How To Find A Technical Cofounder For Your Online Business Idea
- Benjamin Kuker
- May 17, 2011
I have a feeling I might step on a few toes with this article, but finding a technical cofounder for an online business idea is a topic that I’ve seen come up often across a number of business community websites. It’s a common problem and, unfortunately, it isn’t handled well in many cases. As a result of personal experiences as a programmer/business owner being pitched ideas, as well as seeing others struggle with the issue, I’d like to address the issue to let business owners know how best to prepare themselves and how to find a good programmer for their startup idea. This article should also serve as a starting guide for programmers who are approached about becoming technical co-founders.
Here’s a typical situation that goes awry:
An entrepreneur has an idea for something online and after talking to a few friends who like it, decides to try to turn the idea into a business. Because the entrepreneur doesn’t have the technical skills to bring their project to fruition, they look for and find someone willing to implement it, promising them a share of the company in return for their technical expertise and work on the project.
Great so far, right? This is where it starts to fall apart. Because the entrepreneur doesn’t have money to pay the programmer right away, the programmer is working solely on the hope of future compensation via a share in the company. The project starts to go past the time the entrepreneur expected it would take and tensions start to rise in the relationship, with the entrepreneur wondering what is taking so long and the programmer wondering if he’ll ever get paid. Many partnerships don’t make it past this stage, devolving into a tangled mess about who owns the idea and the code and what the compensation should be.
If, by chance, the relationship does survive and the product gets launched, that doesn’t mean that there’s smooth sailing from that point forward. Startup internet projects often arrive slightly buggy at first and if the entrepreneur didn’t take the time to research the market in advance, the product can be dead on arrival. The situation becomes even worse if there is no marketing plan or budget. If the idea was reliant on ad revenue for profit, it quickly becomes apparent that there will be no incoming money at all.
At this point, everyone loses. The entrepreneur walks away dejected, whatever money they may have invested in the project gone, and they may blame the programmer for how the project failed. The programmer is angry that they worked for months on a promise with no results. Neither will probably ever talk to the other again.
Sadly, I have seen this scenario play itself out over and over again. It doesn’t have to happen, though, and I’m going to share with you how you can avoid it and give your idea a better chance of succeeding.
I own a business. I know what it’s like to have dozens of ideas that you’re absolutely sure would turn a profit if you just had the technical skills. Because I’m also a self-taught programmer, I can tell you that you probably don’t want to invest the time teaching yourself how to program. For most people, it simply won’t be worth it.
In most cases, the need to find a technical person to build your project is unavoidable. However, that’s never, ever the first place you should start.
Before You Pitch To A Technical Cofounder
The enthusiasm we have for an idea can often overshadow our business sense. Even if you have that gut feeling that your idea will succeed, you still need to invest the time and energy to see if it’s viable.
From a business perspective, viable means a few different things. Your product must solve an actual need, have a profitable market size, differentiate itself from the competition, generate sufficient interest from your target market, be cost-effective to produce in a timely manner, and have a clear marketing path. Absent any of those factors, your idea will not succeed. Simply put, do your homework and you’ll stand a much better chance of success.
Your product pre-production workflow should be something like the following process:
- Research your idea. Look at the market size and the number of competing products. Find the weaknesses of other products and address them with your product. If it doesn't or can't address an actual need in a unique and compelling way, abandon it.
- Decide on the absolute minimum feature set of your product. Gather quotes from multiple (at least 3) development companies for building a minimum feature prototype. In addition to cost quotes, also ask for time quotes so you can get a feel for how long the project should take to implement.
- Research the cost of advertising your product. Look at online advertising rates for your potential product keywords, industry publications ad rates, search engine optimization fees, and any other advertising avenues you’d like to pursue.
- Do an initial financial projection based on competitors’ prices, your development costs, and the advertising costs to see if your product is financially viable. Don’t forget to factor in operating overhead including accounting, legal, insurance, etc. If it's not financially viable, abandon it.
- Hire someone to do a working prototype/proof-of-concept. Sign that person to an NDA if necessary.
- Test your prototype in your target market. Rework it as necessary. If it doesn't test well, abandon it.
- Gather your market research, your business plan, and your prototype and make your presentation to potential CTOs. If your presentation is compelling and detailed enough, you might be able to get them to become a full partner. Otherwise, you will have to offer actual compensation (read salary) in addition to corporate shares.
Red Flags Galore
Having been pitched several ideas by aspiring entrepreneurs, I’m constantly amazed at how little groundwork has been performed before coming to me to implement it. Here are some red flags that will cause me to politely, but firmly, turn down the offer.
- An incomplete or poor idea – If the project scope isn’t fully detailed, everything is going to take longer and frustration and stress will rise on all sides. If the idea is just plain bad, you can’t overcome a poor foundation. If there isn’t enough differentiation from competitors, the venture will fail.
- Unrealistic expectations – No, I can’t build a Facebook clone in a week. Yes, there might be people out there who say they can, but you won’t end up with a good product. Software development is like an iceberg – 90% of it is under the surface. Just because the user interface is done doesn’t mean that the product is ready to go. The UI is the 10% above the water.
- No immediate compensation – Unless you have a sterling track record of successful business ventures, I simply can’t even consider working full-time for free on the promise of future profits or shares in the company. This is an instant deal-breaker. However, I would consider working at a discounted rate for equity in an idea that I believed showed merit and profitability potential. If you don’t have the money to provide even a reduced salary up-front, find investors. If you are unable or unwilling to do that, it’s not a project I want to be a part of.
- No shared risk – This goes hand-in-hand with the above. If you’re not willing to put money into the project, it tells me you’re not committed and aren’t willing to share the risk. It’s simply an untenable situation to expect the technical co-founder to assume the full burden of risk through sweat equity.
- No shared responsibilities – If I’m going to be handling the technical side of the business, I need to know that you’re going to handle the business side of it including administration and marketing. If you haven’t even thought about that side of the business, it’s a good sign that you need to do some more planning.
- Inflexibility – If you are bringing me on as a partner, I become equally interested in seeing it succeed. However, if you don’t demonstrate the ability to take input and ideas from the very beginning, it diminishes the project’s chances of success. If you gloss over or ignore concerns I have or points I make regarding the project, it’s not a good sign and I’ll probably pass on the opportunity.
- Punctuality problems and poor communication – If you’re a half hour, hour, or two hours late to our initial meeting, it’s not a good sign, even if it’s the worst traffic jam in the history of the world. If it takes days, weeks, or even months for you to respond to an email, I’m not going to work with you.
- Micromanagement – I’m certainly open to discussion and ideas and if you want understand and be involved in the technical portion of the project, that’s great…to a point. However, if I get the sense that you’re going to tell me how to do my job or that the project is going to be a time-sink because of constant meetings, I’m going to decline the project.
- Incomplete or inaccurate financial projections – As a potential business partner, I’m going to ask to see your financial projections for your idea. Your projections should provide a range of best-case/worst-case revenue scenarios over a number of years. If you don’t have any, I’m either going to walk away from the deal or request that you come back when they have been completed. If there are glaring holes or problems with your projections, we’re going to have to talk about it.
- No marketing plan – Just as important as financial projections, a marketing plan is essential. You should know every demographic aspect of your target market. You should know the methods and costs associated with reaching that market. You should have projection ranges of sales and adoption rates. If you wildly but confidently project millions of users within a few months, I’m going to have a hard time taking your proposal seriously.
- An NDA – This isn’t a deal-breaker for everyone, but it can be for me, depending on how it’s structured. If you require a non-disclosure agreement for me to simply even hear your idea, I’m going to walk away unless you’re a Steve Jobs or Bill Gates type of figure. I won’t want to put my other projects at risk by signing a binding legal agreement for something that I don’t have an idea what it’s about. However, I may be open to a NDA once I hear your initial idea and if the NDA is reasonably structured.
- No legal contract – If you’re not willing to enter a legal agreement that clearly defines ownership, compensation, responsibilities, buyout clauses, and exit strategies; it’s a firm and instant no. A strong and detailed legal framework will define responsibilities and take the stress off the relationship between the parties involved so that they can concentrate on the business itself instead of worrying about who owes whom what. Working without a legal contract is simply not optional or negotiable.
There are definitely other red flags and even some yellow flags, but what I’ve listed above will unfortunately eliminate 95% of business proposals. As an entrepreneur, you need to approach a potential technical cofounder as an investor in your company. At the end of the day, your deal with a technical cofounder is still a business partnership. A good cofounder will be interested in everything an investor would want to know and more, so you should be prepared accordingly.
Finding The Right Technical Cofounder
If you’ve made it this far without jumping ship, it’s a good sign that you’re on the right track. Now I’m going to share with you the other side, how to find the right technical person to be your cofounder.
Finding a pool of good candidates to approach can be tricky and there really isn’t any magic formula for where to look. Personal referrals are probably the ideal way to discover someone, but don’t feel as if you’re wed to a programmer because someone referred you to them.
If you’re not able to find a personal referral, I’d recommend looking for small local companies that provide programming services. Other possibilities include programming conferences, business networking events , programming forums, Q & A sites like StackOverflow, and open source project contributors.
Before you begin interviewing candidates, you should have an idea about the size, scope, and technical details about your project, even if you don’t understand the minutia. Take the time to do the groundwork beforehand or you’ll pay for it later. Talk to multiple people or companies to see how they would approach the project from a technical standpoint and what type of timeline they would expect. If possible, have a trusted technical advisor to help you vet your interviewees.
Here are some key characteristics you should be looking for in a potential technical cofounder for your startup:
- Appropriate skill set – When you’ve properly researched your project, you should have an idea of what type of specific skills will be necessary to implement it. However, if you haven’t done your homework, your chances of choosing the right individual are greatly diminished, as are your projects chances of success.
- Previous work examples – Ask for previous work examples from your potential partner and have someone with a technical background review them. If you can do it yourself, you should also test the application or website to see if it functions properly or if there are any glaring errors or issues.
- Referrals and testimonials – Ask for contact information for former clients, bosses, coworkers, and partners. You should be particularly interested in your potential partner’s knowledge, ability to get things done, ability to deliver on time, communication skills, and attitude.
- Prior project management experience – Depending on the size of your project, you may want to find someone with prior project management or leadership experience because bigger projects may require more than just one person, even if that’s how they start. You want to make sure that they can handle growth down the road.
- Startup lifestyle compatible – Running and working in a startup is a lot of work. It can be an incredibly fun and educational experience, but it can also be extremely stressful and exhausting. Both you and your cofounder need to be ready and willing to engage in the startup lifestyle.
- Stable home life – I mean a few different things with this point and if you’re looking for a business partner, I don’t think it’s out of bounds to ask these questions as the home life can most definitely affect your startup. If personal relationships aren’t solid, working in a startup can strain them even more. If relationships start to go bad, work can move so far down the priority list that it’s not even visible.
- Good financial situation - Personal finances also affect relationships and they can do a lot of damage absent a relationship as well. If a potential cofounder is deep in debt or doesn’t have a decent reserve already built up, they may jump ship the moment a higher-paying opportunity comes along. Tread very carefully, especially if you’re not also giving close to a market wage to your technical cofounder.
- Good communication – This should go without saying, but make sure that your candidate has good communication skills. Having a blog, being a public speaker, be prompt in communication, and being able to explain complex ideas in a simple manner are all valuable assets. Choose wisely or you may end up going months without an update or returned call.
- Business skills – It will be an incredible asset if your technical cofounder also has at least rudimentary business skills. At the very least, they should be able to understand what you’re doing from a business perspective and how it directly relates to their technical work. Absent this, you may find that they are entirely disconnected from the business process and that their work doesn’t reflect the same sense of urgency that it should.
I should mention briefly here that even when you find your technical cofounder, you may also need to hire a graphic designer or user interface expert at some point, even if it’s just for contract work. Programmers are notorious for not having graphic design skills (there are a select few who can do it all, but they are few and far between) and, depending on your cofounder’s ability, your product may have a much better chance of success if you get more help in that area. However, that’s an entirely different article…
What To Do After You’ve Found Your Technical Cofounder
After you’ve found your technical cofounder, you should divide up responsibilities clearly so that there can be no misunderstanding about it later on. Make it clear who should be doing what and by when. Write it all down. Make sure that you’re both in agreement.
Establish a communication schedule so that every few days or every week you give each other updates on both the technical and business progress. I can’t emphasize enough how important clear communication is to a successful business. Note, however, that this doesn’t mean that you need to have three hour meetings three times a week instead of actually getting things done. Do what makes sense for your business.
You should both also document your work, even if it’s just light documentation. Write down brief one-page descriptions of each of your processes so that someone else could come in and pick it up quickly. Future employees will be grateful and if either of you ever needs to step down from the business, it will be easier for someone else to step in their place.
Finally, but most importantly, you must have a contract. This should be non-negotiable for any business venture. A contract will establish boundaries and ownership, set responsibilities, and generally reduce stress in your startup. It’s not necessarily an issue of trust; it’s about establishing a corporate framework that allows everyone to concentrate on the business itself rather than worrying about when or how they’re going to get paid.
Briefly, here are some contract points you may want to consider for incorporation:
- The division of share equity and dividend payout
- Titles and responsibilities
- Shareholder buyout clauses
- Exit strategies
- Decision-making model
The above isn’t a comprehensive list by any means. You should always seek out professional legal counsel for all contract issues. In most cases, you can do so without breaking the bank as many startups start rather simply and won’t need complicated articles of incorporation or partnership agreements.
Here’s To Your Future Success
I hope that what I’ve written here will help send at least a few down the right path. At the end of the day, make sure that you partner with quality, skilled people who can deliver on the promises they make. Very few startups can overcome poor personnel, especially at the beginning.
While I’m not currently looking for partnerships, I’d be more than happy to offer consulting or web design services for your startup when you’re ready for them. You’ll find our other business articles as helpful resources for startups, especially if you have an online component, and you can also take a look at our web design portfolio. As always, you can follow us on Twitter or become our fan on Facebook.
Best of luck to you in your startup venture. May you have great success!
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