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Is a partner the right answer?
I've been working on an application for a while in my precious spare time. I feel the technology is spot on, and I really need to advance to the next level. Unfortunately I'm not at the point where I can quit my day job and spend all my time on it. At the same time I could really use someone else to work on the project with me.
I've tried friends and family, and I'm not sure that is the best route. I'm considering looking for a partner, that's in the same position. A professional who wants to put their free time into something other than Open Source.
For those of you who have started your own companies, how did you take it to the next level? I'd like to hold the venture capitalists off as long as possible. My fear is that'd give up a lot with little in return, but maybe it is the only way to break free from the day job, but I'm not sure how this works as far as paying yourself a salary.
Is it crazy to just look for a partner who you don't know? Would this ever work out?
looking for options
Tuesday, March 16, 2004
So what is the partner going to do? Pay you a salary for ashare of ownership? Work on the app with you? You are going to pay them something?
FIrst things first
Tuesday, March 16, 2004
No, a partner you don't know would add nothing. You are not big enough or in possession of anything that anyone would invest in (I presume.)
This is the hard part. No one's interested until you don't need them anymore.
When people have partners and are small, it's generally a friend, so they're comfortable working together and the relationship is useful and safe.
At your stage, it's notorioulsy hard to move ahead, and there's no alternative to just building something and getting customers.
me
Tuesday, March 16, 2004
How about some options other than "it's all too hard"?
Tuesday, March 16, 2004
looking for options wrote, "I'd like to hold the venture capitalists off as long as possible. My fear is that'd give up a lot with little in return, but maybe it is the only way to break free from the day job, but I'm not sure how this works as far as paying yourself a salary."
I seriously doubt most VCs would give you the time of day. VCs expect a quick and high return on any investment they make and they look for things (an existing business, a strong management team, a good business plan, current cash flow, projected future cash flow, etc.) you currently don't have. Assuming you could find a VC who was interested and willing to invest in your software application, this person/company would most likely demand that you pay yourself a very low salary.
One Programmer's Opinion
Tuesday, March 16, 2004
if you are going to choose a partner, choose very carefully. if you choose someone who does not have the same motivation, goals, work ethics etc, you will have more problems than now...just my 2 cents from personal experience.
suhu
Tuesday, March 16, 2004
If your not willing to commit yourself to it full time why would a partner be interested in commiting to it?
My advice to you is to stop writing code and start writing a business plan. Who are you selling your product to, why are they buying it, how are you going to market to them, how are they going to pay, what does the product need to do, how much money do you need to invest, how are you going to support it, do you need a partner?
Tony Edgecombe
Tuesday, March 16, 2004
I don't think you've answered the most important question:
In what way will the new partner help you?
It's easy to think something (like a partner) is going to be a "silver bullet". "If only were were bigger, had VC money, had a partner, etc.
I think there is GREAT benefit to the focus you get from being constrained with not enough time. It forces you to get *something useful* shipped ASAP.
That's how we started. It was extremely helpful. Our revenue started out at $200 a month. But it grew.
Bringing in a partner is very complicated. See the recent JoS discussion at:
http://discuss.fogcreek.com/joelonsoftware/default.asp?cmd=show&ixPost=123160&ixReplies=29
Mr. Analogy (formerly The real Entrepreneur)
Tuesday, March 16, 2004
One programmer's opinion- Completely agree. Many people have a very odd idea about how willing VCs are to give out the dough. I think this mythology developed during the dot com boom when we kept hearing of idiots giving out venture capital after seeing an idea written on a napkin. I can tell you from bitter experience that this is not the case. In those (anecdotal) circumstances there was always something elese at work. Usually it was an irrational belief in the person writing on the napkin, rather than an irrational belief in what was written on the napkin.
If you do want to persue VC you need a good management team and a market that the VCs will perceive as large enought to justify the risk. Orthodontist office management software will not fit the bill. Also if you have developed a horizontal windows app I would forget about the idea of VC right now. I think they stopped funding those in the early 1990s.
You might try to find an angel investor. I imagine most of those are pretty gun-shy.
Your best bet, depending of course on the nature of you product, is to partner with someone who is good at, and willing to do software sales. It could easily be part-time for him as well and he could be reimbursed with commissions. The trick of course is finding such an individual.
There is no substitute for sales at this point. Of course if you can get some early sales you might find yourself in the tricky position of needing to quit you job to meet support needs, but not having enough revenue to support yourself.
Good luck.
name withheld out of cowardice
Tuesday, March 16, 2004
What will the money from an investor get you?
Salary while you work on this project?
Money for advertising, etc.?
The only reason someone else would loan you money (invest in your idea) is because there's a proven track history that you are already making money and if you could invest $X in ABC, you'd make back $2*X.
Mr. Analogy (formerly The real Entrepreneur)
Tuesday, March 16, 2004
It seems most of what I've read is discouraging rather than encouraging.
I feel I could get VC money, but it would be a very small amount of money, for a lot of equity. I spoke with one local company that got off the ground with something like $250K in VC money. That doesn't seem like a lot to me, and I'm not willing to risk everything for that type of investment. But that's pretty much where the market stands. I just think it would require giving up a lot of what I worked on for some time.
I do feel like I have something to offer a potential partner. I have a significant amount of R&D time into this now, and I am working in a lucrative market. Most of the infrastructure for the product is in place.
looking for options
Tuesday, March 16, 2004
I read over the link to the other discussion. There is no doubt that having a partner is going to involve sometime in the lawyer's office. (I can't wait until my friends finally get those law degrees ; ) ).
I tend to agree with the comments, which say keep it close to home. Trust is important to me, but commitment is too. Maybe the only way to fly is alone.
looking for options
Tuesday, March 16, 2004
BTW,
When I say partner, I mean someone will to work for equity in the product. An investor would be someone that would pay me to develop it.
looking for options
Tuesday, March 16, 2004
Looking for options,
You are too small for VC. You need an angel investor type. Ideally you could find someone to invest in your company and give you advice on how to grow it.
Notice that I said company. You have to start thinking like it's a company and not some neato technology.
pdq
Tuesday, March 16, 2004
I've considered this as a company from day one. The company is small, because I have more skills than money right now. In today's market I feel you best have a good technology or you will not have a technology company. The days everybody getting funded are over, I realize that. But companies are still getting funded.
I'm not really considering Angel or other funding right now.
That's my point. I want to have the product out the door first, and I am considering alternatives. I have outsourced certain parts of the development already, but I don't think this is a good solution right now. I think it would be best to find someone with a real vested interest.
So I'm in a Catch 22. To small to get funded, to small to grow.
looking for options
Tuesday, March 16, 2004
In answer to the person who thinks I should have a business plan: I do have a business plan. Right now I need to ramp up the product. There is no way around that. And I didn't say that I wouldn't consider someone to drive the product from the marketing side.
looking for options
Tuesday, March 16, 2004
> When I say partner, I mean someone willing to work [for free in return for] equity in the product.
Ah, OK. You need a top programmer, someone who can take a rought idea from a unknown company and develop it into a marketable product. Well that person probably doesn't exist. What you can do at best, and only if you are very lucky, is find someone who is willing to accept an average salary of perhaps only $60k and limited benefits in return for a significant equity, say half ownership.
First Things First
Tuesday, March 16, 2004
> An investor would be someone that would pay me to develop it.
Actually, for that you need what is called an 'employer'. They will own 100% of the product and they will pay you to develop it. Remarkably, that's how 'getting paid to do something' works. What they don't do is pay you to develop something and then let you keep that. You might try getting an arts grant if you want to do something like that.
First Things First
Tuesday, March 16, 2004
The point being is that I can't develop and market this product alone. I am simply considering other options. My guess is the person I'm looking for does exist. How I find him or her is another story.
I'm *considering* looking for someone that enjoys working on software, might be tempted to write OpenSource software in their free time, but might take a chance on working on this project instead.
I'm willing to consider all my options, as I have plenty of ideas, a working code base, but limited resources.
The point being I've already invested a lot into this. I would have not built this for an employeer for less than 6 figures, and I believe my work is worth at least that right now.
looking for options
Tuesday, March 16, 2004
"The point being is that I can't develop and market this product alone. "
Why not?
Do you lack the skills or the time?
If the latter, which do you lack?
"and I believe my work is worth at least that right now. "
No. It's worth what the customer is willing to pay. That may be more or less than what you've invested in it.
If you can find a partner who shares your vision and with whom you work well, and who has (ideally) compelementary skills it's amazingly helpful. I work great with my partner. She brings complementary skills to the table and we both have the same vision.
Mr. Analogy (formerly The real Entrepreneur)
Tuesday, March 16, 2004
Looking for Options, welcome to the real world. You have nothing to interest anyone except yourself and maybe family. That's just the way the world is.
To go further, there are no magic secrets. You have to create something yourself and find customers. That's what it's all about.
If you manage to do that, then you'll find people will consider joining you or investing in you.
It's a tough world.
Tuesday, March 16, 2004
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