.

$5k to build, with payment upon MVP completion... spend an additional $3k, including costs to establish a legal entity with joint ownership with no worse than a 50/50 split and friendly buy-out terms...

Good luck!

How many investments are you making?

One or two, maybe 50% equity is fair for your efforts at building traction and growing the company.

Ten, probably not.

A hundred, no way.

On the other hand, a 100 investments is probably what is needed for the chance at a real payday. On Graham's premises, it doesn't really matter how much equity one takes because the return on the home runs is so large. Thus the 50-50 indicates that the goal is not home runs but more modest exits.

Rationale: Let's assume a home-run rate of about 3% which is my rough estimate of what it is for YC startups. That means that funding 75 startups yields a 90% chance of at least one home run.

Now one might ask how long this will take. If we assume that 50% of the companies can be marked as failures quickly, he will only need to invest substantial time in ~37 companies. If he can focus principally on 3 at a time for a period of 6 months, it will take approximately 6 years to achieve a 90% home run probability. Of course, he'll almost certainly have had some modest successes before then.

Again this is all predicated on hmexx being good at selecting and advising startups. For most people, the odds are much worse.

(a) one person being able to do the job of the entire YC team.

(b) that person having equivalent relationships with additional capital.

(c) one might make the case that the relationships to capital must be better because ventures are likely to be located further from conventional sources of capital.

50% equity is a lot to give up for two months of effort unless the other co-founder is only expected to put in the initial two months. And if that's the case, why bother?

If the OP is investing in only one or two companies at a time, then it is practical for him to participate in YC in his role as cofounder. If it's 25 companies, then it is more difficult.

The truth of b & c are completely dependent on who hmexx is.

Furthermore, those companies taking the note have a much longer runway than hmexx will provide and will be plugged in to a network of later stage investors.

Finally, each YC company has access to the other companies in its class and the YC alumni...and lots of other things in the valley.

It's logically possible hmexx could approach a similar level of success but it looks unlikely.

You imply that they'll tend to be fire-and-forget type projects (iPhone apps would work well I guess) but even most of them need some significant attention further down the line. Who puts in the extra dev work or marketing efforts (or even further investment) if it's worthwhile/needed further down the line and how are they compensated if that split of work is very uneven?

- match the offer with a better one, so all those that would take up the OP would flock to you instead

- build your MVP, keep 100% and then do your own marketing. $5000 for 50% difference but you get to do all the work.

Either one of those would be so much more effective than just berating the OP or warning others of this evil and greedy person.

And if the OP knows more about how to market than you do, you'd actually need to spend more than that to market your idea as well as the OP will.

For the record the reason why I made that point is that I would personally value that $3k at higher than $3k because I do not have marketing experience. And yes, there are lots of people who will take a fee to market for me - but I'm not in a particularly good position to know whether I'm getting a good one.

Think about it, what does he know about the product? Nothing. You'll spend a lot of time explaining it to him in full details and then he markets those details to strangers, parroting your words.

This is great, out-of-the box thinking by the OP.

Anyone who want to do something like this (esp. the OP and jacquesm), please connect with me on LinkedIn: Terrence C. Yang, mentor, angel.

If the OP is full of it then I'm pretty sure he/she will be hung out to dry and someone may be out a month and will have gained $5K. Whether that was an acceptable risk to take is up to them.

I referee youth soccer. My son plays. I see the way the business works.

Dreams of college scholarships fill the trough at which professional youth coaches feed. All premised on the misconception that women's soccer is like college football. But women's soccer is only allowed 12 scholarships - football has 88.

The general conception of what it means to own stock in any business tends to be closer to the Microsoft secretary and the Google chef than to an approximation of $zero. My biggest criticism of the offer is the anonymity of the investor serving as precedent for similar offers to the HN community. My concern is that such offers feed off people's dreams.

The deal is structured in a way almost guaranteed to require additional investment should the project gain traction. There's no runway by design and once the technical founder's position is diluted, he can be swiftly booted to the curb.

If hmexx is a moral paragon, I cannot offer a better deal. If he isn't, I can offer no deal at all. And that may be a better one.

Hmexx is putting his money on the line.

You counter with paranoia and paternalism.

If hmexx wouldn't be $55000 short on what two months are worth to me I'd happily take him up on his offer and I don't think I'd need you to look out for me on the contractual side of things.

If there is just one person here whose price tag is a bit more modest and who is sharp enough to come back here to ask for some guidance during the negotiation phase or the review of a contract then that person has all of HN to back them and a ready pool of counter offers in case the OP is full of it.

No deal may be a better one. But those that make it into the big leagues would agree that being stuck in youth soccer is not the end of the line for everybody.

Maybe, hmexx has structured his offer without considering the ramifications of 50% stake as an incubator. I'm somewhat inclined to give the benefit of the doubt. No level of ethical intensions makes 50% equity make sense either for entering or accepting a project into an incubator.

50% equity is what investors demand to keep an enterprise from dying. Flowers are appropriate for a first date.

And of course the founder has a way of getting more runway without becoming a minority shareholder: put more money in.

If hmexx can conjure traction with $3k and little further effort, then entry into his incubator could make sense, even for a person with the resources to develop the project on their own, at least from the standpoint of logical possibility.

Is it good for hmexx's investment to structure a deal likely to produce problems for the counterparty after two months? I guess that depends on whether one believes that fast failures should be total and lead to abandonment or partial leading to adjustment.

A safe strategy for the counterparty to hmexx's incubator option is to produce a minimum MVP and go passive, letting hmexx do all the heavy lifting if he wants to move the project forward.

What I see is that a 50-50 incubator split doesn't align with the interests of either party. It disincentivizes the developer from seeking to raise outside capital, and should the developer choose to pursue outside capital, the developer must use some of his limited runway to do so.

It seems to me that the sorts of developers for whom hmexx's offer is most appealing are those less likely to raise additional capital on their own - i.e. if they were able to raise capital on their own, they might not need hmexx (a talent which conjures traction for $3000, aside).

If hmexx's role includes providing the additional capital investment after runway, then the deal is actually structured to give him majority control. If hmexx's role includes raising capital from third parties, then he is going wind up a minority shareholder anyway, so why not maximize the incentive for the active developer to develop?

If I fail, I'll get another job after a couple months and do it again.

I'm tempted to make a similar counter-offer as a developer. Do some customer development, prove the market, and I'll fund your product development and build it for you.

Logical assumptions lead to a plausible candidate - but that's not identity.

What you would do or not do is entirely besides the point.

If you don't think this is a valid proposition, then don't do it.

Who cares who the 'candidate' is, I'm sure that anybody that enters into this will want to know before they commit to two months work, at the same time I don't begrudge the OP his choice to be anonymous for the time being.

Being (in)famous can be an upside or a downside when making an offer like this.

There are a few toxic names in the start-up scene and I'm sure that google will be able to turn up enough red flags based on name alone in those cases.

If the OP is worth his salt in the marketing game is the big variable, he believes he is good enough to warrant a $8K outlay, more than half of which goes to his co-founder to cover their time.

I've seen people study chess book moves for half a lifetime and still not be able to play a half decent game of chess. All I have to do to throw them off is play (1) b2-b4 -

50% of an MVP + cash to cover for your time + a co-founder to boot + $3K in marketing budget for your MVP is not a bad deal by many standards, and if you end up not liking the deal you can take your toys and go home and the OP is the loser.

He's betting that it works, not betting that he can screw you over.

What makes YC successful is baking pies.

Startup: Hey, come work here for below market salary for 5% that vests over 4 years Dev: Sounds rad!

This guy: Hey, work on your own project for 50%, and you only have to work on is the MVP for a month, and I'll pay you sort of crappy but probably better than other people in other fields. HN Devs: You. fucking. bastard.

This guy: Work on your own idea! Have your own dream! I'll just put in the money and experience to make the business a success. HN Devs: You're not offering enough to have a 50% share in the company that wouldn't exist without you!

What experience?, I don't know who this guy is!.

I'll match this offer as well for anyone who is interested.

Yes, it sounds like a bad deal for some people. But for a lot of people its a great way to:

1. not have to find work for a month,

2. work on something they're passionate about anyways,

3. have an idea of theirs that may not have otherwise seen light of day become a reality.

Perhaps a little codification might be good:

* A Maker puts their idea onto HS with "MatchMake HN: " * Any interested Investor then replies * Maker chooses Investor (possibly publically) * A month later a "Show HN" is published.

I would be interested seeing everyone's results

Just put this together. No escrow or anything and haven't fully implemented bidding but let's see if there's any interest.

First, its a great deal, both for hmexx and folks who take him up on it. Frankly I think it could be revolutionary. My reasoning is as follows;

Many "products" over the last couple of years have been fairly straight forward web "apps" built on top of existing infrastructure. They provide some basic customer value, they tend to be fashionable (moderate lifetime), and generally take less than a year to produce.

That is almost exactly the same as the book publisher model.

So hmexx sets himself up as an MVP "publisher" and pays "authors" $5000 up front and a 50% interest in the proceeds going forward. Now lots of new book authors would love that deal because they know how to write books but they have no idea how to promote them into bookstores and Amazon's top lists etc. Unlike books though web apps don't pay out a revenue stream on per-unit sales. Instead they tend to either a pay a chunk via a buyout, or they generate income over time with advertising/partnerships. If we're talking about "apps" for mobile then there is a revenue stream very similar to books.

So I reason its a good deal because the content creator has a much better chance to benefit from their creation than previous generations of artists had.

Now as an illumination, the whole 50/50 thing shines a light right into the core of the startup 'dream' mentality. It is the idea that you will start a company that becomes the next Facebook and you become a billionaire over about 10 years of nights. 50% of zero is zero, 50% of a billion dollar company is $500M worth. The closer reality is that if the idea has 'legs' then you can expect a series A round that will reduce both of you to 33% and then a series B which takes you to 20% to 25%. If you get there you're probably making a decent salary and have some small but non-zero shot of a return.

Every year somebody makes over $50M on one of the big lottery games in the US, its only like once in 5 years that people make over $50M from their startup. The good news is that fewer people have the chops to "buy in" to a startup lottery ticket.

So that is the reality. If you want to make some money, buy a house, raise a family. Go work for Oracle or Apple or Microsoft or Google. Don't do startups for the money, do them because you are passionate about what they are trying to create. If you do them for the money you will become bitter and depressed.

But this offer, to be paid $5000 in exchange for a half interest in the lottery ticket you create? Given the 'two, three month' worth of work estimate. There is not a whole lot to complain about.

This way you risk only $3000 (or less) instead of $8000, and the developer will be much more motivated to build it knowing it's already an idea with a real potential market.

One has to optimize for the 'harder' thing being done. So if the challenge is getting the MVP written, then this order makes sense, the risk on the $3000 is less than the risk on the $5000. If the challenge is getting people to understand it, then doing the landing page first makes sense. From hmexx's point of view $8,000 is at risk either way, except he "knows" he can do the customer acquisition part but doesn't know if someone can do the "MVP" part.

One of the realities this discussion has highlighted is how little young engineers (and some older ones too!) value the whole marketing/customer acquisition thing. But the beauty of it is that when the risk arbitrage is low enough, that doesn't matter. One has to ask is there a 'funding round' that is earlier than a 'seed/angel' round? Maybe an 'idea' round. Two people come together, one proves they can execute on building an MVP and one proves they can execute by acquiring customers, then the pair take the next step (assuming the thing works and customers are found). This really side steps the whole "I've got a great idea if I could just get it off the ground" discussion into "What are you willing to bet?"

That nails it perfectly. I like the OPs proposition. I like it so much that I'm now wondering what would be a better counter offer, and I've failed to come up with anything so far. This little trick could kickstart a whole new phase in the start-up world.

Unless the OP turns out to be Jason Calacanis ;)

First mover advantage, sometimes you show the Johnny-come-latelys all the mistakes they can avoid, and how they can improve upon your product by examining your weaknesses and flaws because you rushed it to market.

If you are a first mover, consider having in your business plan what you do when the 'heavy hitters' decide to copy your product and do it better. They most likely will so plan on it. Do a total quality management on your product and improve on it every chance you get before the copycats do it better.

As someone said here earlier, idea is just a multiplier of execution.

The Amiga was basically a launch platform that went away for many niche market software. If the companies that developed those for the Amiga had developed them for the Macintosh, they'd still dominate today.

So do I. Remember Pagemaker vs. Quark Express?

Anyone remember Calamus? Great DTP.

If this were a book deal, the author would be assigning copyright to a company in exchange for an advance and a non-controlling share in that company. And that company's business plan is premised upon the dilution of the author's equity.

Once there's dilution, the author remains with the company at the pleasure of a guy he met on the internet and some other investors. They may be swell people, they not. Likewise with the the author.

Yes, the value is probably zero. But in this scenario, the possibility of an upside is not just dependent upon the product's success but also upon their being some lucky alignment between his financial interests and those of the other shareholders - and they are likely to have multiple intermingled financial arrangements.

May be you are trying to make a point but this statement is clearly NOT true. It all depends on how wide the area are you talking about. Are you talking about California or Kansas or entire US ?

Unpublished authors talk about the one big break they need to be a success, and all that is standing between them and success is convincing a publishing company of their merits. The same applies in film making - it is the small guy currently waiting tables up against 'the man', who is holding them back from being a successful movie star and actor.

We don't have that in the entrepreneurial community, at least not to that extent. Without the perception of gatekeepers entrepreneurs know that the reward correlates to the work you put in.

I like the funding ideas that don't propagate the story that all you need to be a successful entrepreneur is to convince somebody to give you money.

Emotionally its probably what many devs need.

Accelerators, meetups, co-founders, all serve the same need. Believing that the idea has at least one person who believes in it, and prods you to move on.

That said, this is probably a bad split - hmexx might be better to decide if he is an investor (early stage) or a co-founder -> if the latter then really its just one company - you cannot be a founder of two companies at the same time...

That being said, I think this idea does have the potential to be very interesting, and if circumstances were different I might even consider it.

My guess (above) is that HN is the ideal place for investor / 'prenuer matchmaking. Whether pg will let it be I cannot tell you. But it should beat AngelList just because.

For those of us who are complete neophytes at things like this, would you be willing to elaborate on what this means, and why it's important?

Vesting schedules typically last 4 years with shares vesting quarterly or monthly.

So, you can think of it like this: After year one, you'll own a 1/4 of your 50%, or 12.5%. Year two, 1/2, or 25% ...and so on. You don't actually own the full 50% (i.e. doesn't "fully vest") until year 4.

Many vesting agreements carry a one year cliff, which means that none of your shares vest if you leave the company before performing for one full year. This is to prevent the "lazy founder" problem, where one founder is doing most of the work and the other one is goofing off, or decides to leave and take another job.

This is important because the first year is the most risky for a startup and requires all hands on deck. If someone flakes out, you can't have a big chunk of shares tied up in them. One, because it isn't fair. Two, because you likely need to go find yourself another founder or will need that equity for first employees. It scares off experienced founders and investors to see a chunk of your cap table trapped in a "bad decision" founder that flaked out. This same logic carries over to why there are vesting arrangements... you shouldn't be compensated if you abandon the company and don't put in the same work as the other founder.

Hope that helped explain what it is and the reasoning for it!

for example a common scenario is a Four year vesting with a one year cliff, acceleration up any sale or liquidation event.

What this means in every day terms is that you own more shares each month you work, but if you leave before a year is up you own nothing. So if your half is 5 million shares then after the first year of working you will have earned 1.25 million shares after your first year which are now yours and cannot be taken away.

For each working month after that you will earn an additional 104,167 shares (its actually 166 2/3) until you have completed your 48th month at the company at which point you now own all five million shares, or are "Fully vested" as the term would imply.

It basically just ensures dedication to a project and that an early person who was involved with the company in some way does not come back 10 years later suing for "their half" of a company they may have helped start but had no involvement in product direction, success etc.

Say two founders begin a vested company and one drops out, does total ownership transfer to the other founder?

If BOTH drop out, how are assets divided?

Lastly, it seems that the disagreements over ownership will merely shift to disagreements over 'time worked', and weather the effort was legit.

In the case of one person leaving, all their invested shares fall back into the management pool and are distributed proportionally amongst the remaining co-founders (but not investors, they always only have the number of shares they paid for).

Also make sure you do an 83b election (in the US) for vesting shares. Otherwise you pay income taxes on the value of them as they vest. Google it for lots more info, it's pretty straightforward

Basically, you don't want to end up in a situation where your co-founder can take off after 6 months and still have 50% of the company. Co-founder==co-worker, in the strictest sense.

Conversely, if the $8k is to be treated as just investment (which would not fall under vesting) he should be taking much less than 50%.

Let me put it this way - if someone with money offered me 8K total for 50% of my side project, and that was it, I'd say no way.

If someone with talent, motivation, and a remarkable ability to get things done offered me nothing other than his or her dedication to making my side project a success in exchange for 50%, I might say yes.

So it isn't really about the 8k. Here's the thing. Suppose you're one of those highly motivated and effective people, but you know yourself and you just aren't the creative force behind a project. You know that there are lots of creative programmers who would produce an app if they could just get away and be funded for month or so. So you offer some money. Instead of finding prototypes and looking for one to fund and support, you're finding programmers and looking for one to produce a prototype. Instead of looking to join an early startup, you're offering a small amount of money to create a startup to join.

Maybe one way to modify this would be to say - if I pass, you keep the money and your prototype, and I give up on my share (or it is greatly reduced). If I decide your app is the one I want to run with, we are now 50-50 partners in the venture.

I posted above that I'm willing to match the offer. I don't think of this as an "investment" so much as me trying to kick start a relationship where I'm a cofounder.

As such, I'm interested specifically in ideas where I believe I can provide value that the other cofounder doesn't, so we both benefit. I expect it to be an ongoing pursuit where I continue to work on the company.

Buying half a company for 5k and then putting in 3k of advertising only to walk away would be the wrong move on my part and that's not the intention I have going into any transaction that may result from this.

It removes the risk for the developer to just 'build' (which is ultimately what they enjoy doing) and also shifts the key responsibility for the initial marketing / customer acquisition away from the developer (which is often what they either don't enjoy doing or suck at).

After this phase, either the idea is a success, the developer gets paid and a mvp is now a business hopefully with profit (for both parties involved) or the idea was not a success and the developer still gets paid some money.

If you have a world changing idea and you've quit your job with a plan to start a start up - that's fine. This probably isn't the right opportunity for you - try Y Combinator or go in search of real funding once you've built a self financed MVP.

However, if you're a developer with a niggling idea that you keep meaning to work on because you know it could turn into something bigger or you just don't feel confident in your own marketing / customer (or user) acquisition skills then this is a really great opportunity!

I've literally missed so many opportunities before, where I've had an idea - not executed it due to no short term monetary reward or no confidence that I could market it correctly and then watched as a start up is formed a year or two later by someone else which was essentially that idea!

Second, I would strongly recommend getting a lawyer to draft up some sort of agreement that specifies what happens if the project isn't up to spec, etc. It would essentially be a basic contract. I know there's always the temptation to say "well the legal costs would be too much to enforce it" but that's not always the case. This is garden variety stuff here. You don't need to protect every scenario to provide some value to yourself.

As the offer is written, the $3000 could be spent on AdWords and similar services.

An open question is: how active of a partner would you be once the business (hopefully) becomes a real/profitable business? Are you offering to be a full active partner in running the successful businesses that you seed with this offer? If so, then your offer sounds like a good deal for developers.

Anyway, great idea!

How does this scale. Presumably in Hacker X builds a product you like and you're able to find success with your $3000 and marketing efforts, how does the relationship move on. Presumably, you've now built a product dependent on both of you. Hacker X needs to build new features/scale and you need to ramp up your marketing efforts in equal measure. But you have products from Hacker Y and Hacker Z that you're currently working on, and Hacker A, Hacker B, and Hacker C's products are also financially viable. What happens now?

I suppose my issue is (from the hacker perspective) that for 50% equity, I expect some lasting relationship with the person handling the marketing of my product beyond wherever $3000 gets you.

For those jumping on OP for requiring 50%, remember it's an offer and you're free to explore other avenues. Nobody is holding a gun to your head. For many people, this is a pretty fair deal. It might not be for you, but I don't see how OP is taking advantage of anyone. He's significantly reducing risk for freelancers to work full-time on their own projects and that significant risk reduction comes with a price tag.

- At $5k / 50%, who is covering the costs of creating a separate entity (LLC formation)?

- What happens in the event that the project is completed in time, but the addl $3k spent to acquire enough customers doesn't yield any positive results?

- Who owns the IP in case after all is said and done, it falls into a dead pool? IP in code that didn't survive as a startup is still valuable.

- How many side-projects are you funding and are you expected to be directly involved in each one?

Some people look at getting paid $5k to complete a side project as plus. I guess to some it is. Taking 2 months to build means you were paid $2.5k per month (around $15 per hour) assuming 40hr work weeks.

Customer acquisition is the most time consuming, costly and difficult part of any startup. Is $3k really realistic to determine if the market is there?

Protip: find real investors who are interested in giving you a fair price. This offer is basically equivalent to a payday advance or a loan shark in terms of cost.

hmexx if you would like, hit me up, I have several ideas that I am trying to create, you obviously have experience gaining traction, so maybe we could agree on one or two to work on it, I need a good cofounder.

You don't need to pay me anything, in fact, we could both add 2-3K (more is excessive) as initial funds for each project.

Obviously I would like to know a little about you and you can evaluate me as a potential partner.

In the 50k/year scenario the investor get's a 5x on investment for years to come. That would be an awful feeling for the developer who's putting in the ongoing maintenance effort.

A better idea would be for the investor to claim 50% until capital investment was recouped, then gradually scale back.

- So, 50% until the $8k was paid back. - Then 25% until a 2x return. - Then move to a 10% ongoing royalty fee.

This excites and incentives the developer to keep building things out knowing that one day they will get the the 90% lions share of profits. It also works for the investor who can rinse and repeat the process with multiple developers.

If someone is willing to take $5,000 to do the heavy lifting up front (therein taking most of the risk) for only 50% equity, their idea is either terrible or they aren't committed to seeing it through.

If it turns out to be a crap idea you lose 50% of a crap idea. If it turns out to be a great idea you gain 50% of a business.

Employment - Low Risk, Low Returns

Startup - High Risk, High Returns

I love how this preposition is somewhere in the middle.

I have made and launched dozens of sites. The only ones I was paid to build belonged entirely to someone else. The ones I made for me .... I could barely afford hosting at some stages in my life.

I wouldn't take this deal, because stopping / starting employment isn't that easy for me, but I can see other people rationally taking it.

And if other people think he's underbidding, I would encourage them to bid him up.

It's okay if you don't hit a home run. It's even better if you don't starve or get evicted for your troubles.

But for those people who freelance, and are in between jobs this may well be an ideal opportunity to (continue) being paid for doing something they have been thinking about for a long time.

Articulated market needs are much more valuable than just an idea... Nathan Barry had a nice post on HN the other day having to do with this: http://nathanbarry.com/finding-ideas-project/

Business Model Generation (http://www.businessmodelgeneration.com/book) is a helpful resource as well.

Further, the right idea/individual would get my full, undivided attention, resources, and limitless brainstorming/pivoting sessions.

I'm also a fan of the idea of documenting the process and milestones on hn for the benefit of future teams or projects.

My background is in law and business and I'm interested in technologies that bridge offline and online domains. I'm a daily reader of hn but a new poster.

hmexx -- thanks for stepping up and encouraging more of us to do so.

I happen to be sitting on a project that bridges online and offline, we applied for the last YC batch but didn't make it. Will send more info as soon as I'm able to :)

I applaud the proposal. I'd love to hear about a follow up post in the near future.

If you know that your idea is THE big idea that can be worth millions, take $5K out of the bank or your retirement fund or sell your car or do anything in your power to come up with 2 months of survival money and do it on your own. If not, have some risk free fun and a great experience building something awesome with hmexx's money.

Dev: Is rock star techie whose disadvantage is lack of motivation Dev: Builds MVP that Proposer thinks is going to be valuable Proposer: "Validates" it by showing it around Proposer: Sells flips MVP for considerably more than $8k

It's not necessarily bad, it's probably symbiotic.

So..

* Do all stars care about 5k? * If they do, why is short-term motivation of $5k show powerful? * 50/50 with equal voting rights? Disputes, ahoy. Two people that never worked with each other before.

I think this model should be expanded into two-sided market to attract more capital and more diverse background from techie investors. These techie investors may indeed come from Hacker News community themselves, who are more mature startup-wise (more capital and experience). Although the model has not been tested on the investors' side, I can sense a healthy demand from the comments here (especially from haters' camp :))

P/S: hmexx, would you consider this as my proposal for your 8K investment? :)

But... you want a co-founder who is committed, can point you to the right way to build the MVP so that you can actually acquire customers, has a network in and some knowledge of your vertical.

Otherwise, you build an MVP, give up 50% for... not necessarily very much. Now you have a weak co-founder with 50%, might make it hard to take the next step, sort out control issues, have enough equity to get more people interested and still be interesting for the founder.

And if you really believe in your idea, and are the kind of strong hacker and entrepreneur that will be successful, is $5,000 that big a hurdle for friends and family, credit cards etc.?

Are you planning on doing this anonymously?

To me, this is a red flag.

The offer is set before the entire HN community. It has substantial financial and legal implications.

You are competing with YC.

Your track record is relevant to the ranking of this thread on HN.

So? If you're not going to take the OP up on his offer then what business is that of yours? Or are we little children that need your protection?

> You are competing with YC.

And YC can't deal with that competition? It has to be shouted down so nobody knows about it?

> Your track record is relevant to the ranking of this thread on HN.

Not one bit. The ranking is only dependent on the number of upvotes, not based on his/her track record.

Really, you have 0 business flagging a thread like this. It's one of the more interesting experiments that I've seen here and if stuff like this gets flagged then HN has truly lost its charm.

I'm no one special... just a techie with some moderate success who wants to help launch some cool new products.

Since your comments point to a trail which leads to a plausible individual, it is difficult to see a serious legitimate benefit which arises from not claiming to be that person. On the other hand, falsely claiming to be that person would have legal implications.

[Edit] on a meta-level, I believe that a precedent for this type of offer to be made anonymously is a hazard to the HN community.

That's reasonable to me. Anybody could out him once they connect, if he was a shady character the ruse wouldn't last long.

This proposition makes a helluva lot of sense.

I have done the hustling/marketing side of a startup. I got my failed (sigh) startup lots of good press and lots of users.

I would venture to say that I probably put in more work than any developer on my team at that point.

Now, I am a hacker but I 100% fully understand the value he is putting down. He will be just as invested in your MVP as you will be. His sole job is something you never have to worry about. Maybe he doesnt hold his end up of the bargain, which may happen. If that does happen, well make sure there is a clause in whatever agreement you sign.

To all the naysayers: I take it that you all have finished your ideas, went through YC and are accomplished millionaires? If not, what's with the negative attitude? Here's someone OFFERING you money for your project, and OFERING to do all the hustling for you. You underestimate how much work and trouble hustling is...

Thank you for this opportunity, and you can expect my email later today!

This is strictly a better offer than the OP's: I get paid for about the same amount of time, and I get to keep 100% of the creation (so does everyone else, since it's Open Source). In other words everybody wins.

Is it available to everyone, though?

Edit: or do you mean the offer? If so, then no, currently just to me. Though if others could negotiate similar terms.

Things that can actually succeed:

* A payable gmail alternative.

* A payable mail list (I think 37 signas was working in to that).

* A payable online book designer like (write in markdown and have a professinal like pdf output, epub, mobi...).

* Online radios. There are a lot of labels that want to promote their new records, and a lot of music lovers that want to have their online radio.

* A payable service that evaluates and give you reports about your internet connection.

* Humble bundle as a service.

* [1 thousand more]

So... ideas there are a lot. Problem is decide which one to build or improve. There are for sure companies that do already all the previous examples, but small changes can become totally different products. The good products have people with good criteria behind. What i mean is that instead of looking for someone with good idea, is better to look for someone with good criteria.

On any case, thanks for the initiative.

Most importantly, 99% of ideas are valued at $0.

U$ 5.000 is about what I get for 3 months of salary, so it works out.

I agree I'm not talented... at selling myself, but I do believe myself capable of building something in 3 months.

I like the proposition in principle, I won't do it because I have too many financial commitments and it sounds too risky and I have only one shot, if I was a kid just out of college I might have done it.

The government of my country has a similar offer, but with 0% equity, for local entrepreneurs, I'll try to take on that offer :) .

a) That guy is not able to save such money = Doesn't have real interest in the product. b) That guy is willing to share 50% the company, so probably doesn't trust on the idea as much as he/she can say. c) If that guy doesn't have the money, and can't get the money, is because is probably not good enough to develop such product.

So if you want to pay as little at 8000 I really hope you where meaning it is not in America or Europe and it is in another country, where the base salary is lower than 500$.

It is a complete MVP that I do not have the time or money remaining to market. The code is all there and it is extremely portable. I have an idea or two about how to make a profit with it as well as several features you could add to make it really great.

Take a look and let me know.

Wouldn't it make sense to pool a small amount of $2-5k investments from a number of individuals who all agree on a particular project and taking it to launch. Not speaking about crowd-funding/kickstarter. There's clearly a lot of very smart people who can build shit, and a small amount of folks willing to invest. Why not just pool everything together. Spread the risk, but combine the talents of more people.

it doesn't have to be perfect to become a successful product. Dan Shapiro has built and sold a couple of products that way and it has worked out well for him. I don't see the value in paying someone a fee (and a minimal one at that) then giving them half the company for a relatively small amount of work.

Also, your email is not in your profile, so if someone wanted to contact you, you are already making that part of the process exponentially harder

With this 50-50 split who decides the future direction of the project.

After the MVP is ready there is still a lot of coding required to make it a successful business, you need the developer to be fully committed to the project. Losing 50% stake this early is not that much motivation. Unless the new partner brings specific skills to the table that the business can't survive without.

It's better to take a small stake like 15% and just choose a project very selectively.

I'm very good at AutoLISP programming. I' m trying to make a business out of it. Do you know AutoLISP? It is a the programing language of AutoCAD.

Working with AutoCAD. That is the problem. It takes a long time before an AutoCAD drawing is created. And that is not all.

Once the AutoCAD drawing has been created, it must be checked. So creating a drawing in AutoCAD takes a lot of time.

I could write a program in AutoLISP. The program creates an AutoCAD drawing in no time. And there is no need to check the drawing.

Who could be interested in what I'm doing? Who could be my customers? Well. That is easy. AutoCAD users are interested.

I'm now promoting my business. I'm trying to find customers for my business. But I'm not very successful up till now.

I have opened an AutoLISP blog and I have opened an AutoLISP newsletter. Every week I post a different article on them.

I also have written a demo AutoLISP program that I give away to people that are interested. And I have written an AutoLISP paper.

Right now I want to find subscribers for my blog and for my newsletter. Maybe you have some suggestions for me.

You had a proposal. You are willing to invest a total of $ 8,000 in my business. And if we are successful, you will be my 50% partner.

I think it is a fair proposal. I can agree with that proposal. But my business idea. Do you think it is any good?

50-50 equal partners means no one gets what they want. That is both good and bad.

Premise 1, that investors overestimate their ability to pick good ideas is undoubtedly true. The best investors are still usually wrong. But the consistent returns that the Sequoias of the world suggest that even if they're usually wrong, they're right enough to make oodles of money.

Premise 2, that an MVP built by a lone founder is just as likely to succeed as a full team on AngelList is almost certainly false. Years of research have demonstrated that founding teams help success. A lone founder can certainly succeed, but is less likely to do so.

Premise 3, that freelancers don't pursue their ideas is absolutely true.

Premise 4, that HackerNews has talented people with good ideas is also absolutely true.

Now comes the key--he's offering $8K (plus the value of his marketing expertise) for 50% of the company.

Let's be generous and assume the marketing consulting is worth $7K. If the average seed investor is paying a $5 million premoney these days, that's a 99.7% discount! Even if a sole founder is 1% as likely to succeed as an AngelList startup, he'll still be 3X ahead.

My conclusion is that hmexx is a marketing genius. He's found a way to buy stock at a 99%+ discount. Also, he's still going to apply a selection process--if Premise 1 were true, he ought to choose at random.

Hmmm, maybe I should invest in him!

Also, just to add to the scrum, I'll double the offer to $10,000!

However if putting in 8000 is the only thing you do, then it's a horrible idea. Putting in more money, maybe.

This is the perspective of someone in the Bay Area though. 5000 is easily saved/spent here.

You can find someone else cheaper, but likely would have to communicate remotely. That increases your risk too.

For me this proposition would look better if instead of money it would contains some milestones. At each milestone we will define some metrics and based on this metrics we will decide if we move on or pivot/drop the idea. For example:

M1. Agree on problem we want to solve and the way we reach our customers. I would love to change the world not just make money. Can we agree on it? etc.

M2. Create and promote MVP. Example metrics: how many people clicked learn more button?

Good partner is more worth then invested money. But that's of course my point of view. I don't need money and can spend half my time building the product (The other half need to make living :-) )

But I believe for many people it could be great offer. And I wish you best luck. Would love to hear how it turns out.

...having said that, think there is still a chance (however small it is) that it might just work and you might get lucky, but what are the odds?

One risk to hmexx, but may actually be a good thing, is that they get the 2nd or 3rd best idea from their dev partner. Then, if there is a healthy exit, the dev partner can fund their no.1 good idea. However, after a successful exit with hmexx, they may be in pole position to participate in the next deal with their dev partner while seriously reducing the biz partner's work load. This would be great for deal flow.

I thought: so many startups have no skills to build their mvp so let's build it for them!

I've then created a lean landing page to get feedback about the idea of building mvps for startups: mvpeers.com. A full-stack dev friend of mine was also involved in the experiment.

I followed a totally lean approach: I started off with just a title and began posting my landing page in startup forums asking people what kind of information I should have put on the page. After a day I had a full page, signups and referrals. I've made a time lapse of the page itself for fun :) http://j0hnlucas.tumblr.com/post/22121212880/git-time-lapse

re premise 2: I believe a lone coder is not all it takes to create a successful mvp, you need to have experience with lean concepts. Building "just enough" and finding real insight from feedback are not easy tasks.

I spent a month or so gathering online and offline feedback and tried to close deals with customers but then gave up.

My takeaway:

1. first timer startuppers are so naive sometimes that they believe they are making you - an experienced coder - a favour by sharing their idea with you. So 50-50 is not even obvious to them (even without any cash!)

2. first time startuppers don't have much money.

3. more experienced startuppers who understand real value in mvps tend to partner up with someone who can code.

All this said, I still believe there must be a niche for selling these services if awareness is raised properly. It's important to find the right customers who are educated enough to understand the value of a good mvp and have up to $10k to put on an idea.