grossberg Email: “I am hoping to meet a development resource for a startup project I am working on”. What does that even mean?

A twitter friend of mine posted this today, and I thought a longer reply was worth while.

You see, too often I see people trying to find “the perfect elephant” for their pre-cash startup. There was a lot of jargon in that phrase, so let me unpack it:

• Perfect Elephant: Someone who is extremely passionate about the founder’s cause, super skilled, available to work “startup hours”, and so desperate to willing to work for your startup that they will work for whatever you give them.
• Pre Cash Startup: We have no money. The only asset we have to trade is the idea that maybe maybe this will turn a profit in the future. Compensation is given as a share of that money, which we might make in the future

To the founders

I know you, Mr Founder, think that your product will be the next Facebook. I wish you will in that, I really do.

However, sometimes in these situations it may feel like you should put some skin into the game

If you believe in your product, find a way to fund it.

I don’t care of that funding comes by way of loans, credit cards, savings, or an extra job you pick up to earn extra money. (Or find an angel or VC money). I only know that, as a technical person, I will be very grateful that you made the effort to get me paid

Because, honestly? I have too much work already - and all of it pays. Anyone even tangentially related to technology has more work than they can handle.

How do I know this? Threads like this: Ask HN: Who is hiring? (July 2011). Then hit the Page Down key on your keyboard… 60 times. That is your competition.

Now, tell me exactly what your pre-cash startup can bring to the table that none of the other startups on that list can bring?

If I had any availability at all, I would be able to get a job for money. As unique as your idea might be, you are not a special flower.

To the founders that do fund their startups - and I work with a number of them - awesome. You’ve passed the first test in your startup lifecycle.

If you can’t pass this very basic test, this feels to me like a very high risk situation, to me as an investor.

Yes, you should think of any programmer willing to work on your product for sweat equity exactly as you would an angel investor. Programmers are doing the same thing: investing money into your dream.

To the developers

I write a series for MacTech Magazine, and my next article (August issue, I think) will be on working with startups, as a consultant

Some advice from that article is: even if you think it’s a great idea, listen to some advice from gambling: “Always set an amount of money for each time you play”

What this means, is that even if I’m excited about an idea, I’ll set a limit for how many hours a month I will put in that month, figured out via this formula:

(Normal Hourly Rate) * (risk markup) = startup hourly rate.

(Extra, after budget money) / (Startup Hourly Rate) = number of hours allowed to work on the startup

My recommendation would be to set your risk markup to the interest charged by your highest credit card, because that’s exactly what you are doing: letting someone else buy something with your money. In this case, what they are buying is your services

I have more to say on this topic, but I have paying projects to work on