Ask YC: Startup crisis. Out of money and tech co-founder has bailed.
I am the non technical co founder of a startup, which has been in development mode for 12 months. I took a $30,000 loan and raised some $160,000 in funding from friends and an angel to develop an idea to the proof of concept stage. I found a Django technical developer 14 months ago, and initially have paid her $6900 a month and 6% of the company equity to build a decent prototytpe, with an expectation of ratching it up in the longer term. She quoted it would take her 6 months of full time work to do this.
4 months into development, she threatened to bail on the project and raise funding for her own startup idea unless I increased her equity stake to 35%. I was initially very upset by this change, as I had been up front and honest from the beginning and I didn't like the idea of switching terms midway through the project. I felt there was an asymmetry in our risk, as I quit my nursing job to do this and raised all the capital. She also refused to take a pay cut in return for the equity. I had limited alternative developer options to leverage in the situation.
I eventually agreed because without a proof of concept,I knew we wouldn't make it, and it seemed we were getting close to launch. I thought I would rather have a real partner than a long term contract developer, and adjusted to the concept if both being in it full time. I have taken a 55% pay cut to work on the startup, and have been paying myself $3000 a months, which comes to about $2400 incomes after taxes.
12 months later, we have a partially complete web app, have run out of money, and she has bolted back to her contract gigs. She hasn't finished the work to the point where I can do a beta, as the alpha feedback has not been incorporated into the software.
She refuses to invest any of her own money into the idea, I don't want to "get a real job" because I won't be able to work on the startup idea. I have very little money left in the bank. Raising more capital is really hard, because we haven't executed on our milestones. 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. I have the source code and am also considering learning Django from scratch: How hard would that be?
Where should I go from here? Any thoughts gratefully received.
drinko
240 comments
[ 0.21 ms ] story [ 246 ms ] threadIt 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?
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.
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.
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.
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
Talent is a marketplace. It isn't owed to anybody.
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)
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.
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.
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
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.
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.
* 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?
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.
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.
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.
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.
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.
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.
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....
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)
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.
In other words, if you bring very little to the table, and your "employee" brings a lot to the table, you're setting yourself up to fail by being "clear" about an untenable arrangement.
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.
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.
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.
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.
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.
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.
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.
So it can be done.
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.
;-)
where do you live?
(The beers make us care even more.)
Hope someday we get that chance.
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
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.
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.
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.
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.
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.
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.
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!
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.